House of Commons
(1 day, 12 hours ago)
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Mr Speaker
I will now announce the results of last Wednesday’s deferred Divisions. On the draft Housing (Tenancy Deposit Schemes) Order 2026, the Ayes were 310 and the Noes were 114, so the Ayes have it.
On the draft Private Rented Sector Database Regulations 2026, the Ayes were 316 and the Noes were 149, so the Ayes have it.
[The Division lists are published at the end of today’s debates.]
Oral Answers to Questions
(1 day, 12 hours ago)
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Helen Maguire (Epsom and Ewell) (LD)
The Lord Chancellor and Secretary of State for Justice (Alex Norris)
Education, skills and work are central to rehabilitation. We are modernising prison education and creating a joined-up system that supports prisoners in progressing from basic literacy to skills training and work experience. We are also tackling the root causes of offending through offender behaviour programmes and substance misuse treatment.
Helen Maguire
Many ex-prisoners experience challenges after prison, particularly when trying to reintegrate into society, which is really difficult to do. We know that 40% of prisoners reoffend within one year, and that reoffending costs £22.7 billion per year; at the same time, 97% of prison capacity is taken. Will the Secretary of State ensure that ex-prisoners are properly supported, so that they can positively integrate into society, and reoffending can be reduced?
Alex Norris
That is an important point. It is great to start Question Time on a note of unanimity, and I am sure that one view that we all hold in common in this place is that when people leave prison, we do not want them to return and reoffend. The key to that is a multi-agency approach locally, starting before individuals leave prison. We are working closely with local government partners to ensure more effective pre-release planning work.
Catherine Atkinson (Derby North) (Lab)
The public are safer when people leave prisons with the skills to find work and stay out of crime. Despite the Coates review calling for education to be put
“at the heart of the prison regime”,
a decade later, cuts have halved the number of education hours in some of our prisons. Today, Ofsted and the chief inspector of prisons have both published a letter calling on Ministers to act on the review’s recommendations, and to tackle poor performance on purposeful activity in prisons. What is being done to ensure that prisoners receive the education that they need to find work and stay out of prison?
Alex Norris
I am grateful for that question from the Chair of the Justice Committee, because that too is a crucial point. We are in a self-defeating cycle: the capacity problems in our prisons, which have been talked about in this Chamber for months, impair governors’ ability to move individuals around and get them to the right place, be it to substance abuse treatment, mental health treatment, educational classes or work training. That is why the steps that we have taken are so important. However, I recognise the vigour with which the Chair and the Committee make their comments, and I certainly intend to work closely with them to deliver on this.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr iawn, Lefarydd. Tackling reoffending requires rehabilitation, but the Wales Governance Centre’s latest report shows that that is not happening well enough in Wales. Recall numbers are up 27%; rough sleeping on release is becoming the norm; and the rate of death by drug poisoning while under community supervision is considerably higher than in England. Addressing those issues requires a holistic approach, which is impossible when Westminster controls the levers when it comes to justice. Following the Secretary of State’s meeting with Welsh Government Ministers yesterday, does he agree that devolving justice is key to making justice work in Wales?
Alex Norris
As the right hon. Lady says, I was in Wales yesterday, meeting the Welsh Government and talking about exactly these issues. As I said in my answer to the original question, we have to use all organisations—yes, His Majesty’s Prison and Probation Service, but also others, including local authorities, local health services and charities—effectively at a place-based level. That is what we said in the conversations that we had yesterday, and I very much look forward to building on them.
Adam Thompson (Erewash) (Lab)
I welcome the Government focusing prisons on rehabilitation, and on better education, training and support to help people turn their life around. I am particularly concerned about pregnant women leaving prison, many of whom have no secure accommodation, are vulnerable to being targeted by drug dealers and could even feel safer in prison than on the outside. How can we provide better support for pregnant women leaving prison?
Alex Norris
My hon. Friend touches on an important question for his community and the country more generally. For anybody—particularly pregnant women—to leave prison with security, they must have access to housing; that is the anchor. We are taking incredible steps forward in this place to ensure that everybody is offered somewhere to be from night one, and through our emergency accommodation, we can offer up to 84 days of support. There is much to do, particularly with pregnant women, to make sure that the other support systems then wrap around them, to give them the best possible chance of staying out of prison.
Dr Lauren Sullivan (Gravesham) (Lab)
The Parliamentary Under-Secretary of State for Justice (Alex Davies-Jones)
I thank my hon. Friend for asking that very important question. I want to reassure her, the House and anyone else who is listening that the Government take sexual offending extremely seriously, no matter who the perpetrator may be—a physician, a celebrity, or anyone else—and it must be dealt with appropriately by the criminal justice system. In our strategy to tackle violence against women and girls, we have committed to preventing these awful crimes, pursuing perpetrators and supporting the victims. We have signed up to this commitment across Government, and that includes the Health Secretary.
Dr Sullivan
My constituent Sarah Johnson showed remarkable courage in helping to convict a physiotherapist who sexually assaulted her and other women in his care. Her case raised serious questions about how a practitioner who was subject to regulatory restrictions and was later suspended from practice was able to remain employed by the NHS and in contact with patients. Will the Minister work with the Department of Health and Social Care to strengthen the regulations, so that those who are under investigation for sexual offences cannot continue to have contact with patients, and will she meet the survivors and me to discuss the matter further?
Alex Davies-Jones
I will gladly meet my hon. Friend and the survivors, and let me put on record my thanks to Sarah for her remarkable courage in coming forward to describe her horrific experience. We will of course continue to engage with colleagues across Government, particularly those in the Department of Health and Social Care, to ensure that anyone who abuses his or her position of trust and influence is held to account, and I look forward to meeting my hon. Friend and Sarah.
Jim Shannon (Strangford) (DUP)
An issue that crops up regularly in Northern Ireland is the searching of the £400 million digital patient record system by healthcare staff, some 30 of whom have been able to gain access to information and data through the system. What discussions has the Minister had, or will she have, with the Northern Ireland Assembly—and, in particular, with the relevant Minister—to ensure that appropriate penalties are in place to deter healthcare staff from accessing confidential patient records without authorisation?
Alex Davies-Jones
This issue is of grave concern to the Government, in England and Wales but more broadly across the United Kingdom. Anyone accessing records without the appropriate permission and level of security should be held accountable. As the hon. Gentleman will know, the Public Office (Accountability) Bill is in the other place, and although the new offence of misconduct in public office does not apply to frontline NHS workers, I have had conversations with the Health Secretary about how we can apply nuance in the case of people accessing records without permission. It causes immense distress to victims and bereaved families, and I will be sure to raise the matter with my counterparts across the United Kingdom.
Ben Maguire (North Cornwall) (LD)
Ian Sollom (St Neots and Mid Cambridgeshire) (LD)
The Parliamentary Under-Secretary of State for Justice (Jake Richards)
The Government are reforming the family justice system to support families and children better. We are rolling out the child-focused model nationally and legislating for new child safety measures to ensure that child welfare continues to be prioritised, and in due course we will publish a cross-system family justice strategy.
Ben Maguire
The ex-partner of one of my constituents is subject to a non-molestation order and has been charged with stalking. He repeatedly withdraws consent from school and medical decisions made about their child, forcing my constituent to pay a solicitor to apply to court each time; he will then back down shortly before the hearing. My constituent just misses out on legal aid, owing to her earnings, most of which now go on legal fees. How are the Government reforming the family law courts to prevent such abuse?
Jake Richards
We are introducing new types of order, which will come with legal aid, to allow constituents like the hon. Gentleman’s to be represented without having to venture into their own personal finances. However, we must also make the family court system work much more efficiently, because part of the problem is the number of delays and the countless hearings that victims have to go through simply to protect their families and their children. We will have rolled out the child-focused model across the country by 2029, and in due course we will produce a family justice strategy that will go further on ensuring a more productive and efficient family court system.
Ian Sollom
The Ministry’s own figures show that care cases are again slowing down in the family courts; just over a third hit the 26-week statutory limit for completion. The Minister has said that the family justice strategy will be a priority for the Government, and will be produced before the end of the year. Will it include a timetable for reversing this decline relating to care cases, and will he report back to Parliament?
Jake Richards
Of course I will report back to Parliament on progress, as and when appropriate. We want to drive down the time that it takes for public family proceedings to conclude. The 26-week statutory target is currently being missed, and that is not good enough. We have introduced measures; the Minister with responsibility for children and families, my hon. Friend the Member for Whitehaven and Workington (Josh MacAlister), is reforming some of the child social care arrangements. We believe that that will help to shorten and hopefully reduce the need for proceedings, and that will help us to deal with the demand, but the hon. Gentleman is right to raise the issue, and we are on it.
Alistair Strathern (Hitchin) (Lab)
I am grateful to the Minister for meeting one of my constituents recently to hear at first hand about the devastating impact that family court failings have had on her family, but the heartbreaking truth is that I could have chosen from many. All too often, inappropriate, failing processes and long delays cause real trauma. They drive up the risks to which young people are exposed, and exacerbate the already high legal costs for all parties involved. If we drive forward crucial family court reforms, can we make sure that our courts finally serve the young people and families who rely on them?
Jake Richards
My hon. Friend has raised this issue on a number of occasions, and it was really important to meet him, his constituent and her children to discuss that horrific case and the effect that it has had on them. Ultimately, there were two real problems facing his constituents. One was a court system that was struggling with demand, and that made administrative errors that had a real impact on the family. Secondly, the system simply was not working with them, or appreciating the harm that they were suffering. We have to look at the quality but also at the nature of the court process for victims, and we continue to do that.
Matthew Patrick (Wirral West) (Lab)
I would like to ask about my constituent Ranem. When a family court told her that her son could not be taken out of the country, she believed it was safe for Ibrahim to be with his father, but it was not safe. Four years ago this week, he was abducted by his father and taken to Saudi Arabia, and Ranem has not seen him since. How can we ensure a better system, in which, when the courts make an order, ports know about it and enforce it, so that mothers do not have to go through what Ranem is going through?
Jake Richards
I thank my hon. Friend for raising this horrific case; I will meet him outside the Chamber to discuss it in more detail and see what we can do. This is all about sharing information between the family courts, the Home Office, border security and the Foreign Office. My hon. Friend the Victims Minister, the hon. Member for Pontypridd (Alex Davies-Jones), is responsible for the mutual recognition of orders across borders. This will be difficult in some types of countries, but we have to make progress on ensuring that protective orders carry weight across borders, because these cases often cross jurisdictions. I will meet my hon. Friend to discuss the specifics of this case, and I hope to assist in any way that I can.
Bradley Thomas (Bromsgrove) (Con)
Sir Julian Lewis (New Forest East) (Con)
David Reed (Exmouth and Exeter East) (Con)
The Lord Chancellor and Secretary of State for Justice (Alex Norris)
It is too early to draw conclusions about recall patterns associated with the progression model. However, we are closely monitoring recall trends and outcomes as further data becomes available, and we regularly publish data on releases and recalls in “Offender management statistics quarterly”, an accredited official statistics publication, on gov.uk.
Bradley Thomas
Offender management statistics show that, so far this year in England, there have been more licence recalls than prisoner releases. Will the Secretary of State acknowledge and admit that releasing criminals in order to recall them does nothing to address overcrowding or public safety?
Alex Norris
First of all, I would defend the principle that individuals who do not follow their licence conditions should be recalled to prison; that seems perfectly reasonable to me. The hon. Gentleman is right to highlight today that one in seven prisoners has been recalled. That is a sign that when our estate runs hot, we do not rehabilitate properly, and also a sign that significant licensing conditions have an impact.
Sir Julian Lewis
Does the Secretary of State accept that the recall figures would be even higher if it were not for the fact that, as reported in The Daily Telegraph today, it is taking the police an average of 39 days to arrest anyone who breaches his tagging conditions? Will he consider writing to us with his estimate of how many people who are released early will be recalled—during the next three months, for example?
Alex Norris
The right hon. Gentleman will know that, through the National Police Chiefs’ Council, we work closely with police forces to make sure that we share the right information, and have a two-way flow of information on who is leaving and what is happening when the police seek to enforce a recall. The statistics are available in the quarterly release, and they will be published in the usual cycle, when the data comes in.
David Reed
Devon and Cornwall police cover one of the largest force areas anywhere in the country. When someone released early breaks their licence in a rural part of my region, officers have to go and find them and bring them back. I am sure that the Secretary of State can understand the constraints, given the large geographical area and their limited resources. What assessment has he made of the cost to local policing of recalls under the early release scheme?
Alex Norris
First, I pay tribute to the work that Devon and Cornwall police do to keep the hon. Member’s constituents and everyone across Devon and Cornwall safe. We work very closely with chief constables on the support that they need, in the light of their experiences. He will know about, and I am sure will have welcomed, the support given by the Home Office during the preparation for the progression model. With that record investment for our policing, we will make sure that officers—rather than being behind desks, as they used to be during the previous Parliament—are out in the community, keeping his constituents safe.
Nick Timothy (West Suffolk) (Con)
Today, the Government will let another 650 criminals out of prison early, on top of 1,350 last month and tens of thousands under their original early release scheme. When the Justice Secretary launched this scheme, he promised that there would be a presumption that every released criminal would be tagged, but that is not happening. I have asked Ministers about this many times, in letters, written questions, oral questions and urgent questions, but to no avail. He talks about waiting for the release of data in January, but waiting for January is his choice, so I ask again: how many released criminals have been tagged, and if he will not tell us, will the public not conclude that he is just hiding his broken promise?
Alex Norris
The hon. Gentleman cannot have this both ways. I have heard him say, and I am sure the whole House tuned in to listen to him in recent podcasts, that he accepts—he never accepts it in the Chamber, but is more willing to do so in public—that we are in these circumstances because the Conservatives did not build enough prison places, and he also refused to rule out an emergency release scheme. I put this to him gently, because I like him: perhaps he is not quite walking the walk, though he is talking the talk.
On the presumption of tagging, we will in due course have the full data; that has been the position of successive Governments, including ones in which the hon. Gentleman had important roles. However, I made a commitment about the presumption of tagging, and I also made a commitment that this would be the biggest expansion of tagging in history, and I look forward to having a conversation about the data when it is available.
Jess Brown-Fuller (Chichester) (LD)
The Sentencing Act 2026 had a very clear aim, which was to stabilise the prison capacity crisis and to prevent victims from having to go through the ordeal of finding out that their perpetrator was being released not because they had served their time, but because there was a capacity crisis. However, the Government’s own capacity projections depend on both building capacity and keeping current cells operational. In the Budget, the MOJ’s capital for maintenance was reduced from £2.3 billion to £1.9 billion for 2029-30, but the cost of the maintenance backlog sits at £2.8 billion and cells are regularly being taking out of use. Can the Lord Chancellor confidently and categorically rule out, at the Dispatch Box, any more early release schemes before the end of this Parliament?
Alex Norris
I have been very clear that the point of the Sentencing Act was to move us on from having to have early release schemes, and I am more than confident that it will deliver that. The hon. Member makes a very important point about maintenance. She will know the success we collectively had with the Treasury over the summer in bringing forward investment to ensure that we can access places more quickly. However, she is right that, while we talk a lot about new places, we need to work really hard, through our investment programmes, to make sure that existing places stay online. As I say, I am confident in the work that we have done with the Treasury to ensure that.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
The Minister for Courts and Legal Services (Sarah Sackman)
The Crown court backlog stands at nearly 81,000 cases, with victims facing intolerable delays for justice. The Government are gripping this crisis in three ways: through record investment, which is lifting the financial limit on sitting days; through modernisation, including through the use of technology in our courts, for example, for virtual remand hearings; and, of course, through our Courts and Tribunals Bill, which will ease pressure on the Crown courts by ensuring proportionate allocation of resource, and redressing the balance between victims and defendants in our criminal justice system.
Luke Myer
The number of cases at the Teesside combined court centre has more than doubled over the last decade, and organisations supporting victims of violence against women and girls tell me that they are concerned about the length of time it takes to get justice. What steps will the Government take to address that, and will they ensure that the rape and sexual abuse support fund remains ringfenced for organisations that provide legal support to those victims and survivors?
Sarah Sackman
I thank my hon. Friend for his important question, which is a reminder that behind those 81,000 cases are real victims waiting for justice. That is why our investment of over half a billion pounds in victim support services is so important. There are also changes in procedures, such as ending the practice of floating trials for rape victims, so that they have certainty about when their trial will go ahead.
Manuela Perteghella (Stratford-on-Avon) (LD)
Does the Minister recognise the devastating impact of delays in serious sexual abuse cases? One such case, which was brought to my attention, took so long to reach trial that the defendant’s health deteriorated and they were ultimately found not fit to stand trial, denying the victim the opportunity to see justice done. Will the Minister consider prioritising cases where there is a risk that delays can prevent a trial from ever taking place?
Sarah Sackman
The hon. Lady eloquently describes the devastating human impact of those delays. Our judiciary looks to prioritise cases where there are circumstances such as the one she describes. That is exactly why we need to bring forward the reforms in the Courts and Tribunals Bill to end these unacceptable and intolerable delays.
Jessica Morden (Newport East) (Lab)
Can the Minister reassure my constituents, who are in their 90s and are the victims of an alleged large fraud, that the lengthy delays they have experienced so far are being addressed urgently so that they can finally see justice done, particularly in view of their age?
Sarah Sackman
Once again, my hon. Friend makes the case through the particularly compelling example of elderly victims of crime awaiting justice. When we say that justice delayed is justice denied, that is exactly what we mean. It is why we must pull every lever in investment, legal aid and sitting days, modernisation through the adoption of technology, and, of course, the reforms in the Courts and Tribunals Bill.
Alison Bennett (Mid Sussex) (LD)
In 2011, there were 230 firms and 781 accredited legal representatives undertaking mental health legal aid work. There are now only 148 firms and 383 representatives. The rate of pay for mental health lawyers has, accounting for inflation, gone down by 47% since 2008. Our criminal courts are full of people with mental health disorders, so a functioning mental health system must be part of the mission to tackle the courts backlog. Does the Minister agree that legal aid fees for mental health law work must increase to ensure that patients detained under the Mental Health Act 1983 have access to competent, publicly funded legal representation?
Sarah Sackman
I was very pleased to meet the hon. Lady and the heads of the Mental Health Lawyers Association, when we were able to discuss these issues. It is why, as a matter of priority when the Government came in, we invested in increases in fees for legal aid, criminal solicitors, prison lawyers and a forthcoming increase in fees for criminal barristers. But I accept that there is more work to do on the civil side, including in mental health. There are changes we can make through the transformation of the legal aid system and we are making that investment too, so that those providers are working within improved systems and not on the old legacy systems that have so hampered the delivery of access to justice.
Sarah Bool (South Northamptonshire) (Con)
Employment tribunal backlogs have reached record levels, with more than 70,000 open single claims and some hearings outside of London delayed until 2029. The Employment Lawyers Association estimates that the phased introduction of the Employment Rights Act 2025 over the course of the next year will increase the tribunal caseload by up to a third. Does the Minister accept the concerns of the legal sector that extending employment rights without the ability to enforce, due to court backlogs, is meaningless and making access to justice in these life-changing disputes a postcode lottery?
Sarah Sackman
I am proud of the work the Labour Government have done in introducing a once-in-a-generation piece of legislation increasing workers’ rights, but we must ensure that those rights are capable of enforcement. The backlogs in the employment tribunal are ones that I recognise, which is why reform will be necessary and why we are increasing capacity with additional judicial recruitment. We are also seeing additional challenges through the pressures that AI is bringing. Our response needs to be up to the task by ensuring that we introduce our own uses of responsible AI to meet that challenge.
Tom Hayes (Bournemouth East) (Lab)
The Minister for Prisons, Probation and Reducing Reoffending (Catherine McKinnell)
Protecting the public and victims is our top priority and probation staff now have access to the toughest range of measures ever to manage offenders, backed by over £700 million-worth of investment. To manage the most dangerous offenders convicted of sexual offences, we have introduced a strengthened supervision package, and probation officers can make use of restriction zones and GPS monitoring systems to keep the public safe.
Tom Hayes
I thank the Minister for agreeing to meet with some of my constituents, who I saw again yesterday morning. Will the Government’s inclusion of smart glasses and wearable recording technology in probation licence conditions apply to suspended sentences and community orders?
Catherine McKinnell
I share my hon. Friend’s concerns about the proliferation of smart glasses and other technology. He will be reassured to know that probation services can already prohibit offenders on licence from possessing and using such items, including smart glasses. I would be happy to meet with him, and I look forward to discussing further how we can ensure that the measure is truly effective and keeps the public safe.
Calum Miller (Bicester and Woodstock) (LD)
During the course of the Sentencing Act 2026, I asked the former Lord Chancellor to reassure me about the Probation Service and the use of tagging, following an incident where a constituent had been traumatised by her former partner’s being released under licence and pursuing her because the tags failed. If the Minister cannot reassure me now about the Probation Service vacancy rate and number of tag failures over the last 12 months, will she write to me providing that information?
Catherine McKinnell
I appreciate the hon. Gentleman’s concerns and would be happy to look further into the issues that he raises. As he knows, we are working incredibly hard to ensure we have the probation team and workforce that we need to keep the public safe. We have successfully onboarded 1,389 trainee probation officers. We are up on our targets and the data is going in the right direction, but we appreciate that we need to do more and are working hard to ensure we keep the public safe when offenders are released into the community.
Mike Tapp (Dover and Deal) (Lab)
The Minister for Prisons, Probation and Reducing Reoffending (Catherine McKinnell)
As my hon. Friend knows, we inherited a crumbling prison estate that was close to breaking point, with only 100 places remaining. The previous Government were just days away from reaching capacity, which is why we are working at pace to deliver an additional 14,000 prison places by 2031; we have already delivered 3,300. That stands in marked contrast to the 500 net places that the Conservative Government managed to add during 14 years in office.
Mike Tapp
I thank the Minister for the fantastic progress made. What steps is the Department taking to ensure that foreign national offenders are held in prison until they are deported, not released back into our society where they can reoffend or abscond?
Catherine McKinnell
There are currently thousands of foreign criminals in our prisons, at vast expense to the taxpayer, and that cannot be right when we need every space in our prisons. Within our first two years, the Government have increased foreign national offender returns by 41% compared with the last two years of the previous Government. I am sure my hon. Friend is aware that capacity in the immigration removals estate is within the remit of the Home Office, and we continue to work closely with the Department to ensure we increase the number of foreign national offenders being removed and keep the public safe.
Ben Obese-Jecty (Huntingdon) (Con)
I will push back gently on the Minister’s assertion of 3,300 new prison places, knowing full well that they were all approved under the previous Conservative Government. Across the adult male prison population, there are 3,669 places out of service due to everything from lack of fire safety measures to infestations of bedbugs and rodents. What are the Government doing to expedite the renewal of those prison places, some of which are out of service until as far out as 2034, given that prisoners are being released, including some today?
Catherine McKinnell
The hon. Gentleman is brave to highlight the record that his Government left, which is a backlog of repairs and a shortage of places. That is why we are working on delivering the largest prison expansion programme since the Victorian era. We are bringing forward £110 million of existing budgets so that we can deliver additional places faster. We are working to repair the perilous state in which the previous Government left some of our prison estate, and ensuring that we manage offenders in the community through an increased Probation Service, which the Conservatives also decimated.
Yuan Yang (Earley and Woodley) (Lab)
Luke Taylor (Sutton and Cheam) (LD)
The Minister for Prisons, Probation and Reducing Reoffending (Catherine McKinnell)
Reducing offending is vital for cutting crime and improving public safety, which is why we are working with partners across Government to improve outcomes through better access to treatment, education, employment and accommodation. We are also investing in probation and expanding intensive supervision courts for prolific offenders.
Yuan Yang
This week is the Union of Shop, Distributive and Allied Workers’ annual Respect Week to raise awareness of the impacts of retail crime. From working with Thames Valley police in my patch, I know that a significant proportion of shoplifting is done by a small number of shoplifters who are repeat offenders and is often linked to substance abuse. Local Reading charities like Change Grow Live do great work to combat that. What more can the Department do to support that work and tackle the cycle of reoffending?
Catherine McKinnell
My hon. Friend raises an important point: around 60% of crimes are committed by 9% of offenders. Prolific offending is clearly a challenge that we need to address. That is why we are expanding intensive supervision courts, which combine intensive rehabilitative sentences with close judicial oversight to reduce repeated offending and ensure punishment that works, as well as investing in rehabilitation. Reducing reoffending and relieving our prison capacity challenge is a key focus for us.
Luke Taylor
The outgoing chief inspector of prisons said last week that organised gangs are using drones to smuggle up to 10 kg of drugs into prison at a time, and claimed that up to a quarter of prisoners admit to having developed a habit in prison because drugs are so rife. The Independent newspaper reported Charlie Taylor saying that many prisoners are leaving custody “doomed to come back” because they are not being rehabilitated. He claimed that the
“public are not being protected properly”
when prisoners are freed because their risk has not been reduced. In the year to March ’26, drugs were discovered in UK prisons 26,630 times—up by nearly a third from five years ago. Does the Minister agree that those in prison, and particularly those in for drug-related offences, stand little chance of turning their lives around and reducing their chances of reoffending on release if they are still routinely exposed to the evils of drugs?
Catherine McKinnell
The hon. Gentleman makes an important point and a very clear case for why we have to deal with the prison system we inherited. The system has very deep and complex pressures, some of which he has highlighted: drones, security on the estate, drugs, and ensuring that we can invest in rehabilitation. All those things are made more challenging while our prison system is running at capacity, due to the system we inherited. However, they also make us more determined to achieve the outcomes for which he quite rightly advocates.
Steve Yemm (Mansfield) (Lab)
The Minister for Courts and Legal Services (Sarah Sackman)
The Ministry of Justice has made significant progress on the responsible utilisation of AI in innovation within the legal services sector. I will offer two examples: first, our launch of the legal services advisory AI growth lab, which brings together Government, regulators and innovators to accelerate responsible AI adoption in legal services; secondly, our commitment to continue to fund LawtechUK, so that we can accelerate the adoption of AI usage across the country. That is what we mean by growth in every postcode.
Steve Yemm
I thank the Minister for her answer. The Labour Government inherited record backlogs in the Crown court system, with victims waiting years and years to access justice. What more could the Government be doing to utilise AI and technological solutions to get the courts moving quicker to improve access to justice and, crucially, to deliver justice for victims?
Sarah Sackman
I thank my hon. Friend for an excellent question. I am passionate about using technology and AI responsibly to address the problem of delays in our criminal courts. We are using AI transcription to improve open justice; we are using AI case readiness tools to help our judges to ensure that cases are ready to be heard on time; and we are using AI responsibly in the scheduling of cases. All those things will ensure greater efficiency over time in our courts.
Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Justice (Alex Davies-Jones)
The Government are taking end-to-end action to transform the justice system’s response to violence against women and girls in a truly cross-Government effort. Our strategy sets out how we will achieve this by preventing these crimes, pursuing perpetrators and supporting victims.
Rachel Blake
I thank the Minister for setting out comprehensively the Government’s end-to-end approach. The Minister will know all too well the evidence around how difficult it is for women to bring forward sexual assault and sexual violence cases. Can the Minister explain how the Government will make courts safe for victims and survivors so that they are not subject to unfair treatment in court?
Alex Davies-Jones
I thank my hon. Friend for raising this very important and timely question. I want to be clear that rape myths and stereotypes have no place in our courts and that victims should never ever feel as though they are the ones on trial. Through our Courts and Tribunals Bill, which is in the other place, we are taking action to stop rape myths from being weaponised in court by ensuring that any previous allegations of rape made by a victim or the fact that they have claimed compensation cannot be unfairly used as evidence in favour of the accused. We are also introducing independent legal advisers for all adult victims of rape and are advancing with our plans for specialist rape and sexual abuse courts for victims.
Kirsteen Sullivan
Eighteen months ago a woman in my constituency was assaulted at a local train station, but with limited CCTV footage no charges were brought forward. This trauma was compounded by a lack of victim-centred support from British Transport police, with my constituent left feeling belittled and ignored. As we approach this year’s 16 days of activism against gender-based violence, what discussion is the Minister having with the Department for Transport to ensure that the voices of women and girls are heard and not dismissed?
Alex Davies-Jones
My hon. Friend raises a very important point. Victims should be listened to, believed and supported, and the Government are committed to ensuring that every single victim of sexual offending feels heard, supported and able to access the information and specialist support services that they need. As part of our flagship strategy to tackle violence against women and girls, we are committed to preventing these awful crimes, as I have said, and this is a commitment that we are signed up to across Government, including with the Department for Transport. I regularly meet with my counterparts in that Department and others to ensure that the Departments are joined up in our approach to tackle these crimes wherever they exist.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
This Government’s early release scheme has put 80,000 criminals back on our streets. They have gone on to commit crimes again and again. Last year, more serious violent and sexual crimes were committed by ex-offenders than in any previous year on record, and around 40 prisoners a day now leave prison homeless. If the Government will continue to release unrehabilitated criminals on to our streets, why have they allowed 11 probation hostels—the very places meant to supervise them—to close under their watch?
Alex Davies-Jones
I will take no lectures from the Conservative party, who left us in this position in the first place, with the result that we have had to make these difficult decisions to keep all our citizens safe. The Government remain steadfast in our commitment to halve violence against women and girls, and the safety of victims and the communities we represent remains central to release decisions. Any offender released from prison will be controlled under strict licensing conditions in the community. We are contacting every affected victim where possible and investing £18.9 million in additional support, including a new national helpline, which I had the privilege of visiting in person last week.
Clive Jones (Wokingham) (LD)
Domestic violence campaigners and charities, including Kaleidoscopic UK, have warned that post-separation abuse is too often missed by the justice system. How many more victims must be failed before the Government take action to ensure that post-separation abuse is properly recognised across policing, prosecution and the courts?
Alex Davies-Jones
The hon. Gentleman is right to raise the issue of post-separation abuse. I hope he will have heard the answer from my hon. Friend the Minister responsible for sentencing and family courts about our strategy to tackle this issue. Domestic abuse protection orders are a flagship policy of this Government, which we are rolling out nationally later this month. They are our strongest ever protective order, and I will happily work with him, stakeholders and victims and survivors to see what more we can do to strengthen support for those experiencing post-separation abuse.
Nick Timothy (West Suffolk) (Con)
The Russell Brand verdict surprised nobody, and all those who allowed his behaviour to go unchecked should reflect on their own culpability. The truth is emerging also about Mohamed al-Fayed; David Walliams remained anonymous for years thanks to an injunction; and there are many similar cases. Following the attack by Brand’s barrister on journalists who reported similar allegations concerning different victims before the case began, what will the Government do to prevent these abuses of process, and stop the abusive injunctions and super-injunctions, which stop scrutiny, accountability and the work of the free press?
Alex Davies-Jones
I thank the shadow Secretary of State for raising these important issues. All the perpetrators he named are individuals whom the Government have concerns about, and we are working with many of the victims and survivors directly. Just yesterday, I met yet another victim of Fayed who had come forward to me with serious allegations and concerns that the processes have not been appropriately followed.
I reassure the shadow Secretary of State that the Government are determined to do all we can to ensure that anyone who is a perpetrator of these crimes is held to the full force of the law. That includes looking at what we can do regarding injunctions. He will know that applications to the courts for privacy injunctions are considered independently, and it would not be appropriate for the Government to comment; however, we are concerned about their use. My hon. and learned Friend the Minister for Courts and Legal Services is looking at what more we can do on strategic lawsuits against public participation injunctions—we have already taken action on non-disclosure agreements for sexual abuse cases, as the hon. Member will know—and to prevent abuse of process throughout the judicial system.
Nick Timothy
I thank the Minister for that answer. Sarah Steele was strangled and allegedly sexually assaulted by a US fighter pilot based at RAF Lakenheath. Like in several other cases, some involving child abuse, jurisdiction was wrongly handed to the Americans, with defendants facing a jury of US service personnel. The NATO treaty and the law say that in such cases, our police, prosecutors and courts should be in charge. Victims report charged suspects being free to travel without restriction, dubious acquittals, lighter punishments, and perpetrators potentially avoiding the sex offenders register. I have written to the Justice Secretary about this several times, and so far the replies have been quite general. Will the Government legislate so that any decision to surrender jurisdiction must be approved by an individual Minister?
Alex Davies-Jones
The case at RAF Lakenheath, and others that have subsequently come to light, are extremely concerning. As the Minister responsible for international justice and the rule of law, I take the issue extremely seriously. Decisions on jurisdiction are made by the relevant police force in response to the claim by a visiting police force, and should be taken in accordance with the Visiting Forces Act 1952. However, following that case, the chair of the National Police Chiefs’ Council has written to all forces to remind them of their responsibilities under that Act. We must ensure that such cases are heard in the correct jurisdiction. I reassure the shadow Secretary of State that the Foreign, Commonwealth and Development Office and the Ministry of Defence are also engaging with the United States on the matter. I will happily work across party lines and across Government Departments to see what more we can do to protect victims.
Jess Brown-Fuller (Chichester) (LD)
It is rare that we can achieve cross-party consensus in this place, but I think we have consensus that no party here would want to see rich and powerful men abusing our justice system to silence the voices of victims of violence against women and girls. Eleanor de Freitas took her own life in 2014 after being privately prosecuted for allegedly making a false rape accusation. The UN Committee on the Elimination of Discrimination against Women found that the UK violated Eleanor’s rights. Will the Minister please consider Eleanor’s law to ensure that prosecutions concerning allegedly false reports of rape and sexual violence can be brought only by public prosecuting authorities?
Alex Davies-Jones
I will certainly look into the case of Eleanor’s law and do all I can to prevent such a situation from happening again.
Jonathan Davies (Mid Derbyshire) (Lab)
The Parliamentary Under-Secretary of State for Justice (Alex Davies-Jones)
My hon. Friend is right to recognise what more we can do to support victims of violence against women and girls. We are investing £550 million in support services over the next three years. Victims seeking support can find local service information through our victim and witness information website. Under the victims code, all victims are entitled to a referral to victim support services to aid their recovery.
Jonathan Davies
Victims of coercion, abuse and assault have been very much in the news recently, but there are many such victims whose stories will never reach the headlines, including a constituent who came to see me. Her case went to court and the defendant was found not guilty, as is the case in many such prosecutions. She would like to get the transcript from that prosecution to help her process what happened and to access support services, but she has been quoted many thousands of pounds to access that transcript. Will the Government look to make these transcripts cheaper—or, even better, free—so that people in such circumstances can get the help they need?
Alex Davies-Jones
I thank my hon. Friend for raising this important point. It is vital that victims and survivors get closure from their cases. Victims of rape and other sexual offences, and bereaved families of homicide, can access their free sentencing remarks transcripts. Our ambition is that, from spring 2027, we will extend this free provision to all victims in Crown court cases, and we are exploring how AI can provide transcripts more quickly and cost-effectively while representing a true and accurate reflection of the case.
Dr Danny Chambers (Winchester) (LD)
My constituent, Mackenzie, who is a pupil at Peter Symonds sixth-form college in Winchester and is here in the Gallery today, has been campaigning really hard on the issue of catcalling and the intimidation and abuse of women in public spaces. Would the Minister mind laying out what support we are giving, and what we are doing to address the intimidation of women in public spaces?
Alex Davies-Jones
I thank the hon. Gentleman’s constituent and welcome her to this place. I applaud her campaigning on this really important issue. The Government are determined to tackle misogyny wherever it exists, and the hon. Gentleman will be aware that, in the Budget, the Chancellor announced £15 million of support for the Minister for Women and Equalities’ misogyny taskforce to tackle these issues head-on. Earlier today, I had the privilege of attending the first cross-departmental ministerial taskforce on this issue, looking at how best we can tackle misogyny wherever it occurs, because we know that misogyny is the issue that radicalises and causes extremism in the issue of violence against women and girls.
Mr Paul Foster (South Ribble) (Lab)
The Lord Chancellor and Secretary of State for Justice (Alex Norris)
Since the last Justice orals, I have sworn my oath as Lord Chancellor to uphold the independence of the judiciary and mark the opening of the legal year. We continue to clear up the mess left by the previous Conservative Government as we build a modern justice system, delivering the fast and fair justice that victims deserve. Our landmark Courts and Tribunals Bill has had its Third Reading in this place and is progressing in the other place, and we continue our action for victims by rolling out specialist rape and sexual offence courts to improve their experience of the justice process.
We are launching Respond, the latest phase of our Enough campaign, and we have announced legislation that will help thousands of young adults who lack mental capacity to benefit from their child trust fund savings. I had the honour of representing the UK at the United Nations General Assembly, reaffirming our commitment to the international rule of law. Let me also take this opportunity to congratulate the UK’s candidate for the International Court of Justice, Professor Dapo Akande, who has been elected to the Court; the UK is back on the world stage and I wish him well in his new role.
Mr Foster
Despite the Planning Inspectorate recommending refusal, a third prison is under construction at Ulnes Walton in my South Ribble constituency. Unfortunately, the local community has been hugely impacted by issues around access, highway safety and vehicle movements—the very reasons refusal was originally recommended. Will the Minister please meet me as a matter of urgency to discuss how we can develop solutions for the benefit of the Ulnes Walton community?
Alex Norris
The importance of new prison places in this country has been well rehearsed over the last 45 minutes. Nevertheless, I believe strongly that we must be good neighbours, both in the operation of prisons and in their construction, and I also feel very strongly about our liability through our contractors. I believe that I am already planning to meet my hon. Friend on another important matter, and I will ensure that we talk about this point too, because I want to make sure that we are good neighbours with his constituents.
Dr Kieran Mullan (Bexhill and Battle) (Con)
The ability of powerful men to exert control over and exploit women is again at the forefront of our minds. But it is not just rich and powerful men: we recently debated in this place a petition by Paris Shears, who campaigns against coercive and controlling behaviour. During the debate, the Minister refused to give Paris the common courtesy of explaining whether those convicted of coercive and controlling behaviour are eligible for Labour’s early release programme. Can the Justice Secretary show proper respect to Paris and other victims and at least answer that question now?
Alex Norris
I am slightly surprised that the hon. Member has taken this tack. He will know that, alongside the announcements we made in the summer, we published precisely which offences were in scope and not in scope for the progression model, so all I can suggest is that he refers to that, as he could have done for the last six weeks.
Dr Mullan
It is obvious that the Minister does not want to put on record and own up to the fact that those convicted of coercive and controlling behaviour are, according to our understanding, eligible for early release. [Interruption.] The Minister says from a sedentary position that I should read; I will pass it on to Paris that he feels she should have just read. The public want clarity from Ministers on these complex matters, and it is right for me to ask this question. How can the Minister justify releasing those convicted of coercive and controlling behaviour early when we know that perpetrators who go on to commit offences like rape often start out with lower offences, like common assault, coercive and controlling behaviour and grooming. We know the patterns that emerge over time. Surely we should tackle this at the first instance and not let these people out early.
Alex Norris
I am slightly surprised that the hon. Gentleman thinks that making a commencement order for legislation in this place is not putting something on the record. I find that hard to understand. He asks how we got into this situation. I gently point him towards the hon. Member for West Suffolk (Nick Timothy), the Leader of the Opposition and the shadow Minister for policy development, the hon. Member for Harborough, Oadby and Wigston (Neil O’Brien), all of whom admitted that they did not build enough places. He talks about exemptions, but I note that their early release schemes have no exemptions.
Patrick Hurley (Southport) (Lab)
The Minister for Prisons, Probation and Reducing Reoffending (Catherine McKinnell)
We are making good progress. Around 3,300 places out of our target of 14,000 have been delivered since we took office, including a 170-place refurbished wing at HMP Norwich, which opened in June this year, bringing these places into the 21st century. We are also bringing forward £110 million from existing budgets to deliver additional prison places even faster. We are determined to clean up the mess that the previous Government left us and to build a criminal justice system that is fit for today.
Sarah Pochin (Runcorn and Helsby) (Reform)
Alex Norris
The hon. Lady will have heard me say two things in this session: first, that there is for the first time a presumption on tagging and, secondly, that we will release full data so that Parliament can scrutinise it in the normal way. I suggest that she waits for that release.
Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)
Catherine McKinnell
As my hon. Friend will know, the contract with Serco was entered into by the previous Government. Serco’s KPI measures include whether installation visits take place within contractual timescales, but being recorded without a tag does not necessarily indicate failure; it may be that the individual has returned to prison, or they may still remain within the installation window. That is why we regularly publish the statistics to ensure that they accurately reflect the situation. I will take her other points on board.
Luke Taylor (Sutton and Cheam) (LD)
Mr Speaker
Order. The last question was very long. This is topicals. I have to get all colleagues in, and I am struggling. To help me get through, the questions have to be short, as do the responses from Front Benchers.
The Minister for Courts and Legal Services (Sarah Sackman)
The Government recognise the profound financial and psychological impact that SLAPPs have on individuals, and their corrosive effect on our democracy and public discourse. As the hon. Gentleman will know, we commenced the Economic Crime and Corporate Transparency Act 2023, and we remain committed to introducing legislation. I recently met the right hon. Member for Maldon (Sir John Whittingdale), and am grateful to him for the constructive discussions that we are having. I will set out the Government’s position on Second Reading of his private Member’s Bill on 27 November.
Catherine Fookes (Monmouthshire) (Lab)
Sarah Sackman
I would be glad to meet my hon. Friend to discuss Sophie’s tragic case. The Government agree that the law and procedure on unfitness to plead require updating. We are actively considering how best to take forward the Law Commission’s proposed changes, including modernising the legal test for unfitness to plead and the issue of whether courts should have a broader, more flexible range of disposals when dealing with such cases.
Tom Gordon (Harrogate and Knaresborough) (LD)
Alex Norris
The hon. Gentleman will not be surprised to hear that when any decision is taken across Government, it is done in the round and we have those conversations with our colleagues in other Departments. Giving local leaders the power to make that decision, if they want it, is important and, of course, if people do not follow it, there ought to be sanctions.
Tracy Gilbert (Edinburgh North and Leith) (Lab)
The Parliamentary Under-Secretary of State for Justice (Jake Richards)
These applications and surrogacy issues raise complex issues around ethics, law and medicine. We have not had those concerns raised by HMCTS, but I am happy to meet my hon. Friend and campaigners to discuss it in more detail.
Vikki Slade (Mid Dorset and North Poole) (LD)
Last week the Justice Committee heard harrowing testimony about the tragic deaths of 14-year-old Ruth Szymankiewicz, 15-year-old Gabriel Santer and 23-year-old Matthew Caseby from their parents. These are all utterly tragic cases, but only one of them led to a prevention of future deaths case, and even then there is no enforcement of them. Will the Minister commit to reviewing the situation so that when the words “lessons learned” are said, families actually believe them?
The Parliamentary Under-Secretary of State for Justice (Alex Davies-Jones)
I welcome this question and the important point raised by the hon. Lady. I welcome the work that the Justice Committee is doing in this space to look at the prevention of future deaths reports to see what more we can do to ensure they are enforceable, responded to and acted upon. The Government are determined to ensure accountability at all levels on prevention of future deaths reports, and I look forward to laying out my position to the Committee soon.
Chris Vince (Harlow) (Lab/Co-op)
Catherine McKinnell
I pay tribute to our hard-working and dedicated probation staff, including those who bravely intervened yesterday at Manchester magistrates court to tackle an individual with a knife. Probation staff perform vital work in our communities, we owe them a debt of gratitude, and we need more to come and join the team. While we continue to exceed our recruitment targets with almost 1,400 recruited last year and a target of 1,300 in 2026-27, my message is, “Come and join this important service to protect the public and keep communities safe.”
David Davis (Goole and Pocklington) (Con)
After the sexual predator Russell Brand was convicted last week, the newspapers reported on an injunction brought by him and Jemima Goldsmith against Miss Berki, aimed at stopping antisemitic harassment by Miss Berki. It included a clause, however, that suppressed free speech. Jemima Goldsmith tried to relax that in December, and Brand stopped her. He is still stopping her from doing that. She is a victim of his violence. Can the Secretary of State look at how a convicted criminal can suppress free speech and continue to embarrass his victims?
Alex Davies-Jones
I want to place on the record my thanks to all the victims of Russell Brand for speaking out so bravely, some of them at huge personal cost as well—that is important for this House to recognise. The right hon. Gentleman is right to raise the issue of super-injunctions, injunctions and SLAPPs, as we have previously heard, being used by powerful perpetrators to hide their abuse in plain sight. I am keen to work with him and anyone else in this House to ensure that these are not abused or taken for granted. He will know, however, that some of these injunctions are independently assessed; it is not for the Government to comment on them. However, I am clear that any action we can take to prevent violence against women and girls should be taken.
Connor Naismith (Crewe and Nantwich) (Lab)
Sarah Sackman
I understand that my hon. Friend is due to meet the Secretary of State to discuss this very issue. It is vital that we support domestic abuse victims with legal aid through the court process. We have already taken steps to extend the equity disregard in the legal aid means test, which means that £100,000-worth of the value of a victim’s home is not considered as part of that eligibility test. It is also the case that the Legal Aid Agency can discount the value of capital that cannot realistically be accessed because of that very abuse. I look forward to discussing this matter with him further.
Sir John Hayes (South Holland and The Deepings) (Con)
There is a close association between domestic violence and animal cruelty. My constituent Annette Bramley’s daughter Holly was murdered by a wicked husband. The Government are working on this, but may I ask them to meet me, Annette and others to look at what further steps can be taken to establish that link and do something about it?
Alex Davies-Jones
I thank the right hon. Gentleman for raising this. Along with my good friend the Member for Newport West and Islwyn (Ruth Jones), I have been looking at what more we can do here. He is right that there is a correlation between animal abuse and domestic abuse, and abuse of individuals in general, and I would happily meet him to see what more we can do to tackle this.
Henry Tufnell (Mid and South Pembrokeshire) (Lab)
Probation services play a vital role in protecting the public, reducing reoffending and supporting rehabilitation. As the UK and Welsh Governments review probation governance in Wales, can the Lord Chancellor update the House on how he is working with the Welsh Government to better integrate probation with devolved services, to strengthen public safety in communities such as mine in Pembrokeshire?
Alex Norris
I met with the Welsh Government yesterday, and we discussed probation. My strong view is that if we are to get the best outcomes for individuals when they leave prison, we need those local services. That might be probation services in this case, but it is also about local authority services, health services and education, to get the best outcomes in exactly the spirit my hon. Friend talks about.
Ayoub Khan (Birmingham Perry Barr) (Ind)
Birmingham and Solihull coroner’s service is still not meeting the expectations of its residents. Will the Minister meet me to see how we could improve the service, which is impacting so many communities?
Alex Davies-Jones
I am aware of issues with coronial services across England and Wales. I regularly meet the chief coroner to discuss this and what more we can do to reduce the backlog. Our coroners perform vital services in their communities, and I want to reassure the hon. Member that the Government are committed to reducing this backlog and giving coroners the support and guidance they need to carry out their vital work.
Andrew Ranger (Wrexham) (Lab)
My constituent Tom Hughes, the owner of Red Dragon’s Vault in Wrexham, has repeatedly had his shop targeted by antisocial behaviour, with objects thrown at the window and customers being subjected to abuse. Rather than responding with anger, he is responding with hope, working with local youth organisations to support young people and provide them with more activities and opportunities. Does the Minister agree that while we must be tough on those committing antisocial behaviour, we must also be tough on its causes, such as the lack of youth opportunity?
Jake Richards
I am old enough, just, to remember a former Labour Prime Minister talk about being tough on crime and tough on the causes of crime. That informs our approach to youth justice. We set it out in the White Paper published earlier this year, and we will be making progress on that issue in due course.
Dr Neil Shastri-Hurst (Solihull West and Shirley) (Con)
Mr Speaker, ask any legal practitioner and they will tell you about the parlous state of our court estate. Can the Minister set out the estimated number of sitting days that have been lost since the last election as a result of emergency repairs across the HMCTS estate?
Sarah Sackman
As the hon. Member will know, we have uncapped the number of sitting days, and it is very rare for sitting days to be lost due to disrepair. But he is absolutely right: the crumbling courts that we inherited were a symbol of a justice system very much degraded by the Conservatives. I am glad that we are reinvesting £287 million in the capital budget, with brand new courts in Blackpool, London and Reading, and we are starting to see our justice system restored to health.
Janet Daby (Lewisham East) (Lab)
It is not right that children who were once in foster care, children’s homes or semi-independent living accommodation find themselves at the hands of the criminal justice system. In fact, over 50% of children in prison were once being cared for by the local authority. What are the Government doing to identify care leavers and care-experienced people in prison, and how are they working to reduce their reoffending and offending in the first place?
Jake Richards
My hon. Friend has raised this issue consistently and has done some really important work on it, both from the Back Benches and in government. In the next few weeks we will publish a protocol on exactly this issue. Before we do so, I should meet her to discuss it in more detail, and I will do so.
Mr Lee Dillon (Newbury) (LD)
Last year the British Horse Society recorded nearly 3,000 road incidents involving horses. However, because horses are classed as property, judges and courts cannot reflect the emotional distress that horse riders have when they lose their animal. Will the Secretary of State meet me to discuss how we can change the law to better reflect the needs of victims?
Alex Norris
The hon. Member raises a really important issue. I have taken part in the Dead Slow campaign with the British Horse Society on two occasions. We are a nation of animal lovers, and I do not think that people would see things quite in the spirit that the law always does, so I am interested in having a conversation with him and the BHS to see what might be done.
Sarah Smith (Hyndburn) (Lab)
I strongly welcome the steps that this Government are taking to help young people who lack the capacity to access their child trust funds. Can the Minister outline how many people he thinks that will benefit? What value will that have to families?
Jake Richards
We simply would not have got to this point without the almost constant championing of this cause by my hon. Friend, so I am very grateful to her. We estimate that up to 120,000 families will benefit from the changes that we are bringing about with my hon. Friend the Exchequer Secretary to the Treasury. The average amount is £2,600, which will have a transformative effect for many families—I know that for one family in my constituency it means that they can go on holiday for the first time in three years. This is a really important step that this Labour Government are taking.
Sir Ashley Fox (Bridgwater) (Con)
Victims of crime have asked the Lord Chancellor to publish criminal conviction data by nationality. Will he do so?
Alex Norris
The hon. Gentleman knows that that has been a point of discussion in this place on multiple occasions. We are looking very closely at the data to ensure that we are getting it right. In conjunction with the Home Office, we want the fullest amount of data to be available so that we can have a proper political conversation about what it tells us.
Perran Moon (Camborne and Redruth) (Ind)
When 73% of those released from prison with no home to go to go on to reoffend, the system is clearly setting people up to fail. It is vital that we attack the social and economic causes of reoffending and help people to rebuild their lives. What cross-departmental discussions have Ministers had about improving access to social housing, mental health support and drug and alcohol dependency support?
Catherine McKinnell
Many discussions are ongoing. Ending rough sleeping and tackling homelessness is a key priority for the Prime Minister, as he has said. Those who are homeless on release from custody have reoffending rates that are nearly double those of people released into accommodation. We are already working on the national plan to end homelessness, but we are working at pace on a cross-Government basis to ensure that we can legislate for a duty to collaborate and that we tackle the scourge that is homelessness both for those leaving prison and re-entering the community and across the board.
Ben Lake (Ceredigion Preseli) (PC)
Will the Minister meet me to discuss the possible addition of assault in cases of grievous bodily harm to schedule 5 to the Criminal Justice Act 2003? That seems to be the only pathway to justice for a constituent of mine who, despite being the victim of a brutal attack, saw the case against their alleged assailant withdrawn just days before trial because of the erroneous decision of the Crown Prosecution Service not to offer any evidence in support of prosecution.
Alex Davies-Jones
I am so sorry to hear of the situation that the hon. Gentleman’s constituent finds themselves in. I would be delighted to meet him to discuss this issue and to see what more we can do to support victims in that situation.
Deirdre Costigan (Ealing Southall) (Lab)
I recently visited Central Jamia mosque in Southall Green, where I heard about delays in the coroners courts system. In particular, the lack of post-mortem scanning machines locally means that people need to drive to Oxford, causing further delays. What work is the Minister doing with the Muslim community and other faiths to allow them to bury family members according to their religion?
Alex Davies-Jones
I thank my hon. Friend for raising this very important issue. I know that this matter concerns Members across the House and outside this place. I have met representatives from the Muslim and Jewish communities to see what more we can do to help them to bury their loved ones in a timely manner while working with coroners to expedite inquests, and I am happy to work across parties and across faiths to see what more we can do to make that a reality.
Dr Danny Chambers (Winchester) (LD)
The sentencing of Russell Brand yesterday for his terrible violence against women has had people reflecting on a book he wrote several years ago, in which he said that he repeatedly lured his dog upstairs and kicked it down the stairs again. That is just the latest high-profile example of violence against animals being an indicator of someone who will go on to commit violence against women and children. I know that the Minister cares very much about this issue, so will she meet me and relevant stakeholders and researchers to discuss it?
Alex Davies-Jones
I happily extend to the hon. Gentleman the invitation I gave previously to the right hon. Member for South Holland and The Deepings (Sir John Hayes), and the commitment I made to look at what more we can do regarding the correlation between animal abuse and physical abuse.
Sonia Kumar (Dudley) (Lab)
Over 60% of people in prison have speech, language or communication needs. Effective rehabilitation must be holistic. To prevent reoffending and provide support, it is paramount that we address not only the offending behaviour, but the underlying communication, health, education and social needs. What steps is my hon. Friend the Minister taking to ensure that access to speech and language therapists and other allied health professionals is available in prison?
Catherine McKinnell
My hon. Friend is an avid campaigner, and with her health background, she is well placed to understand the value of the allied health professionals right across our society. That applies to prison in the same way. Obviously, there is a commitment that any person in prison will have the same access to treatment as they would if they were on the outside, which is vital if we are going to achieve the outcomes we want: reducing reoffending by giving people purposeful activity, education opportunities and the ability to gain skills, so that they can lead a more fulfilling life on the outside. I will certainly take away my hon. Friend’s suggestion about what more we can do.
Brian Leishman (Alloa and Grangemouth) (Lab)
Earlier today, I heard from the head of the Prisoners’ Education Trust about the chaos and cuts caused by new education contracts. In Scotland, scandalously, all prison education is delivered by a private company owned by a US-based venture capitalist. Surely it is time that we take that service in-house for prisons across the United Kingdom and prioritise rehabilitation, not private sector profits.
Catherine McKinnell
My hon. Friend is right that education in prison is vital to rehabilitation; it provides hope for an alternative future, and engagement with education is proven to reduce reoffending by up to nine percentage points. We are determined to modernise the prison education, skills and work system. We want a joined-up system that maximises opportunities to support prisoners to progress. We recognise that there have been challenges with rising costs, and we are working at pace to ensure we deliver an education system that works for all.
China: Breach of UK Parliamentarians’ Data
(1 day, 12 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
(Urgent Question): To ask the Secretary of State for the Home Department if she will make a statement on reports that the phone records and financial information of parliamentarians sanctioned by the Chinese Communist party were obtained by individuals commissioned by representatives of the People’s Republic of China.
The Minister for Security (Dan Jarvis)
Before I begin, let me say that my thoughts and condolences—and, I am sure, those of the whole House—are with those who were injured and killed in the horrific attack in Poland on Saturday.
I thank the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) for his question, and for the opportunity to respond to it today. While I appreciate that there has understandably been significant personal interest in Daily Mail reporting about alleged activity that took place between 2018 and 2023, hon. Members will recognise that I am rightly limited in what I can say in relation to intelligence matters. I can say that there is an ongoing FBI investigation, as well as a live Interpol arrest warrant, but it would not be appropriate for me or any member of this Government to comment on the specific allegations that have been made. We must not risk prejudicing a live national security investigation.
What I can also say is that this Government, and I personally, take the safety and security of Members of both Houses extremely seriously, and I understand the concerns that have been raised. For that reason, I have ensured that my officials are available to meet any right hon. or hon. Member affected by this issue. Earlier this year, alongside the director general of MI5, I held a cross-party meeting with representatives of political parties to highlight the threat of political interference and the guidance and support that is available. This includes advice provided by the National Cyber Security Centre and the National Protective Security Authority setting out a range of measures that Members of both Houses and their offices can take to protect themselves, their data and their devices from a range of different threats, including espionage. Transnational repression, espionage and political interference will never be tolerated, and anyone responsible for conducting it will face the full force of the law.
This Government have brought forward robust measures to defend our country and our democracy from state-backed threats, including from China. That includes launching the political interference and espionage action plan, running training for frontline police officers to better spot, understand and respond to state threat activity, and investing an extra £600 million in our intelligence services to increase their ability to detect and disrupt state threats. We do all of that, and much more besides, because national security is our first duty and because we will never tolerate attempts to undermine the security of our nation or of those who serve, whether in this place or in any other part of our democracy.
Sir Iain Duncan Smith
While I have huge respect for the right hon. Gentleman, I must say that he did not really answer the question. It is not about state security, but individual Members of Parliament who are being attacked and from whom information is being taken so that they can be attacked in future. That is the question we are asking. I understand that Mr Miller, who was originally arrested in an FBI operation for trying to sell arms via a source through to China, revealed that an ex-detective of Scotland Yard, Keith Hunter, had been asked to compile information on the financials and personal telephone calls of certain Members of Parliament, all of whom it appears were sanctioned already by the Chinese Communist party. The bit that it is vital that the Minister answers is that when Mr Hunter was about to do this, or was doing it, Mr Miller told him that China already had the information.
My question, therefore, is what do the Government know about what China has on us, and how much more is China trying to gather? It is important that these questions are answered, because it is not just us who are sanctioned, but our family members too. It is about their security—one of mine lives abroad—and it worries me. What did the Government really know about this? Why have they not spoken to each of us as individuals to explain what was happening? They could have done it under guidance with security, but none the less, they have not done it. Since Sunday, not one single security individual has attempted to contact any of us about the story in the Daily Mail, which is now being read by the British population. Will the Minister answer the question? As sanctioned individuals, with the freedom of speech that we exercise in this House, and under the protection of Mr Speaker, I simply say that this is not good enough. Why are we not being talked to? Why were we not taken to one side and informed?
Dan Jarvis
The right hon. Gentleman has been consistent in raising concerns about these and associated matters for many years, and we have had numerous exchanges to that end across this Dispatch Box. I have huge respect for the consistency with which he brings forward these issues. He is, though, a very experienced Member of this House, and he is inviting me to provide a level of operational detail that he will understand, and that right hon. and hon. Members and Mr Speaker will understand, I am not able to provide. To do so, or to speculate about the actions of individuals under investigation, runs a very significant risk of prejudicing ongoing investigations or subsequent proceedings. It would be recklessly irresponsible for any Security Minister to come to this House and run that risk. I hope the right hon. Gentleman will understand that, even if he does not like the response.
I reiterate to the right hon. Gentleman what I have said to him previously and what I said in my earlier remarks: my door is always open to any parliamentarian who wants to take the opportunity to discuss these matters privately and in an appropriate forum that will enable a discreet exchange of views. I know that you yourself, Mr Speaker, take these matters incredibly seriously.
The Government have been absolutely consistent in their stated aim to ensure that no malign actor or actors can successfully interfere with our democratic processes. I pay tribute to the last Government and the then Security Minister, the right hon. Member for Tonbridge (Tom Tugendhat), for their important work in setting up the Defending Democracy Taskforce, but this Government have built on that work and invested in those procedures. The taskforce is the fulcrum that brings together the different parts of the national security machinery to ensure that our response is robust and proportionate. This Government will make sure that we have a proportionate response to the threats that we face, and that democratically elected parliamentarians here and those in the other place can go about their business without fear or favour.
Emily Darlington (Milton Keynes Central) (Lab)
I appreciate that the Minister cannot talk about security matters, so I shall try to broaden the question, and will hopefully receive a clearer response.
It is obvious that agents of the Chinese Government, and the Chinese Government themselves, are targeting pro-democracy campaigners, whether they sit in Parliament, are citizens of Britain or are in Hong Kong. Just this week we saw that Joshua Wong had been sentenced to 10 years in prison for standing up for democracy in Hong Kong, and we have seen the transnational repression of British national overseas passport holders and UK citizens here on our streets. Will the Government summon the Chinese ambassador to talk about the case reported in the Daily Mail and the transnational repression, as well as calling for Joshua Wong’s release, which they did for Jimmy Lai? Will they sanction those responsible for the national security law prosecutions, as the United States has? Will the Minister be able to tell Parliament what further consequences will follow if the Chinese Government do not start to behave differently towards the UK and will not release Joshua Wong and Jimmy Lai?
Dan Jarvis
I am grateful to my hon. Friend for those points. The Government share the concerns about Mr Wong and Jimmy Lai, and I know that she will have noted recent Foreign Office statements about those particular cases. Let me make it absolutely clear to my hon. Friend and the House that the Government take matters involving transnational repression extremely seriously. Any attempt to intimidate China’s critics overseas, including residents here in the UK, is completely unacceptable.
Alicia Kearns (Rutland and Stamford) (Con)
May I first send our condolences to those who were killed in Poland?
I thank my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) for securing the urgent question, and I thank you, Mr Speaker, for all your support and protection for Members. It is, however, extremely disappointing that the Government did not come forward with their own statement. Members of this House and the other place—including Madam Deputy Speaker, my hon. Friend the Member for Sussex Weald (Ms Ghani)—have again been targeted by the Chinese Communist party. Money channelled through Ministry of State Security front companies was used to secure kompromat to be weaponised by the Chinese state. This is an attack on our democracy, yet it was not significant enough for a Minister to come here of his or her own accord. Most shockingly, those targeted found out from the press. The Government did not brief them—and it is unfair to say that they could not be briefed, because the shadow Foreign Secretary, my right hon. Friend the Member for Tonbridge (Tom Tugendhat), and I were briefed 10 days before the arrest of Christopher Cash, so people absolutely can be briefed in advance.
The FBI arrested two individuals in Serbia in April 2025. They were indicted and fled to China, where they remain under Chinese Communist party protection. When did the Government first know? Has the relationship with the Five Eyes become so degraded that intelligence normally shared by the United States was withheld for over a year, or were they told and did they then decide that Members just did not deserve to know?
This is a damning indictment of the Government’s approach to the Chinese Communist party. In June, the Five Eyes warned of economic honeytraps. In July, Chinese Communist party staff threatened Tibetan protesters with illegal tasers, and there have still been no repercussions. In September, MI5 warned that more than 100 university staff had been contributing to projects run by Chinese intelligence fronts. In October, the United States designated Confucius Institutes a national security threat, yet this Government have refused to implement protections that I secured in law which would enable them to be closed. This month, United Front networks reopened the overseas police stations that the shadow Foreign Secretary shut down in 2023.
Meanwhile, Jimmy Lai and Joshua Wong remain imprisoned in Hong Kong for speaking out for democracy. There are still zero registrations on the foreign influence registration scheme for anyone working for China, and the annual report is 133 days late under this Government. These are not incidents to be dismissed. This is an onslaught against our Parliament and our country, and the Government sit here pretending otherwise.
Mandelson’s China reset has failed. It was dreamed up in conjunction with the National Security Adviser, whose vetting process was opaque at best and who remains missing in action from Parliament. This Government’s one token achievement was lifting sanctions. [Interruption.] Mr Speaker, to quote something you said recently, you were far more lenient with the others. What does the Chinese Communist party have to do for the Government to act? They should put it in the enhanced tier of FIRS and protect our country.
Mr Speaker
Order. When you said that you needed 10 seconds, you did not tell me that you meant half a minute.
Dan Jarvis
The hon. Lady is entitled to make her points in the way that she has done, but I am sorry that she has chosen to do so. She will be furious when she finds out who was in government between 2018 and 2023. I regret the way that she has sought to politicise these issues, which should actually bring the House together in standing to defend our democracy and the rights of Members of this House to do their duty without fear or favour. It is a sad indictment of her position that she has chosen to play the political card in the way that she has done. It is particularly regretful because she was in the House and will remember the bipartisan approach that underpinned the passing of the National Security Act 2023. That has been the approach of this Government, not least when she has had issues that have required our support. That is the endeavour in which we should proceed in order to protect our national security. That is the way in which the public expect us to behave, rather than seeking to score cheap political points.
The hon. Lady made a number of points, some of which are worthy of response, but let me focus on one in particular. She spoke about FIRS and the annual report. FIRS is a very useful tool that will disrupt operational activity by our adversaries. FIRS is an instrument that was included in the National Security Act 2023, which, as I say, was an important piece of legislation that was passed on a bipartisan basis. It is this Government who worked incredibly hard to introduce FIRS on time and on budget, and it is this Government who are developing FIRS as an operational capability in our armoury.
The hon. Lady asked me specifically about the timing of the publication of the annual report. I understand why she would want to do that, and I am sure that I would do the same if I were in her place. We are committed to publishing the first annual report in full, and we will do so as soon as possible, but I reiterate the point that we worked on a cross-party basis with the previous Government to legislate for FIRS. This Government are getting on with implementing that important capability, and we will bring forward the report as soon as possible.
Chris Murray (Edinburgh East and Musselburgh) (Lab)
The threat that this country faces from hostile state actors is of grave concern to Members and parties on both sides of the House, and the security of parliamentarians as they go about their roles is central to democracy. A key component of countering political interference in our democracy is the foreign influence registration scheme. I welcome the Minister’s comments, but can he say more about the funding that is going into tackling hostile state threats? Will he confirm that the foreign influence registration scheme is being operationalised, and will he commit to not politicising the security of parliamentarians, unlike, I am afraid to say, the Opposition?
Dan Jarvis
I can give my hon. Friend the commitments that he seeks, and I am sure that that is what Mr Speaker and the public would expect. They would expect us to behave in a way that seeks to bring together Members on both sides of the House, so that we can stand against the threats that we face and work to achieve common solutions to address them.
My hon. Friend makes an important point about FIRS, which is an important operational tool that is still in its infancy. This Government introduced it on 1 July 2025. We are still working out how we can make sure that it delivers the maximum operational effect, and still working to ensure that it is an effective capability. It is doing good work on behalf of the nation, and we should all get behind it.
Max Wilkinson (Cheltenham) (LD)
Mr Speaker, I know you take the safety of Members of this House very seriously. These revelations are deeply alarming and reflect yet another attack on our liberal democracy. As MPs, we know that our parliamentary staff receive regular reminders to be vigilant against the CCP and its efforts to gain sensitive information. We receive those as MPs, yet we are told that the Home Office has not taken proactive steps to inform the Members concerned in this case.
I do not think the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), who asked the urgent question, got the response he possibly deserves, so I will try again. When were Ministers first aware and when were officials first aware of the information that was reported in the Daily Mail this weekend? Will the Minister commit today to reviewing the process, so that Members are told promptly whenever the Government learn that their personal information is compromised, particularly when it is done by a hostile foreign power?
Recent reports have revealed what the Financial Times has described as a
“chronic shortage of China expertise”
in the British state, both in the FCDO and in MI6. Meanwhile, the US has built a dedicated China office. Will the Minister set out a plan to rebuild our China expertise urgently, and will he consider adding China to the enhanced tier of the foreign influence registration scheme, as the Joint Committee on Human Rights has recommended?
Dan Jarvis
I am grateful to the hon. Member, as I always am, although I am slightly perplexed that he has sought to get me to do things that he knows I am not able to do from this Dispatch Box. I always listen very carefully to what he has to say, not least because of the constituency he represents and the extraordinarily important work that his constituents do on behalf of the nation. It is because I value their work, their contribution and their important commitment to our national security that I am not going to take any risks in relation to prejudicing activities that are under way. His constituents will understand that, and I hope that he does as well.
I thought the hon. Member made an important point about ensuring that we do everything we possibly can to protect our democratic processes. I give him an assurance—and I hope you would agree with this assertion, Mr Speaker—that the Government work very closely with Mr Speaker and the parliamentary authorities, the police and intelligence partners to ensure that Members of both Houses receive relevant briefings where that is necessary and appropriate.
I completely understand the demand and clamour among Members to know more information earlier than we are able to present it to them. I fully understand the desire for that information, but I hope he will understand that it would not be appropriate for me to get into a commentary, particularly on the Floor of the House, on issues that may lead to the prejudicing of ongoing investigations, not least given the nature of the allegations that have been made. That simply would not be appropriate and I am not going to do it, but I hope Members do understand how seriously the Government and I personally take these issues, and we will work around the clock to make sure that protections are in place so that Members can do their job.
Deirdre Costigan (Ealing Southall) (Lab)
Members across this place know personally about espionage risks to our democracy, and I know that that is true of the shadow Security Minister. Does my right hon. Friend agree that we must all be vigilant as we go about our work in this place?
Dan Jarvis
My hon. Friend makes a really helpful and important point. She is right that Members across this House have had personal experiences in this regard. I only hope that, rather than seeking to score political points as a consequence of those experiences, we come together and ensure that our response is appropriate and proportionate. That is the approach I will take and the approach this Government will take.
Priti Patel (Witham) (Con)
The evidence that China poses a threat to our national security and democracy is clearly overwhelming. We have spent a lot of time discussing this matter in the House, including the threats to parliamentarians and the overall security threat. The Minister has spoken in glowing terms about the foreign influence registration scheme, which the Government introduced, and said that it is working. Can he give an explanation to this House as to why China is not on the enhanced tier of FIRS?
Dan Jarvis
The right hon. Lady is a very experienced Member of this House and has served in very senior roles in government, which is why I hope she understands that the Government sometimes have to make quite nuanced, balanced judgments when it comes to national security policy and our relationship with other countries. There will be those in this place—I am not saying that she falls into this category—who seek to categorise our relationship with China in a single word. She knows from her experience in government that it is much more nuanced than that. As successive Governments have maintained, our relationship with China cannot be reduced to a single word. However, we recognise—it is important to be absolutely up front about this, as I have been from this Dispatch Box on many occasions—that China poses a series of threats to UK national security, from cyber-attacks to foreign interference and espionage, as well as transnational repression. We will challenge all those threats robustly and we will make sure that we have the appropriate toolkit to do so.
Luke Taylor (Sutton and Cheam) (LD)
The Minister must now recognise the scale and sophistication of the Chinese Communist party’s efforts to undermine our country, this House and the security of Hongkongers who settled here to flee persecution. Despite that, last week the Home Secretary rather flippantly referred to Hongkongers needing to prove their lack of criminality to achieve settlement. It is, of course, vital that no one who is a criminal enters our country, but as we saw in the case of Wu Chi-wai earlier this year, the Home Office has treated a criminal record incurred under the anti-democratic national security law as grounds for refusal. Does the Minister accept that the Home Secretary’s remarks were clumsy and commit to working across Government to ensure that instructions are issued to immigration officials to fix that practice and ensure that Hongkongers fleeing CCP persecution are protected?
Dan Jarvis
I am grateful to the hon. Member for raising that point. I am certain that the Home Secretary intended no offence by the remarks she made, but he raises some important points. If he were to write to me with them, I would be very happy to consider them further.
Sir Alec Shelbrooke (Wetherby and Easingwold) (Con)
Our colleague, the Chairman of Ways and Means—I notified her that I was going to mention her—is sanctioned by China. She was sanctioned because she constantly raised the horrific human rights abuses against the Uyghurs. The Minister is pointing out all the reasons why he cannot answer questions and cannot say anything, but one thing he could do is to say to the new Prime Minister and the new Secretary of State for Energy Security and Net Zero that, having said there would be an ethical procurement policy, there should be a pause on processed renewables materials that come from China, because there appears to be plenty of evidence that human rights abuses of the Uyghurs are taking place to produce them. Will he commit to doing that?
Dan Jarvis
The right hon. Gentleman is a seasoned commentator on these matters and I always listen very carefully to what he has to say. Let me restate what I have said from this Dispatch Box on many occasions: it is totally unacceptable that any Member of this House has been sanctioned by China, or by any other nation for that matter. He will know that there are a range of processes in place across government to guide Secretaries of State in their decisions, whether in respect of investment or procurement. Sometimes there have to be difficult trade-offs, but in the end the first priority of this Government—and, I would hope, any Government—is our national security. We will make sure that our policies reflect that.
Chris Law (Dundee Central) (SNP)
While it is unacceptable that Members of this Parliament are under constant hostile threat from foreign states, it is also unacceptable that this Government are unwilling to offer protection by taking appropriate action against China. Despite the CCP sanctioning, spying on and now accessing the phone and financial records of parliamentarians, the Government still refuse to publish the China audit in full or to publish any strategy on how to deal with this threat. Why, given all the evidence, have the Government not finally added China to the enhanced tier of FIRS? I draw attention to the fact that the Minister has dodged that question up to now. Given that the revelations we are talking about today happened in 2021, can he confirm whether a full UK investigation, alongside the FBI investigation, is now taking place?
Dan Jarvis
I simply do not accept the premise of the question that the hon. Gentleman has asked, or the way that he asked it. This Government prioritise national security, and we will ensure that—[Interruption.] I find it unfortunate that Opposition Members are questioning this Government’s commitment to national security. There was a time, which will be well remembered, when matters of national security were not thrown across Dispatch Boxes in the way that we have seen done today. It is beyond disappointing that some Members are choosing to behave in that way, and I am afraid that it reflects very poorly on them.
The hon. Member for Dundee Central (Chris Law) has heard what I have said about FIRS. He will understand that decisions about FIRS will be brought forward in the normal way, but I assure him that this Government will ensure that we have the appropriate legislative framework and the right operational toolkit to guard against the threats that we face.
Bradley Thomas (Bromsgrove) (Con)
Every Member of this House should be concerned about this affront to democracy, because the threat from China is incredibly well documented. Current and former heads of the security services have talked prominently about the threat from China and foreign Governments. We have industrial espionage and Chinese activity aimed at infiltrating our energy systems. We could not be clearer-eyed than we are, so what more has to happen before the Government put China on the enhanced tier of FIRS? Week after week, we get reports of industrial espionage, hacking and threats to democracy. What has to happen before the Government finally acknowledge that China should be on the enhanced tier?
Dan Jarvis
I accept the important point about the nature of the threat that we face internationally, and specifically from China; I have just referenced that. FIRS is an important operational tool. As I said to the shadow Minister, we will publish the annual report as soon as we are able to. The hon. Member for Bromsgrove (Bradley Thomas) will understand that it would not be appropriate for me to speculate about future registrations made using that operational tool. That is not how this has worked previously, and it is not how it will work today.
Jim Shannon (Strangford) (DUP)
The targeted harvesting of phone and financial records appears to be part of a co-ordinated campaign of transnational repression against critics of Beijing. Given this escalatory behaviour, will the Minister review the powers available to our intelligence services to disrupt the commercial proxies, and state plainly what consequences the People’s Republic of China will face for executing operations against sitting British parliamentarians, bearing in mind that the website of the all-party parliamentary group for international freedom of religion or belief, which I chair, was hacked, and articles were replaced with pro-China propaganda? Quite clearly, that is something that we would never have agreed to.
Dan Jarvis
The hon. Gentleman makes a very important point. It is worth reiterating that the activity that we are debating is alleged to have occurred between 2018 and 2023. The Government are clear-eyed about the nature of the threat that we face from China and a range of other adversaries when it comes to defending our national security. I pay tribute to the extraordinary men and women who serve in our intelligence services. I am proud that this Government are investing record amounts in supporting the incredible work that they do. We owe them a debt of gratitude; they are heroes of our nation.
Alicia Kearns
On a point of order, Mr Speaker. You are well aware that a number of Members were briefed 10 days in advance of the arrest of Chris Cash, because the last Government deemed that Members deserved to know if they were being spied on. The current Government clearly do not agree. Given your responsibility for Members’ security, and how hard you work to keep them safe, were you at least briefed a year ago, when these reports were shared with the Government?
Mr Speaker
The answer is no; I have not been briefed, even as of today.
Sir Iain Duncan Smith
On a point of order, Mr Speaker. I would not normally raise this, but I will, given your role in protecting Members of Parliament, who have been under attack by the Chinese Government. I applied for this urgent question so that the Government would have an opportunity to explain, at the Dispatch Box, what they knew, and what actions they may take or have taken. Bear in mind that these cases were brought up in 2021; this did not happen yesterday, or on Sunday. Are the Government categorically telling us that they know absolutely nothing about this, and have done nothing about it? They have done nothing to inform any of us—or you, Mr Speaker—about it, which is an absolute disgrace. It is treating this House with utter contempt.
Mr Speaker
We are not going to continue the debate. I granted the urgent question because I thought it was important. I am sure that this will be pursued through other avenues. Let us leave it at that for today.
Commonwealth Heads of Government Meeting
(1 day, 12 hours ago)
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Mr Speaker
We now come to the statement on the Commonwealth Heads of Government meeting. I was going to call the Prime Minister, but it is not him. I call the Minister.
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Chris Elmore)
I have no ambition in that direction, Mr Speaker, but thank you all the same. With permission, I will make a statement on the Commonwealth Heads of Government meeting held in Antigua and Barbuda from 1 to 4 November. The Prime Minister led the United Kingdom delegation, accompanied by the Foreign Secretary and me. We joined Heads of Government and more than 30 Foreign Ministers from member states across the organisation. His Majesty the King, as head of the Commonwealth, and Her Majesty the Queen also attended.
This was an important summit for the Commonwealth. At a time when the world is divided and uncertain, CHOGM reminded us of the value of the Commonwealth and what this enduring partnership of nations can achieve. It connects 56 countries and a third of the world’s people to address shared challenges and work together for practical solutions. This meeting also gave the United Kingdom an invaluable opportunity to strengthen important bilateral relationships and build coalitions around shared priorities.
The Prime Minister described CHOGM as the “most successful” Commonwealth meeting of recent times. We took forward important discussions on economic growth, democratic resilience, climate and ocean action, and the needs of small and vulnerable states. Leaders reaffirmed their commitment to the Commonwealth charter and supported a Commonwealth that is more focused, effective and capable of delivering practical results.
I pay particular tribute to the Government and people of Antigua and Barbuda, which is the smallest country ever to host CHOGM. Organising a summit of this scale was a mammoth task, but our hosts delivered it with warmth, energy and ambition. There could be no better summary than His Majesty’s words at the opening ceremony: “Small island, big vibes.”
The Caribbean setting brought into sharp focus the priorities of many Commonwealth members, particularly on growth, investment, climate resilience, debt and access to finance. This CHOGM placed greater emphasis than previous summits on trade and investment, which is in line with the UK’s approach. Governments, businesses and investors came together for the Commonwealth business forum, and for a dedicated investment summit to consider how the Commonwealth can become a modern economic partnership that mobilises private capital, removes barriers to trade and creates opportunities across all its members. The United Kingdom supported that ambition with a substantial package of practical measures. We announced a new partnership between British International Investment and the Inter-American Development Bank to unlock private investment across the Caribbean. We increased our support for the Commonwealth investment network, to help Commonwealth small island states attract climate-positive investment.
We announced a new resilient infrastructure programme worth up to £40 million, building on the UK Caribbean infrastructure fund. The new programme will support renewable energy and infrastructure that can withstand the growing effects of climate change. We announced initiatives worth up to £8.7 million through the global clean power alliance finance mission. Working with the World Bank, these measures will support cleaner and more resilient energy systems across the Caribbean.
We also signed a four-year partnership to support Jamaica’s National Reconstruction and Resilience Authority post Hurricane Melissa. This Government-to-Government partnership will support Jamaica in unlocking up to $6 billion of capital investment for resilient infrastructure, delivered with the expertise of world-leading UK firms, and could become a model for UK-supported reconstruction in the region and beyond. These initiatives will make a practical difference to our partners and their people. They can also create new opportunities for British investors, banks, insurers and professional services.
CHOGM was not a stand-alone diplomatic event; it formed part of the United Kingdom’s wider multilateral approach, and built momentum ahead of COP31 and our G20 presidency next year. The Commonwealth allows us to hear directly from countries that often struggle to have their voices heard. At CHOGM, we worked with partners on climate resilience, debt, development finance and reform of the international financial system. We were pleased that former Prime Minister Gordon Brown joined those discussions in Antigua, and we will carry those conversations forward into the major international meetings ahead.
Our aim is clear: a more representative international system that delivers growth, stability and opportunity, including for small and climate-vulnerable states. Democracy, good governance and the rule of law remain central to the Commonwealth. At CHOGM, we announced a partnership with Australia to protect parliamentarians from online abuse and support democratic participation. This will bring together technology, expertise and practical solutions, with a particular focus on the abuse faced by women in public life.
Formal leaders’ and ministerial meetings were only one part of CHOGM. The Foreign Secretary addressed a United Kingdom-supported event on blue finance and innovation, alongside the Prime Minister of Antigua and Barbuda, highlighting the need for ambitious action on green shipping, stronger ocean governance and protection, and scaling up blue finance.
I spoke at the Commonwealth women’s forum about our shared responsibility to combat violence against women and girls. I joined a Commonwealth Parliamentary Association panel on safeguarding democracy, alongside colleagues from Malta, the Commonwealth Secretariat and accredited organisations, and I was delighted to see a number of hon. Friends and colleagues in the audience. UK Ministers participated in discussions on small states, civil society, investment, climate finance and ocean protection. UK youth delegates participated in the Commonwealth youth forum, recognising that the Commonwealth’s future rests with young people. These events ensured that the summit gave voice to business, civil society, women and young people, as well as Governments.
We are clear on the value we place on strong relationships with Commonwealth partners, on facing down shared challenges together, on seizing opportunities together, and on sharing our values to build a safer world for all of us, but as the Prime Minister set out ahead of CHOGM, if we are to meet these challenges of the future, we need to be ready to face up to the past. For years, those members of the Commonwealth affected by the transatlantic slave trade have wanted an honest conversation about the legacies of slavery. Before the summit, the Prime Minister set out how this Government intend to respond to those calls. He expressed sorrow and regret for the pain and suffering caused, and offered a new, structured dialogue with Caribbean and African partners. This dialogue needs to be co-designed with partners affected, and will involve listening with respect. It will be time-bound and inclusive. It will consider remembrance, education, culture and calls for a formal apology, to which the Government are open. It will also look to the future and support practical co-operation on the challenges faced by affected partners today, though our position on financial reparations has not changed.
This approach was warmly received by partners. It helped create a positive and forward-looking discussion at the summit. It was welcomed in the CHOGM communiqué. Our focus now is on turning that solemn and sincere commitment into meaningful action.
This CHOGM gave the Commonwealth renewed energy. It showed that this diverse family of nations can work together on the issues that matter most to its people: jobs, investment, climate resilience, democracy and opportunity. It also demonstrated the kind of partner the United Kingdom wants to be: outward-looking, reliable and respectful. We listened to the Commonwealth members, strengthened relationships across the global south and backed our words with practical commitments. We will now work with our partners to deliver on those commitments, carry their priorities into international moments ahead, and ensure that the Commonwealth fulfils its potential as a modern network for practical co-operation. I commend this statement to the House.
Mr Speaker
Can I just say that, while I thank the Minister for coming, I would have thought that it would be the Foreign Secretary making a statement on such an important conference as CHOGM? But I thank the Minister for coming, and for being so open and honest. I call the shadow Foreign Secretary.
Tom Tugendhat (Tonbridge) (Con)
Like you, Mr Speaker, I expected the Foreign Secretary. The Minister has been a friend these many years, and nobody is happier to see him than me, but it does somewhat surprise me—no doubt it surprises him, too—that the head of our delegation at the Heads of Government meeting has decided that it is not worth his effort to come and brief this House. Clearly he has better things to do than answer to the British people, whom I thought he was sent to represent.
Anyway, we shall move on, because the understudy’s understudy is in their place. This statement, much like the meeting, will not answer the questions that we need answered if we are to shape a future for us all. It has instead, sadly, been overshadowed. Let me set out why. First, our Government, by failing to be clear right at the beginning—before CHOGM began, in fact—about their position on reparations, allowed the discussion to be diverted from the future and towards the past. I will not rehearse the arguments; Members will already know my position on the tragedy of slavery, and the endurance of this abhorrent crime against humanity—in Mauritania, for instance, where it continued until 1981, which is two years before the Minister was born, and in the Arabian peninsula, where slavery existed right up until the 1960s. Nor will I rehearse the slave raids from Algiers on to the Cornish coast or the courage of those sailors and soldiers who fought the evil slave trading kingdoms of Dahomey, which King Ghezo referred to as the glory of his people. Of course, Britain’s part in the slave empires was shameful; the past of the whole of humanity in slavery was shameful. The pride of Britain is that the Royal Navy, the West Africa Squadron and our people fought it when others were still defending it.
Today, we can share the blame or we can look at the future. Instead of looking at the past, why are we not focused on the truth of modern slavery: the Uyghur detention facilities in Xinjiang; and the human trafficking enabled by Moscow that sees so many die in the Sahara and the Mediterranean? Let us not go over that; instead, let us focus on where we should be with the Commonwealth. Half of the Commonwealth is India. What lessons has the Minister—perhaps even the Foreign Secretary—drawn from the non-attendance of the Indian Prime Minister at this CHOGM and indeed past CHOGMs?
What has the hon. Member learned about the importance of African nations in the Commonwealth membership? Countries like Nigeria demonstrate such vibrancy and such energy and could benefit from the capital of London. What has he learned from the green energy projects of Kenya about future opportunities in shared data networks and opportunities for growth? Indeed, given that the Prime Minister met the leaders of both Kenya and Nigeria, why have we heard nothing more about that? What is going on with an Africa strategy that would tie us together and give Britain an opportunity to develop the depth of relationship that is, sadly, being taken by China?
Furthermore, where is the consistency in our dealings? What lessons have been learned about the Prime Minister’s swapping sides again and again on Chagos? First, he agreed with the Mauritian Prime Minister; then he agreed with the US President; and now, in echoes of what I can only describe as the Blairite 2000s, there is a consultation and a pledge waiting for resolution at the end of the year. Perhaps the Prime Minister will honour us by outlining what he has made a promise to do this time; perhaps he will have the grace to tell Parliament instead of hiding again.
Given that the importance of the Caribbean to Britain is one subject on which I think we can all agree, what conversations has the hon. Member had on reversing the Chinese infiltration of those islands in the Americas so that we see islanders treated with the dignity they deserve—not, sadly, like the islanders Joshua Wong and Jimmy Lai in Hong Kong?
It is always a pleasure to see the hon. Member for Bridgend. I hope that he enjoyed his trip in the sun. Sadly, he has returned without even a tan and with little else to show for his troubles. At least we have all learned one thing: while our Government waffle and waver, the King commands respect for his clarity and leadership. Thank God, at least, for that.
Chris Elmore
It is always a pleasure to see the shadow Foreign Secretary in his place. It is nice that he checked Wikipedia to see when I was born. The statement is about CHOGM, so while it was nice that he took a canter through the various continents of the world, may I take him back to the substantive point?
I set out in quite significant detail the success of the CHOGM summit. The right hon. Gentleman is right to raise the importance of the impact on China—that is the whole point of the structured dialogue. Part of the challenge is about the influence of China around these continents and in these countries. To have constructive dialogue, we need to accept our past, work through it and look forward to the future. I think he would almost agree with me on that very point. [Interruption.] He had his chance and he did not ask that question. If we are to look for improved influence and at better infrastructure investment to allow British industry to influence and develop across the Caribbean and Africa, that piece of work will be crucial in the months and years ahead.
It is always nice to debate with the right hon. Gentleman, and I am sure we will do so again in the months and years ahead. As I have huge respect for the House, I will explain one further point: the Foreign Secretary is at G7 meetings in France; I am delighted that I have the confidence of the Prime Minister to address the House on one of my areas of responsibility, which include the Commonwealth.
Marsha De Cordova (Battersea) (Lab)
I thank my hon. Friend for his statement. Alongside CHOGM, the first ever global summit on eye health was held, bringing together world leaders to address the global challenge of avoidable sight loss. With more than 2 billion people worldwide living with sight loss, the challenge is clear: we must ensure that everyone has access to good-quality eye healthcare. Already, 41 countries have made this commitment, with pledges exceeding $1 billion. Now we need the UK, as a world leader in eye healthcare, also to make this commitment. Will my hon. Friend the Minister agree to meet me to discuss this?
Chris Elmore
I was delighted to be at the eye health summit with my hon. Friend, and I want to put on record my congratulations to her on her dedication in leading this work on tackling global eye health. I know how truly committed she is to this process. I am more than happy to meet her and to sit down and engage on this subject, not just because it is important to her but because it matters across the Commonwealth and across nations beyond the Commonwealth. I am very happy to do that.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Monica Harding (Esher and Walton) (LD)
It remains crucial that the Government engage wholeheartedly with our friends and partners in the Commonwealth, especially now, in an insecure world, when other partnerships may be fraught. While I am pleased to see CHOGM emphasising the challenge of food insecurity, protecting our oceans and tackling climate change, it added up to warm words but sharp cuts in UK aid to Commonwealth nations. The aid budget to the Commonwealth has been slashed from £546 million in 2024-25 to £131 million in 2028-29, with over half of that going to Nigeria alone. All this is happening while humanitarian crises are continually underfunded and El Niño is already causing havoc around the world and is likely to force many millions more people into acute food insecurity over the next year. The King attended the launch of the Commonwealth nature initiative, but the UK Government failed to make a contribution. These cuts to official development assistance are hurting our partnerships in the Commonwealth, our international understanding and our influence.
The Prime Minister has talked about Labour values driving his agenda and not making the mistake of wearing too many Tory clothes. Does the Minister agree that presiding over the deepest aid cuts this century—deeper than Donald Trump’s in America—looks like trying on the last Conservative Government’s clothes, and that Labour values would involve a return to the 0.7% aid target, which has been legislated for by this House? Will the Minister lay out a timeline to do this? I applaud the Foreign Secretary’s desire to take action on development finance and tackle unsustainable debt, but with the G20 fast approaching, will the Minister make a statement on how he will do this, alongside taking action on illicit financial flows and multilateral development bank reform, and with COP31 in Antalya this week, will he reassure the House that the UK will uphold its commitments to tackling the climate crisis?
Chris Elmore
I thank the hon. Lady for her various questions. I agree with her on food security and I hope she knows the importance that the Government, and particularly the development Minister, place on that. She is right to challenge me on ODA funding. We do not agree, however. We have made difficult decisions in relation to defence spending and ensuring that the defence of this country is a first and clear priority. We have 0.3%, and we have set out on multiple occasions that the ambition is to return to 0.7%. I am not going to set out a timeframe for that from the Dispatch Box. I talked in my statement about the priorities around the G20, and I said that CHOGM was the first in a series of events, including COP, that the Foreign Secretary and the Prime Minister will be in attendance for as we build towards the G20. I can confirm to the hon. Lady that we have allocated additional support in relation to pressures around El Niño. She is right to mention this, and the UK Government will always be supportive of tackling the climate crisis, however we are able to.
Alan Gemmell (Central Ayrshire) (Lab)
I thank the Minister for his statement. He may not know that I am a former chief executive of the Commonwealth Enterprise and Investment Council, which is responsible for the business forum. I hear that that was a great success this year, and I want to put on record my congratulations to Sam Cohen, its chief exec, and her team. If the Minister is keen to do a teach-in for the shadow Foreign Secretary on his learnings from India and Nigeria and our relationships with the Commonwealth, I would be very happy to join. Does the Minister agree that trade should be at the heart of our Commonwealth relationships, and that with such a trusted network of 56 countries with shared values, we should be supercharging trade around the Commonwealth and improving the lives and jobs of the nearly 3 billion people who are Commonwealth citizens?
Chris Elmore
My hon. Friend is right that the benefit of the Commonwealth is a significant part of our work and that trade should be at the front and centre of that. I am confident that the shadow Foreign Secretary is always keen for some educational improvement, so I am sure, between the two of us, we could give him some lessons on the work of the Commonwealth.
Sir Edward Leigh (Gainsborough) (Con)
Shamefully, some 12.5 million slaves were sent across the Atlantic during the slave trade, and it is reckoned that 90% of them were captured and traded in horrific circumstances by African kings. Does the Minister agree that it would be ridiculous to hold the descendants of those African kings responsible for the sins of their fathers? Should we not learn from the King, our chief diplomat, by expressing sorrow from the depth of our soul, but not getting involved in apologies, let alone reparations?
Chris Elmore
I reassure the Father of the House that, as I said in my statement, there is no plan for, and our position has not changed on, reparations. I will not comment on any other countries’ part in the slave trade or any other type of offence, whatever the grievance, but this constructive dialogue is a clear way forward to engaging with Commonwealth nations, including African countries. It is about working and moving forward in the best way possible, and in a way that is honest and straightforward. I would argue strongly that those are British values. This is about a hope that this country can look forward, move forward and ensure that the Commonwealth is fit for the future, and does not simply focus on the past.
Janet Daby (Lewisham East) (Lab)
I wholeheartedly thank my hon. Friend the Minister for his statement. If he casts his mind back, he will remember the many conversations we had about Hurricane Melissa. I thank the Minister for the strengthening of partnerships among the 56 Commonwealth countries, but what steps are the Government taking to bolster the climate resilience of Commonwealth partners, particularly those on the frontline of climate change?
Chris Elmore
My hon. Friend is right about the many conversations that we had on behalf of her constituents during Hurricane Melissa and about the response of the UK Government. A succession of Administrations have worked to deliver climate resilient infrastructure that can withstand the impact of multiple hurricanes; I saw that myself when I was the first international Minister to visit Black River following the hurricane in December last year. We will continue that focus on climate resilience investment, and in some cases we can use procurement to offer British firms that work in individual countries. That will always remain a priority, and it is something that we take extremely seriously.
Madam Deputy Speaker
I gently remind right hon. and hon. Members that “Erskine May” is very clear, in paragraph 22.20, that the King’s name should not be used to try to influence debate.
Richard Tice (Boston and Skegness) (Reform)
What was noticeable about the Minister’s statement was that there was no reference to discussions that the Prime Minister had with the Prime Ministers of Nigeria or Mauritius. Did he raise the issue of the more than 4,000 Christians killed in Nigeria this year? Did he raise the fact that my constituents, and the vast majority of the millions of people in this country, do not want to surrender the Chagos islands?
Chris Elmore
It is a matter of record that Ministers, including me—I am the ministerial lead on freedom of religion or belief—frequently raise with other countries the abuses of people of Christian and other faiths. I cannot comment on the individual conversations the Prime Minister has had, but I assure the House that these issues, including on all the various human rights abuses that take place internationally, are raised at the highest levels.
Chris Vince (Harlow) (Lab/Co-op)
I thank the Minister for his statement. Like everyone across the House, I find it deplorable that any person can think they have the right to own another person and treat them like property, whether that is a historical or current injustice. What conversations has the Minister had with our Commonwealth allies about defence and security, which my Harlow constituents take very seriously? As I visited the BBC World Service recently, may I emphasise its importance to our soft power and influence?
Chris Elmore
My hon. Friend is quite right to raise the importance of defence and national security, particularly in relation to the Caribbean and other parts of the Commonwealth. He is also right—as the Minister within the Foreign Office responsible for the World Service, I wholeheartedly agree with him—about tackling disinformation. The investment we were able to secure during the spending review round to tackle Russian and other state interference, as well as misinformation, is absolutely crucial to the wider work of the Commonwealth and beyond.
Sir Andrew Mitchell (Sutton Coldfield) (Con)
I mean no disrespect to the Minister when I say that this statement should have been made by the Prime Minister. The Government have rightly championed the value of Commonwealth partnerships, but is the Minister aware that the Global Health Partnerships scheme set up by the coalition Government at a time of economic austerity—that has been enormously valuable to Commonwealth countries, as well as enhancing Britain’s national interest and our health services—now faces being defunded thanks to the savage cuts to the international development budget made by the last Government? Will he personally look at whether this great scheme can be saved?
Chris Elmore
I pay tribute to the right hon. Gentleman for the work he has done across the international development space for many years. I take no offence from his requirement for the Prime Minister, but I am afraid he will have to put up with me. I am more than happy to review the matter. He will know of the difficult decisions we have taken in relation to ODA funding and the challenges it faces, as I said in answer to the Liberal Democrat spokesperson, the hon. Member for Esher and Walton (Monica Harding). These decisions are not easy. However, we take them extremely seriously and will keep them under review, particularly if at some point in the future we are able to move back towards higher ODA allocations.
Brendan O’Hara (Argyll, Bute and South Lochaber) (SNP)
We are told that one of the core areas of discussion at last week’s meeting was climate resilience. Given that building climate resilience is now absolutely critical, particularly for small countries in the global south, could the Minister tell the House how he explained to them his Government’s decision to cut overseas aid by more than £1 billion last year? Could he share with the House what impact he was told that cut has had on many of our Commonwealth partners, many of which are having to live with and mitigate the worst effects of climate change, despite having contributed virtually nothing to creating the problem in the first place?
Chris Elmore
We are still investing in critical infrastructure and climate resilience developments right across the Caribbean and further afield. That work is not changing; it is still a focus of the Government. As I said in answer to my hon. Friend the Member for Lewisham East (Janet Daby), I have seen this work up close. One of the ways in which we are mitigating some of the ODA funding cuts—I think he is aware of this—is by channelling our influence with philanthropic donations to ensure that we can work in this space and offer additional support. I know that it does not please him, but our support for Caribbean nations on climate resilience funding is warmly welcomed across the Caribbean, and that did not change in CHOGM.
Sir Oliver Dowden (Hertsmere) (Con)
Nobody disputes the evil of slavery, but I would caution the Government that they are being somewhat naive about going down the path towards an apology, because I fear that it will be seized on, as other pronouncements have been, by left-wing dominated international institutions and courts for which the ideology of decolonisation and the hostility to Israel is axiomatic. Before we know it, we will find ourselves going down a path whereby a Minister will stand at the Dispatch Box in a few years’ time and say, “I’m terribly sorry—we have no choice but to offer reparations.” We will find ourselves in exactly the same absurd position that the Church of England finds itself in; it is paying £100 million in reparations when its buildings are falling down. Can I urge the Minister not to go down this path? It is a very risky path indeed, as I know from Chagos and other negotiations.
Chris Elmore
I have huge respect for the right hon. Gentleman—he is a former Deputy Prime Minister of this country. I do not, however, agree with him on the path that he has somehow managed to weave in this Chamber by focusing on what may or may not happen. This constructive dialogue is time limited with a clear purpose, working with international partners. It is about trying to learn from our history but, crucially, to move forward into the future. As I said in my statement, our position on reparations has not changed.
Sir Julian Lewis (New Forest East) (Con)
Does the Minister think that an apology for the slave trade issued by a Government who have absolutely no responsibility for it having happened, on behalf of a country in which there is no one alive who has any responsibility for what happened 300 and more years ago, will make the people who are seeking reparations more likely or less likely to intensify their demands?
Chris Elmore
I can say to the right hon. Gentleman that the response of international partners has been nothing but positive, and progress has been made on the constructive dialogue. We will not agree on this, I am sure, but the adult approach—the UK approach—is to respect and understand our past and move forward.
Chris Elmore
I am afraid it is indeed our past; the right hon. Gentleman might want to read a history book if he does not think it is the United Kingdom’s past. We will do this with an open mind and work towards a constructive solution over the coming year or so.
Luke Taylor (Sutton and Cheam) (LD)
Overseas aid is critical to improving our security not just at home but around the world. It improves resilience, strengthens institutions and enables our Commonwealth brothers and sisters to thrive. The Minister references defence and national security spending decisions. I am sure he recognises how ODA investment makes our interests at home and overseas more secure. I am particularly concerned to see the cuts to funding for countries with existing programmes from £546 million to £131 million. Can the Minister explain in more detail how those cuts have been assessed and what impact they may have on programmes that are already in progress and on our security at home and overseas?
Chris Elmore
I am more than happy to explore in more detail with the hon. Gentleman individual country profiles and work, although this is published in the usual way in terms of the impact of decisions on countries. I will make a wider point, and he touched on it in his question: these are difficult decisions—I am not shying away from that—but I believe they are the right ones.
Esther McVey (Tatton) (Con)
Today the Prime Minister has not come to the House to answer questions on his trip to the Commonwealth Heads of Government meeting. Not answering questions is becoming a pattern. The Prime Minister broke with convention by not allowing journalists with him on the trip to ask questions on this matter. Is it because he is running scared and only likes to answer soft-soap questions on social media, or is it because he is partway through changing his mind on giving reparations to these countries, just like he changed his mind on Brexit and let down the country and his Makerfield constituents?
Chris Elmore
It is interesting that the right hon. Lady says there were no journalists there, because I am pretty sure the political editor of the BBC was there, along with a number of other journalists, but maybe she and I have different views on what we class as a journalist. I hasten to add that the last CHOGM statement was given by my right hon. Friend the Member for Oxford East (Anneliese Dodds), not the Foreign Secretary or the Prime Minister, and that in 2022, which is the last time the statement was made when the Conservative party was in government—I hope it is the last for some considerable time—it was delivered by a Member of the House of Lords. Frankly, we have seen more leadership from my Prime Minister than the several dozen we went through in the 14 years when the Conservatives wrecked this country and left us the mess we have inherited.
Robin Swann (South Antrim) (UUP)
First, I thank the Commonwealth Parliamentary Association for the opportunity to attend CHOGM as a Member of this House, along with the hon. Members for Newcastle-under-Lyme (Adam Jogee) and for South East Cornwall (Anna Gelderd). I know the Minister is here in place of the Prime Minister and the Foreign Secretary, but I want to congratulate him on how he handled himself in the panels that he spoke on, which were about some very challenging topics for this Government. As we all agree on the value of the Commonwealth, what steps will the Government take to enhance the resilience of supply chains across the Commonwealth, to ensure that every part can benefit equally?
Chris Elmore
I thank the hon. Gentleman for his kind comments about my panel performance; I do not do them often, so it is nice to know that when I do, there is at least one person in the audience who is glad of it. He is quite right to talk about the importance of supply chains. Part of our focus is ensuring that all Commonwealth nations, no matter how small or large—but crucially, the smaller states—have these tangible and meaningful benefits of being a member of the Commonwealth family.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
The Minister played a significant role in the Commonwealth Parliamentary Association UK branch and internationally prior to his appointment. Were there any discussions at CHOGM about the role that Parliaments and parliamentarians across the Commonwealth can play in the future shape of the Commonwealth?
Chris Elmore
The right hon. Gentleman is my successor as the Opposition ranking member in CPA UK, and it is nice to know that he probably does a better job than I ever did. [Hon. Members: “Aw!”] I have got the sympathy vote, Madam Deputy Speaker.
I was very glad to meet the secretary-general of CPA International to take part in a panel on democracy and the need for improved scrutiny, as well as support for Clerks, Speakers and Deputy Speakers, and I pay tribute to the work that Mr Speaker and his deputies do in this space. We see it as an absolute focus of how we can improve future CHOGMs, and of how—between CHOGMs—we can work internationally with Commonwealth Parliaments right across the globe. It is a crucial part of our work and the work of CPA UK and CPA International.
Robert Jenrick (Newark) (Reform)
The only thing that is exceptional about Britain’s record on slavery is that we were the first country in the world to abolish it. We are the country of William Wilberforce. We are the country of the West Africa Squadron. Why are we entertaining this performative far-left nonsense? Why does the Prime Minister not just focus on what the British people actually want, which is to cut the cost of living and do something that helps our own constituents? [Interruption.] Government Members can groan as much as they want, but I wager this: what I am saying is more in tune with the people of this country than anything that we have heard from them today.
Chris Elmore
If the right hon. Gentleman is looking for performative nonsense, he should engage a mirror. In relation to this work, I know it is difficult for him to comprehend, but two things can be true at the same time. I am extremely proud of the work that the Royal Navy, the Government and William Wilberforce did—I thank the right hon. Gentleman for the history lesson—but we can also say that there is an important piece of work to do around acknowledging our past and moving forward. As I say, I know that is difficult for him, but nevertheless that is really what is going to happen.
Ben Obese-Jecty (Huntingdon) (Con)
I draw the Minister’s attention to the comments that he made about the conversations with world leaders at CHOGM and not being able to engage. Half of the Government’s written statement on CHOGM was about conversations with Navin Ramgoolam around Mauritius and the Chagos deal. The Government are prepared to discuss a shared handover plan before Christmas with regard to Chagos. Last year, they also cited the International Tribunal for the Law of the Sea as the main and most proximate threat to our ownership of the Chagos islands. Yet today and tomorrow, the Attorney General and six King’s counsel are in Hamburg at the International Tribunal for the Law of the Sea discussing British sovereignty claims. Why are the Government prepared to defend against ITLOS with regard to the Falkland Islands, but are prepared to give the Chagos islands away due to the potential threat of ITLOS?
Chris Elmore
I understand the connection that the hon. Gentleman makes, but I am going to disappoint him and not bite. The reality is that if he wishes to engage in this matter, he should engage with the Attorney General directly and, more importantly, with the Minister for the Overseas Territories, who I am sure would be happy to speak to him.
Jeremy Corbyn (Islington North) (Your Party)
I thank the Minister for his statement, and I am pleased that he put on record his thanks to the Government of Antigua and Barbuda for hosting the conference. The issue of slavery obviously came up. Many in this House do not want to discuss it, but the reality is that the slave trade and slavery made a lot of wealthy people in this country even wealthier, the compensation paid was massive, and many big British companies still benefit from the profits of it. That leads to the issue of the systemic debt that many former colonies have, the imbalance of trade, the inequality and the poverty. The issue of reparations will not go away just because the Minister wishes it to go away; it is live, strong and will be debated for as long as it takes to get some kind of global justice.
Chris Elmore
The right hon. Gentleman is right to raise the issue of debt relief. That is part of the work that happened at this CHOGM, and the whole point of the constructive dialogue is to look at some of the Caribbean Community asks and wider pieces of work on culture, heritage and education. However, to be clear, our position on reparations has not changed. I refer him to the fact that various Governments around the Caribbean, and indeed in west Africa, have warmly welcomed this dialogue from the Prime Minister and accept that there are parts of this work on which Britain will have clear positions. That does not mean that we cannot set up a constructive dialogue jointly and work on the priorities together, but our position on reparations is not going to change.
Mobile Phones in Schools
(1 day, 12 hours ago)
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The Parliamentary Under-Secretary of State for Education (Josh MacAlister)
With permission, Madam Deputy Speaker, I would like to make a statement on education technology and mobile phones in schools.
Today’s children are growing up in a world shaped by smartphones, social media and artificial intelligence. Technology can bring enormous opportunities, but schools remain—and must remain—a place where children can focus, learn and connect with one another. Technology’s role in education should be to support learning, not to get in its way.
Earlier this year, with support from across the House, the Government strengthened guidance on mobile phones in schools to back teachers and parents in making schools mobile phone-free. Since that updated ban started in September, many schools have taken great steps to tackle the disruption that mobile phones can cause, and I am grateful to school leaders and teachers who have worked hard to create calm, focused classrooms. However, many teachers and pupils tell us that phones are still being used under desks, in the toilets and in the playground. Department for Education data published today tells a similar story: only 16% of secondary pupils say that their school’s mobile phone rules are followed all of the time. That means that teachers are spending valuable time spotting phone use; that school leaders are having difficult conversations about enforcement; and, most importantly, that digital distraction continues to crowd out learning.
How schools choose to implement the existing policy really does matter. Leaders need to feel more empowered by Government to make schools genuinely mobile phone-free environments. In schools where pupils are allowed to keep their phone in their bag or blazer—those with so-called “not seen, not heard” policies—only 20% of school leaders report that the rules are followed all of the time. By contrast, in schools with mandatory collection policies, 74% of leaders report that the rules are followed.
That is why I am today announcing that we will update statutory guidance to make it clear that schools should have policies that ensure children cannot have unsecured mobile phones in their blazer or bag throughout the school day. This backs teachers and leaders by giving them the clarity they are asking for. It still gives schools the choice as to whether phones are collected at the start of the day, kept in secure lockers or stored in a lockable pouch, or any other strategy that ensures phones are not within reach of children. We—parents, teachers and Government—need to work together to change children’s expectations about what the school day looks like. It should be a time to get lost in learning and make friendships that last a lifetime, not to be stuck doomscrolling in the corner of the playground.
The revised guidance will come into effect from September 2027, although we encourage schools to move towards implementation sooner if they can. Schools will continue to be able to make reasonable adjustments and exemptions where appropriate, including for pupils with medical needs and those with special educational needs and disabilities. We will work closely with school leaders as the guidance is developed. We want to learn from schools that have already led the way on this issue, ensuring that the approach is practical, proportionate, and able to meet the needs of children and teachers in different settings.
The second plank of this change is a new approach to deploying technology in schools. Today, we are launching a public consultation on establishing independent safety certification of education technology, or edtech, in schools, colleges and early years settings in England. Well designed and purposeful use of technology can support teaching, learning and the smooth running of settings. We also have a duty to support children and young people to learn to use technology confidently and safely. However, technology should never get in the way of learning. It should enhance, rather than shortcut, cognitive development, and without question it must be safe. Children’s safety and their educational outcomes, human interaction and teacher-led direct instruction must remain at the heart of our education system.
The Department for Education already sets standards for the safe use of technology, but settings are often still left to make sense of whether technology products meet those standards. These can be complex and technical issues about data protection or content safety, for example. That is why we are launching today’s consultation, which will invite views on whether certification for specific categories of technology should be introduced. It will explore which types of technology pose the greatest risks, including through exposure to harmful content, the use of children’s personal data and the impacts on cognitive development or social and emotional wellbeing. The consultation will ask about the standards and criteria that should underpin any scheme. The aim is to reduce the risk of harm to children, remain proportionate for suppliers of all sizes, be robust over time and be useful for educational settings. Findings from the consultation will inform the design of any future certification scheme, including the appropriate timescales for its introduction.
The proposed change to mobile phone guidance and the consultation on edtech safety certification meet the Government’s wider vision for childhood and education. International evidence, including the latest results from the programme for international student assessment, shows the strength of England’s education system. We are determined to go further to improve reading, writing, oracy and numeracy; to strengthen engagement; and to make schools unmissable for children. We want to go further on the depth and rigour of reading, so that we can inspire a love of reading for all children.
PISA highlights the risks when technology begins to replace the challenge, rigour and human interaction that define great teaching and learning. Technology has a place in our classrooms, but it should always be in support of learning, not become a substitute for it. To quote directly from PISA’s recent report:
“Technology can be a powerful amplifier of learning, but only if students are equipped with the cognitive and metacognitive tools to use it wisely. That means protecting time for reading in the school day. It means designing digital learning platforms that reward reflection, not just reaction.”
This Government are determined to get ahead of these challenges by shaping the role that technology plays in children’s lives, rather than leaving children to be shaped by it. I commend this statement to the House.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Laura Trott (Sevenoaks) (Con)
I am delighted to come to the House today to welcome a proper phone ban in place for schools. The Government have finally done the right thing, but they have been on what I would euphemistically describe as a journey. We should remember that the former Prime Minister told us that a legislative phone ban was “completely unnecessary”. The previous Education Secretary, the right hon. Member for Houghton and Sunderland South (Bridget Phillipson), stood opposite me here and, in her warm and friendly manner, dismissed it as “a headline-grabbing gimmick”. When I raised this topic at Education questions, a then Education Minister told me to think of something better to go on—not condescending at all. When I asked the Government in this House to rule out a “not seen, not heard” policy, they refused. The stats that the Minister is citing today are correct, but they are essentially the same as the stats we quoted a year ago in this House, and the Government refused to act on them.
Let me remind Labour Members how many times they voted against a legislative phone ban in schools: not once, not twice, but seven times. Even the Minister, who I am sure has agreed with me all along, was forced through the voting Lobbies time and again, and the new Education Secretary, who also voted against it, has clearly had a change of heart.
The Conservatives and, to be fair, the Liberal Democrats, who also supported the ban, were told by Ministers that the majority of schools had a phone ban in place and that the existing guidance was working. It was therefore quite something this morning to have facts that I was repeatedly told in this House were incorrect being used by the Education Secretary, in the media, to justify the new guidance. We must also remember that the guidance was put on a statutory footing only a month ago. One month, and already the Government have to come back and toughen it up. We could have saved a lot of time and confusion for schools if the Government had just listened to us in the first place.
The Minister has confirmed that the guidance will only come in next September. That is a self-inflicted whole extra year of lost learning time while schools have a previous set of guidance, issued only a month ago, that the Education Secretary admitted this morning is not working—all because the Government refused to listen to the evidence. That is at best frustrating and at worst chaotic.
We have got there in the end, however, and this is a significant moment. I pay tribute to the many campaigners who have fought for this, the many parents who have spoken out and the many pupils who have bravely spoken about their own experiences. Smartphones in schools are a disaster for learning, a disaster for safeguarding and a disaster for happiness. This is an important step forward in giving children their childhood back.
I welcome the news that the Government are consulting on an independent safety certification for edtech. Will the Minister clarify whether the review will look at all edtech products currently being used in schools or just new edtech products entering the market? Will he also confirm that the review will look at education outcomes as well as safeguarding? Does he have a timeframe for the consultation? How is the review consistent with rolling out unevidenced AI tutors for the most disadvantaged? Those are the very pupils who need evidence-led, teacher-led support. Will the Government commit to not rolling out the programme until they can guarantee the safety and efficacy of AI tutors?
I welcome the Government finally getting to the right place. A full phone ban in schools is the right thing for behaviour and attainment in our classrooms. It will keep schools as places of learning and will turn the tide on the pervasive screen creep that is destroying childhood. We must never accept that just because something is new, it is progress; just because it involves technology, it is automatically better; and we must never again allow anything into our classrooms that has not been proven to be safe for children.
Josh MacAlister
In the spirit of problem solving, I welcome much of what has been shared by the right hon. Lady in response to the statement, and I too thank all the campaigners outside this House and all the Members, both Government and Opposition, who have been pushing for progress on this issue for so long.
This is an issue that we, as politicians, will have to keep coming back to in future. If we look back at what happened with legislation to respond to the rise of the use of motor vehicles, we had to pass Bill after Bill in this House to make sure that seat belts and car safety were brought up to the mark. It was genuine iteration. Government and Parliament took action and the industry responded. In truth, we will have to stick at this for years to come. Hopefully, it is a point of reassurance that this Government are committed to getting ahead of these issues and to iterating time and again to get ahead of the problem.
A lot has changed in the last year on the strengthened guidance that we introduced. The proportion of schools with full bans has doubled since September, which is extremely welcome. I also draw the House’s attention to the fact that this was an issue that the Conservatives did a lot of speaking about when they were in government. I have here a list of all the occasions on which the 10 Conservative Education Secretaries had a chance to do something about this. They were raising the point as far back as 2018. [Interruption.] The right hon. Lady says that I said they were right. I felt a lot of sympathy with those views when they were shared originally; the difference—and it is a big difference—is that we have done something about it. In a way, the best reflection of a party’s priorities is how that party chooses to use the precious time that is available to legislate, whether we choose botching Brexit, making a mess of a Budget, pushing a phoney war with trade unions—as the Conservatives were doing in their final few months in government—or prioritising children and legislating for children. We have done the latter, and I am delighted that we have done it. We were only able to do it because we had a Bill, and we prioritised it in this House.
Josh MacAlister
Well, we put it on a statutory footing because we had a piece of legislation.
The question that is worth a moment of response was about the educational outcomes being within the scope of the certification process. AI tutors are a real concern, but there is an opportunity there. The Government are funding some of the leading companies around the world to develop products. They will then go into a separate programme for which we have funding, led by the Education Endowment Foundation, to establish the impact on educational outcomes and attainment. It is entirely right to suggest that there should be no widespread deployment of this technology before we know its full effects on cognitive development. Of course, there are also safety issues.
Madam Deputy Speaker (Caroline Nokes)
I call the Chair of the Education Committee.
Helen Hayes (Dulwich and West Norwood) (Lab)
I thank the Minister for his statement, and welcome the announcement of strengthened guidance on mobile phones in schools. It constitutes agreement with the Select Committee, which called for a policy whereby children have no access to their phones during the school day rather than a “not seen or heard” policy. The Committee also said that schools should be given the resources, where needed, to implement such a policy in full. For secondary schools, the cost of buying pouches can be as much as £20,000. How will the Government ensure that schools have the resources to implement the policy effectively?
The Committee is currently undertaking an inquiry on AI and edtech. We have received a vast amount of evidence about the complexity of this landscape and the challenges that schools face in respect of procurement and the deployment of technology, and understanding the pedagogical basis that underpins it. Standards should be set, and I welcome the Government’s consultation, but they should be set in relation to a clear sense of the educational purpose of the technology, a deep understanding of pedagogy, and an understanding of the technology itself. What work has been undertaken on those aspects to underpin the Government’s thinking in this area?
Josh MacAlister
I thank the hon. Lady for her long-standing campaigning and support for these issues, including the work that she has done in her role as the Chair of the Education Committee. The source of the Government’s confidence in recommending this as the approach that all schools should take from September next year is that 39% of secondary schools are already, from within their existing budgets, able to implement a full ban, which means that young people are not taking phones around the school in the middle of the day. They have found a number of means of doing that, which include pouches. We will work closely with school leaders very closely to ensure that this is implemented effectively next September.
The hon. Lady asked about the role of the certification process, and the deployment of AI tools and the need to ensure that they are effective. I completely agree with her description of the complicated landscape that headteachers and subject leads face when deciding what to use: that is exactly why we want the certification process to go alongside the trials and the evaluation work that we want to do, specifically on the use of AI tools in the classroom. We need to do that as quickly as we can, but, as the hon. Lady will know, the quality of these trials needs to be robust enough to provide schools with really clear guidance.
Munira Wilson (Twickenham) (LD)
I very much welcome this change of heart from the Government. There is no place for phones during the school day, and stronger guidance for schools on mobile phone use is a very welcome step, as is the edtech review. Classrooms should be places of focus and learning, free from the addictive and demanding world of social media that, sadly, so often leads to bullying, but schools need the right equipment and procedures in place.
We Liberal Democrats are very clear that it should be up to headteachers to decide how they keep phones out of reach of pupils, but I reiterate the Chair of the Education Committee’s comments that this will come at a cost and that school budgets are already stretched to breaking point. Some schools will ask parents to buy the pouches, but parents are already facing the ever-rising costs of sending children to school. Can the Minister assure me that school leaders across the country will have the necessary funding to implement the guidance effectively?
For schools that want to ban smartphones completely—some are going down that route already—one barrier is that some bus companies require bus fares to be paid on an app on a smartphone, and they are not willing to change their ways. Is the Minister looking at these sorts of barriers for schools that want to go a step further?
I welcome the clear assurance from the Minister that, for pupils with medical or special educational needs and disabilities, appropriate exemptions and adjustments will be made by schools. This must not be onerous or discriminatory towards individual children. Will he confirm that young carers will be included in such exemptions?
Finally, with an increasing number of schools giving children digital devices to do schoolwork on throughout the school day, and then homework at home, can the Minister confirm whether the edtech review will also look at the amount of screen time that children in schools are being exposed to?
Josh MacAlister
I know that the hon. Member has been a keen campaigner on these issues over a number of years. On resources for implementation, as I shared in response to the question from the Chair of the Education Committee, we know that 40% of secondary schools have already implemented, from within their existing budgets, some version of a complete ban during the school day. With the range of options that are available, we are confident that schools will be able to implement this change, but we will engage closely with school leaders over the coming months to ensure that we have a version of this that is effective and can be implemented with the resources that are available.
I turn to buses. Payments are an issue in my own constituency, where Stagecoach requires young people to have an app much of the time. It is something we need to look at, and the hon. Lady is absolutely right to highlight it. Setting out the changes now, with the lead-in that we have, means that we can get to work on tackling some of those issues. There are lots of other options for how bus companies can get young people to use their services without insisting on payment through a smartphone.
The hon. Lady’s important point on young carers is well made, and I would be very happy to look at that further.
Peter Swallow (Bracknell) (Lab)
Parents across Bracknell Forest will welcome the strengthened guidance on mobile phones in schools and the fact that the Government are having a look at edtech. I agree with the Minister that we need to make sure that the guidance is implemented in an intentional way, guided by pedagogy. May I ask him to touch on data concerns? One of my concerns about AI being utilised in the classroom without clear guidance is that we need to make sure that the data is kept safe and secure. It should not be the case that foreign tech companies are profiting from sensitive data from our young people.
Josh MacAlister
I thank my hon. Friend for flagging this issue. The edtech certification process that is out for consultation today asks questions about this, and the intention is for the design of the scheme to go beyond classroom edtech and apply to edtech that may enable the smooth running of a school. That includes complex technical questions about things such as data privacy and collection.
Sir Julian Lewis (New Forest East) (Con)
I presume it is too much to expect a Government Minister to admit that the shadow Education Secretary was right to propose this measure previously and that the Government were wrong to vote against it, so let me ask him something easier to answer. What does he think the measures will be in the evolutionary process that he describes when schoolchildren start returning to the classroom with long essays that have clearly been the result of the application of AI? It will put teachers in an extremely difficult position, and it would be good if we could be ahead of that particular curve.
Josh MacAlister
The right hon. Member asks excellent questions in this House, and I am very happy to answer the specific one about homework and AI. He is right to highlight that this is an issue to which we will need to return in years to come. In fact, in many ways homework has already been highly disrupted by the use of generative AI tools. The issue for school leaders and teachers is ensuring there are methods of assessment and pushing learning that have grit and friction. Often that will need to be in the classroom, where we can be confident that AI tools are not being used to do the cognitive offloading, meaning children miss out on the opportunity to grow and develop, which is what our schools should be all about.
Mr Jonathan Brash (Hartlepool) (Lab)
Speaking as a former teacher and, indeed, as a parent, I warmly welcome this announcement from the Minister. Our schools should be phone-free environments focused on learning. Furthermore, as a parent, when my daughter Alice leaves the front door in the morning to go to her brilliant Hartlepool school, and when she leaves the school gate at the end of the school day, I do want to be able to contact her and to know where she is. Does the Minister agree with me that schools banning pupils even being able to arrive at school with a phone are going too far, and that lots of parents would have serious concerns about that?
Josh MacAlister
My hon. Friend is right to highlight the challenges in some of these debates, but I think headteachers are in an incredibly good position to make these judgment calls for their school community. They do not do that lightly; they often do it in deep collaboration with parents and the wider school community. I have been to schools that have completely banned mobile phones, including on the way to and from the school. In some places, there will be reasons why that is not appropriate—we have heard from some Members about public transport options—but I do think it is down to headteachers to make those decisions. They of course have the best interests of children at heart, and they can see the impact some of these measures have on children in their school.
Mike Martin (Tunbridge Wells) (LD)
I am proud to say that we are ahead of the game in Tunbridge Wells. When the Government failed to pass the legislation originally, its secondary schools got together, agreed a shared policy and implemented it. The policy was to have no smartphones on the school grounds, which therefore means pupils will not be taking smartphones on buses either. Dumbphones can be carried for the purposes of safety if necessary, but they have to be switched off during the school day. That was rolled out this September, the feedback is good and it seems very successful. Have the Government considered this as an option?
Josh MacAlister
We are aware of that option being available to schools, and I know of some schools that have taken that approach. Part of the reason why we are making this announcement this week, with sufficient time ahead of implementation of updated guidance for September next year, is to extract the best learning from existing practice in the school system, including the school referenced by the hon. Member. We want to make sure that the way in which this is described allows for the best existing practice that has been developed, including the use of what are sometimes called dumbphones.
Dr Sam Rushworth (Bishop Auckland) (Lab)
I thank the Minister for the announcement of this updated guidance. I still remember not long ago the look of embarrassment on the faces behind the shadow Secretary of State when she opposed the Government’s efforts to get to grips with Grok and nudification apps. Of course, the most harmful behaviour on phones happens outside school, so would the Minister update us on the Government’s progress in keeping children safe from the features of their phones that can cause real damage?
Josh MacAlister
Yes, there is a wider set of issues to do with children and technology. The Government have taken action on a full social media ban, which will come into effect next year. Action has been taken against AI chatbots and nudification images, and there is of course the action we are taking today, which builds on action we took earlier this year. All of that taken together is this House and the Government trying to wrestle with the best way to move on this issue and get ahead of it. As I said earlier, I believe we will have to come back to this issue time and again to be ahead of the curve.
Vikki Slade (Mid Dorset and North Poole) (LD)
On the conversation about exclusions, may I make the case for young carers not to be excluded from the freedom to learn because of the distraction of what might be going on at home? That is why I have been calling—in conjunction with MYTIME Young Carers, a wonderful local charity—for a young carers champion in every school. I have written to the Minister to ask for a meeting to discuss that. Will he now agree to meet me to see how we can protect young carers not just in having a single point of contact, but in everything we do for them in our schools?
Josh MacAlister
I apologise for the lack of response to the hon. Lady. As I am not the Minister responsible for young carers, I would be the wrong person to speak to, but I am sure my colleague would be happy to meet her. As a former teacher, I recognise and agree wholly with what she said about the need for children to be freed up, especially if they have that burden and responsibility in their home life. Most of us in this House are, I think, of an age where we did go to school without smartphones in our pockets. There were ways of speaking to the head of year, going to the school reception and contacting home, and there is no reason why that cannot work in the future.
Chris Vince (Harlow) (Lab/Co-op)
I thank the Minister for his statement. I stopped being a teacher in 2020. I am pretty certain that kids had smartphones in 2020, yet I heard nothing from the then Government about banning them, so it is a bit rich of the Opposition to suggest that we have done nothing about it.
On young carers, the Minister will know that I am a big advocate of supporting them and have often raised the issue of young carer leads in every school. Will he add to what he has said about ensuring that young carers are not disadvantaged, taking into account what he said to the previous speaker?
Josh MacAlister
My hon. Friend mentions young carers about as much as he mentions Harlow! [Interruption.] Yes, very disappointing!
To repeat the point, it is important that young carers at school have the freedom to get on and learn. There are ways of ensuring they have the ability to contact home. I know there are thousands of heads of year and pastoral leads in schools who have a very good understanding of the children in their school and will help to facilitate that connection so that they are not isolated or disconnected.
Tom Gordon (Harrogate and Knaresborough) (LD)
I welcome the steps the Minister outlined to ensure phones will no longer be a distraction in the classroom, but for many children they can be a lifeline if they have chronic conditions such as type 1 diabetes. I am pleased to see an acknowledgement about an exemption for medical or disability purposes. My concern is that if there is a supply teacher, or if children are moving year group or moving school and transitioning, how will the information be passed on to ensure we do not end up in a situation where a child needs to use a medical device or app on their phone to monitor their health condition and they end up being denied it?
Josh MacAlister
I thank the hon. Member for making that important point. Schools already have systems in place for ensuring that there are handovers between teachers. I cannot stand at the Dispatch Box and guarantee him that in every single case across the entire country, 22,000 schools will always get it exactly right, but it is important that schools have those systems in place. The Government support them to do that. He is right that having that exemption and clarity for those who need to use a device that assists them with medical needs will still be important in future.
Mary Creagh (Coventry East) (Lab)
Will my hon. Friend join me in congratulating the staff, students and governors at Stoke Park secondary school, who have a “Never used, seen or heard” mobile phone policy? They were in this place yesterday at the Education Centre with a bunch of year 9 students, and we debated the ban on social media for young people. Does he agree that that is an essential next step in giving our children their childhoods back and protecting them from extreme anorexia, the manosphere, pornography and self-harming websites?
Josh MacAlister
I agree with my hon. Friend’s statement and thank the leaders at Stoke Park secondary school for being ahead of the curve and taking action on the use of smartphones in schools. This measure is part of our action to ensure that those below 16 are unable to access social media, so that they get their childhoods back. My hon. Friend will know that I have supported that from a number of different positions in Government, as well as with a private Member’s Bill that set out exactly that, along with some of the changes that we have now brought in for schools.
Monica Harding (Esher and Walton) (LD)
I have had over 500 emails from constituents calling for a smartphone-free childhood, so I welcome today’s announcement. However, while restricting access to smartphones, schools are increasingly issuing laptops and tablets that pupils can take home and use beyond the school day. As some independent schools are re-examining the role of screens in education, technology use is expanding across the state school sector. Will the Minister explain how the Government will ensure that one form of screen dependency is not simply being replaced by another? What consideration has been given to the amount of time that children spend using school-issued devices both in and outside the classroom?
Josh MacAlister
The hon. Member has hit the nail on the head: that is the issue that schools need to navigate at the moment, and we need to help them. The edtech certification, on which we are starting the consultation, is designed to tackle exactly that issue and help school leaders navigate some of those choices, as are the trials and evaluations that we will put in place on AI chatbots. That is linked to the warnings from PISA about school systems elsewhere in the world, where technology has been left to let rip in the education system and has displaced books, reading, writing and some of the more tactile things that we know children need in school to have the right cognitive development.
Cat Smith (Lancaster and Wyre) (Lab)
I welcome the Minister’s statement. On Friday, I visited Lancaster high school in my constituency; under the leadership of Colin Malone, it has seen its best-ever GCSE results. During my visit, I did not see or hear a mobile phone. It is an example of a mobile-phone ban ensuring that children’s educational outcomes are improved. Will the Minister join me in congratulating Colin Malone on his leadership? My question to the Minister is about changing technology. While we are talking about mobile phones, I am aware that technology is moving on, with AI glasses and smartwatches also in the mix. Does he have any thoughts on that?
Josh MacAlister
Yes, certainly. First, congratulations to the students and staff at Lancaster high school on their GCSE results. It is encouraging to hear that part of that success is the leadership of the school driving down the use of smartphones altogether. I share my hon. Friend’s concerns about some of the advances in technology, and I am determined and prepared to further clarify guidance, particularly in relation to smart glasses, so that it is absolutely clear—it is clear already—that they should not be anywhere near our schools.
Matt Rodda (Reading Central) (Lab)
I thank the Minister for his statement and the way that he has addressed other issues around edtech, which are also very important. Could he say more about the work that will be taken forward with parents in the next few months, so that there can be further discussion about this important issue to help parents understand how the Government are taking policy forward?
Josh MacAlister
Absolutely. I have not had a chance to share with the House that we will be issuing guidance for parents of older children at the start of next year on healthy screentime use, which is linked to the action we are taking for education settings as well as the wider social media ban that will come into effect next year. It will build on guidance that is already in place for very young children, where there has been concern about excessive screen use for those in early years settings.
Leigh Ingham (Stafford) (Lab)
Will the Minister congratulate King Edward VI high school in my constituency, which has rolled out a phone-free school programme this year that the young people have welcomed? However, other headteachers across my constituency—at Sir Graham Balfour, Stafford Manor and Blessed William Howard schools—have said that the resources needed to administer a phone-free school are a challenge. Will the Minister say more about the support we can provide to schools that are putting the measures in place?
Josh MacAlister
I thank the teachers and the headteacher at King Edward VI high school. I will also share a reflection that many Members of the House will have had from school visits, which is that children who may have gone into the process thinking that they would miss accessing their smartphones in break time—or sometimes in lessons, when they should not be on them—often described the freedom that comes from focusing that big chunk of the day on in-person interaction and learning. As I have said, just under 40%—39%—of secondary schools already have a full effective ban in place in line with what we are proposing. We will, of course, engage with school leaders in the coming months to ensure that our proposal is designed in such a way that it will be implemented effectively.
Alistair Strathern (Hitchin) (Lab)
It was great to see local schools like the Priory and Hitchin Boys’ and Girls’ lead the way on keeping phones out of the classroom. Having campaigned with parents and teachers to make this a norm, I am delighted that the Government are leading on this issue. As others have alluded to, the growth of generative AI is threatening to tread on children’s learning in the same way that smartphones did; just as we did with smartphones, we should not treat that as inevitable or unavoidable. How does the Minister intend to support our schools to ensure that generative AI can be used as an effective tool to support learning, but kept out of the spaces where it can be harmful to learning?
Josh MacAlister
My hon. Friend is right to highlight this matter. He has been a massive campaigner on these issues in his constituency and in this House, as have others. My hon. Friend the Member for Beckenham and Penge (Liam Conlon) has also been a big advocate for these issues. Earlier this year I was in Estonia, which has a high-performing school system and is adept at making good use of technology. While I was there, I saw the care and thought that went into the development of generative AI models that could be Socratic with pupils—they could coach and teach back and forth. Anything like that would need to go through rigorous testing to ensure that educational outcomes would be improved, but that shows the care and thought that needs to go into the deployment of such technologies.
Sarah Russell (Congleton) (Lab)
I welcome the Minister’s statement on smart glasses, which I profoundly believe should be banned from all public buildings as a matter of urgency. In the Information Commissioner’s findings about edtech, it already has concerns about the data that those companies admit they are farming on children. My concern is about the totality of the information that can be gleaned about children from across both the technology they use at home—such as their smartphones, including their location, and from apps that they might have, such as menstrual trackers, where children might not understand the importance of the personal data that they are sharing—and edtech. I am concerned that by the time AI recruitment decisions are being made, when the current generation are 25, 30 or 40 years old, the totality of information that could be known about them online will be staggering. Will the Minister take an approach that involves high levels of scrutiny of the totality of information that could be held about children, both from the edtech sector and outside of it?
Josh MacAlister
My hon. Friend has done a very good job of describing the complicated nature of some of the risks and concerns that will affect this generation of children, the first to grow up online to this extent. It is because of the issues my hon. Friend raises that we are proposing an edtech certification scheme. As I have stressed in response to other hon. Members, it is about not just edtech in the classroom, but any use of technology in education settings, including colleges and early years settings and schools, that captures data in order to improve the running of the school or homework or other services. We want to ensure that that certification scheme covers all those services.
Tom Collins (Worcester) (Lab)
I welcome the thought that has gone into this new guidance for schools on phones, but young people have told me that their worst relationship with their devices is when they are at home, not when they are at school. I really welcome the independent safety certification approach, but we need to close the loopholes on safety for digital devices across the board so that they meet the same standards as technology everywhere. Does the Minister agree that we have more work to do to implement digital product safety so that technology is safe for everybody, everywhere, all the time?
Josh MacAlister
I wholly agree with my hon. Friend that we have much more work to do. The magic of the social media ban, which comes alongside a series of other Government actions to reclaim childhood, is that if we get it right, it will give hours of time back to children. The time that is being used for doomscrolling at the moment is taking away time for children to do real-life things that are hard and rewarding and that give them genuine joy. When I have spoken to young people and asked, “If you got an hour back from your screen, what would you do?”, there is such a variety of answers, and that gives us a real sense that those things are what children should be doing. It just goes to underscore the importance of the ban.
Jessica Toale (Bournemouth West) (Lab)
I have been inundated with hundreds of messages from parents and my local Smartphone Free Childhood group, who are deeply concerned about the impact of their children’s smartphone use. Many have felt that the missing piece has been a decisive intervention—the hard stop that a complete ban in schools can provide. Does the Minister agree that this clearer, stronger guidance can provide parents with the confidence that they need that a phone-free school is just that?
Josh MacAlister
Absolutely. The action that we are taking today, building on action that the Government have announced in recent months, is all about trying to make this a common effort across parents, schools, Government and society. We do want to draw a line and recognise that it has gone too far and that we did not get ahead of this issue as a society. We want to get children their childhood back. [Interruption.] Members on the Conservative Benches who are heckling me on this point will know that we are only able to do that because we have prioritised legislative time to focus on children—not something that could be said of the Conservatives in their final few years in government.
Andrew Cooper (Mid Cheshire) (Lab)
I thank the Minister for his statement, which answers the call from many school leaders in my constituency for the Government to lead on this issue and provide a consistent approach that all schools can follow. Will he join me in praising Winsford academy in my constituency, which took bold action in early 2024 to introduce phone pouches after more than 350 incidents over a five-week period. The school reported immediate improvements in concentration and social interaction, and they were sustained over time. Does he agree that this is exactly the sort of outcome we want replicated across all schools?
Josh MacAlister
Absolutely. Winsford academy, like many schools, has got ahead of this issue. I imagine that the teachers there saw the big impact on learning and teaching that uncontrolled smartphone use had in the school. It is because of the work of those schools—40% of secondary schools have gone ahead of the existing statutory guidance and are making sure that children do not have access to phones in their blazers or bags—that we are confident that we can do this for the whole of England. We are drawing the line in the sand a bit further and saying that when children are in schools, they should not have any of the distractions that come with a smartphone or any phone at all.
Pam Cox (Colchester) (Lab)
The Stanway school in Colchester gained national attention through a Channel 4 documentary called “Swiped: The School That Banned Smartphones”, in which phone-free experiments saw pupils who took part reporting lower anxiety, improved concentration and an extra hour of sleep each night. Does the Minister agree that the experience of students in Colchester demonstrates the benefits of smartphone-free schools? What support will be in place to help more schools adopt those policies?
Josh MacAlister
I went to the screening of “Swiped” when it came out and met some of the staff who were involved in the project and some of the researchers. The project showed the impact on children over a period of weeks when they had that time freed back up. If I remember rightly, part of the experiment involved children putting their phones in a perspex box on the way into school, and it was left there for a number of weeks. I do wonder what the impact on this House would be if we were to do the same as an experiment.
Mr Luke Charters (York Outer) (Lab)
I thank my hon. Friend the Minister for today’s announcement. As a former teacher, he knows better than most that the best kind of learning happens away from the screen. We are joined in the Gallery by my mum, who is a wonderful grandma to my boys, baby Louis and Robin. Does the Minister agree with me and my mum that those early screen habits are very important and that the Government should set clear guidance for parents, grandparents and carers about the importance of screentime habits at home?
Josh MacAlister
Quite. What a what a lovely answer to be able to give: I agree with my hon. Friend and his mum about this issue. Of course, this is an intergenerational issue as lots of young people grow up with the care, love and support of aunts, uncles and grandparents. It will be essential to ensure that everyone is on board with these changes so that we can set that new norm.
Joe Powell (Kensington and Bayswater) (Lab)
I thank the Minister for his strong and consistent leadership on this issue over the last two years. I totally agree that the expectation should be for school leaders, parents and the Government to work together. I really welcome what he said about further guidance being on the way for parents.
Some constituents have contacted me with concerns about how some schools have been proactively sending out guidance from the Smartphone Free Childhood campaign whereas others have said that that is perhaps a partisan campaign, which seems to me to be overly cautious. Will the Minister join me in paying tribute to the Smartphone Free Childhood campaign and expand on whether he thinks that some of its campaigns, such as the parent pact, are useful tools for parents?
Josh MacAlister
I thank my hon. Friend for his campaigning and leadership on this issue in his constituency. I know that he has an active Smartphone Free Childhood campaign group and that he has been a big advocate with Joe and Daisy, the leaders of the movement. Many hon. Members across the House will be familiar with the campaign; I would not describe it as partisan at all. The campaigners have built a remarkable community behind the change, and the attention that they have brought to this issue has been part of what has shifted politics on it in recent years.
Josh Fenton-Glynn (Calder Valley) (Lab)
I welcome these measures. Parents and teachers have called for them. This is the right thing to do.
The Facebook whistleblower Sarah Wynn-Williams said that Meta would target teenage girls who deleted selfies with advertising for beauty products, skincare and even cosmetic procedures, monetising their insecurity. Tech giants have repeatedly shown that they will not regulate themselves. Is the Minister having conversations with the Secretary of State for Digital, Culture, Media and Sport to ensure that algorithms are regulated to protect our kids?
Josh MacAlister
I thank my hon. Friend for the question. I am familiar with Sarah Wynn-Williams’s book and the claims made in it, which are extremely serious. The Secretary of State for Digital, Culture, Media and Sport is concerned about the need for the public square, which we find now to be largely online, to reflect the British values we have in everyday life. She is personally passionate about that, and that approach is shaping her attitude towards the forthcoming social media ban.
Connor Naismith (Crewe and Nantwich) (Lab)
In Cheshire, we are leading the way on Esther Ghey’s phone-free education campaign, with 92% of state high schools in the county using lockable phone pouches this school year. That was made possible in no small part thanks to funding and leadership from our Labour police and crime commissioner, Dan Price. Will the Minister visit Cheshire to see the difference that that is making to safeguarding and educational outcomes in our local schools?
Josh MacAlister
I join my hon. Friend in recognising the heroic leadership and commitment of Esther Ghey following the shocking, appalling circumstances her family have faced in recent years. She has been able to turn that into such positive, hopeful campaigning, which is proving to be very effective. I saw Esther a couple of weeks ago, when she raised issues to do with this very guidance with me. It is a tribute to her.
I also recognise the leadership of Dan Price, whom I know. He has spoken to me about the work he has done with schools as police and crime commissioner for Cheshire. He caught on to the link between what children and young people are doing on smartphones and social media and incidents and concerns in the community. He has been ahead of the curve on that.
John Slinger (Rugby) (Lab)
In 1943, Churchill reportedly said:
“We shape our buildings and afterwards our buildings shape us.”—[Official Report, 28 October 1943; Vol. 393, c. 403.]
Later, the academic John Culkin said,
“We shape our tools, and thereafter our tools shape us.”
Will the Minister assure the House that the Government will ensure that that trap is not fallen into as regards edtech and other forms of digital technology relating to our children?
Josh MacAlister
My hon. Friend has asked a really great question to finish the statement on. In line with the quotes he shared, either we as a country will have young people who are disrupted by this technology, or we will need to choose to disrupt it so that it benefits children, young people and the whole country. We do have agency and control over these issues; when we believe that we do not, we end up in a dangerous place. The action that we are taking on education follows a series of other actions that the Government are taking to get ahead of the issue.
I look forward to working with hon. Members across the House on further action in the future as the technology develops. We will need to ensure that we shape it so that it benefits our children, rather than having the disruption that it can cause impacting children’s outcomes.
Madam Deputy Speaker (Caroline Nokes)
May I thank the Minister for his statement and, indeed, for his comments on mobile phone usage in the Chamber?
English Ethnic Identity (Census Particulars)
Tuesday 10th November 2026
(1 day, 12 hours ago)
Commons ChamberRead Full debate English Ethnic Identity (Census Particulars) Bill 2026-27 View all English Ethnic Identity (Census Particulars) Bill 2026-27 Debates Read Hansard Text Watch Debate
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
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Josh Babarinde (Eastbourne) (LD)
I beg to move,
That leave be given to bring in a Bill to make provision about the inclusion of English ethnic identity within census particulars in England; and for connected purposes.
Madam Deputy Speaker, do you have to be white to be English? This St George’s Bill says, “No, you do not.” I am a proud Englishman. I have proud Nigerian heritage, but my parents and I were born in England. We grew up in England. Our home is in England. Yet some voices attempt to reduce Englishness to a skin colour and to a bloodline.
If we are to go down that path, my mum’s side of the family has been English for as far back as we have traced, yet since I announced the Bill, some of those voices have said:
“You’re not English and never will be.”
“Your family is foreign and will always be foreign, it doesn’t matter if you’re born here.”
“Go home while you have the legs and breath to carry you. Your days are counting down.”
“No deport, only kill”—
death threats for daring to say that you do not have to be white to be English.
If those people want to gatekeep Englishness on the basis of ancestry, let us talk about ancestry, because there is one thing their argument cannot withstand: English history. English ethnicity is real, but it is a matter of historical fact that it has never been one bloodline. The very word “English” comes from the Angles who sailed here from what is now Germany. Then came the Danes. Then came the Normans, the Flemish weavers, the Huguenots who fled France, the Windrush generation who helped to build our NHS, and the Ugandan Asian shopkeepers who lifted our high streets. Even our royal family has German roots: it was the House of Saxe-Coburg and Gotha until 1917. Is the King not English either, I ask?
The layered, multifaceted Englishness that I am talking about is not a new thing. In fact, it is the subject of Daniel Defoe’s best-selling piece, “The True-Born Englishman” in 1701. He said:
“A true-born Englishman’s a contradiction,
In speech an irony, in fact a fiction”.
Of our descent from the Angles, the Romans, the Danes and more, he said:
“Fate jumbled them together, God knows how;
What e’er they were they’re true-born English now.”
He was saying that the English have never been one pure group—that the people some now call the original English were once the newcomers. This is not a dilution of the English people. This is the unique story of the English people.
But ethnicity is about far more than descent. As per the Oxford English Dictionary, its definition is having
“a common cultural or national tradition”.
It is about having a shared life, a shared soul. It is the things we cheer for together and the things we grieve together. There are few places we feel that shared life and soul more than when we watch England play, but I remember the final of the men’s Euros in July 2021, when three black men stepped up to take penalties for their country. They missed, and within minutes were drowned in racist abuse. The message from those dark corners was brutal and it was clear: you are English when you win, according to some, but you are something else when you lose. Well, I refuse to accept that Englishness can be whittled down to the colour of one’s skin, and so do the public. According to More in Common, 74% of people in this country say you can be English, whatever the colour of your skin, and British Future’s findings are similar. The question is whether the state will now catch up.
In the ethnicity question in the census, the only box that says “English” sits under the “White” category. If you are black, the form offers you “Black British”, and if you are Asian, it offers you “Asian British”—but not “English”. The same question in the Welsh census offers a “Black Welsh” category, and in Scotland the census offers “Scottish Asian”, for example. Yet the best that England offers in our census is a miscellaneous write-in box that may as well be the margin. Is the right hon. Member for Richmond and Northallerton (Rishi Sunak), a former Prime Minister, only marginal to our country? Is the right hon. Member for Tottenham (Mr Lammy), a former Deputy Prime Minister and co-sponsor of this Bill, only marginal to our country? What about Ian Wright, Lewis Hamilton and Cynthia Erivo? The list goes on. Are they just marginal, too? Of course not, and the census should say so.
This St George’s Bill fixes that. It provides for the addition of categories such as “Black English” and “Asian English” to the census. The Bill takes nothing away from anyone. “White English” stays exactly where it is, and so do “Black British”, “Asian, British” and the rest. The Bill simply adds choices that reflect how people already see themselves, because it is not for politicians to decide who is English. That is for people to say themselves.
To those who feel uneasy about all this, let me say something directly. To those who feel it sincerely: you are right to be proud of England, its traditions, its quirks and its eccentricities, as I am, but every institution we honour survives only because new people join it and come to care. This includes our churches, our communities and our families. History tells us that Englishness is no different. History tells us that Englishness is not a pie that gets smaller with every slice taken from it; Englishness is a chorus that grows louder with every voice. Nationalism says, “This country is mine, not yours”, but patriotism says, “This country is all of ours.” In this House, we must be patriots.
While this St George’s Bill may add just a few words to a form, we all know that words tell people that they count—that they belong—so let us move people out of the margin and on to the page. “White English”, “Black English”, “Asian English”, “Mixed English”—all are English. Let the next generation never have to ask whether they are allowed to be English. Let the next generation never have to wonder if the St George’s flag represents them. Let them simply know it. Do you have to be white to be English? No, no, no. I commend this St George’s Bill to the House.
Question put and agreed to.
Ordered,
That Josh Babarinde, David Lammy, Sir James Cleverly, Adam Jogee, Ben Obese-Jecty, Victoria Collins, Munira Wilson, Layla Moran and Mark Pritchard present the Bill.
Josh Babarinde accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 23 April 2027, and to be printed (Bill 178).
Financial Services and Markets Bill [Lords]
Tuesday 10th November 2026
(1 day, 12 hours ago)
Commons ChamberRead Full debate Financial Services and Markets Bill [HL] 2026-27 View all Financial Services and Markets Bill [HL] 2026-27 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 53-I Marshalled list for Third Reading - (14 Sep 2026)
The Chancellor of the Exchequer (John Healey)
I beg to move, That the Bill be now read a Second time.
Two weeks ago at this Dispatch Box, I set out a Budget to provide breathing space now and fresh hope for the future. It was a Budget to steer Britain through the global economic storms and a Budget built on fiscal discipline, which now more than ever underwrites every promise that this Government make to the British people. But as I said then, the only way for British families and for Britain’s finances to be secure in the long term is to have an economy that is growing more strongly. That means we must raise investment, back wealth creation, support innovation and help to create good jobs in all parts of the UK.
I welcome the constructive spirit in which the Opposition in the other place have approached this Bill, and let me also pay tribute to our Treasury Minister, Lord Pitt-Watson, for the way in which he led the Bill in the upper House and for the expertise he brought to the debates. It was during those debates that the Opposition Front Bench declared that this Bill was
“moving in the right direction”.—[Official Report, House of Lords, 8 July 2026; Vol. 858, c. GC122.]
I hope we can continue in this House in a similar spirit of cross-party support.
Let us take the example of child trust funds. Back in 2003, I was with the then Chancellor, Gordon Brown, when he promised that the funds would
“enable all young people to have more of the choices that were once available only to some.”—[Official Report, 9 April 2003; Vol. 403, c. 286.]
Around 6.3 million of these accounts were then opened, but then, regrettably, they were closed in 2011 when the child trust fund was abolished under the Conservative-led coalition. For some families, accessing that money since has not been straightforward. Where a young person lacks the mental capacity to manage their own financial affairs, their parents or carers generally have to obtain formal legal authority through the Court of Protection before they can access a matured child trust fund on their behalf. That can be lengthy and confusing, and up to 126,000 young people have struggled to get and benefit from the money that was set aside for them. I am grateful to the right hon. Member for Kingston and Surbiton (Ed Davey) and the hon. Member for Horsham (John Milne)—who I had expected to see in this place, but he is not—and others for their work on highlighting this issue. The Government have listened, and we will amend this Bill in Committee to deal with this frustration and unfairness.
There is also strong cross-party recognition that the financial services sector is a growth powerhouse for Britain, not only in London but across the rest of the UK, where nearly two thirds of the jobs in this sector are based: in Leeds, Manchester and Birmingham, for example. In Scotland, 94,000 people work in financial services, alongside 36,000 in Wales and 20,000 in Northern Ireland. This one sector generates 8% of the UK’s entire economic output, exports to all corners of the globe, and every year backs thousands of British firms to start and succeed here in Britain.
Jim Shannon (Strangford) (DUP)
In relation to Belfast, the Chancellor mentions those 20,000 jobs. The sector gives young people in Northern Ireland an opportunity to gain an exceptional job with good remuneration, and to travel, should the opportunity arise, within their companies. What has he done to increase the number of jobs and give more such opportunities to young people in Northern Ireland in the future?
John Healey
The short answer is more investment—encouraged by the UK Government, but decided, often, by the financial services sector itself. My right hon. and learned Friend the Economic Secretary was in Belfast recently to mark the opening of new Bank of America offices—a sign to the hon. Gentleman, I hope, of a flourishing financial services sector in Northern Ireland, and one with a good, strong future.
Graham Stuart (Beverley and Holderness) (Con)
Has the Chancellor made an assessment of the investment and wider economic benefits that would arise from these deregulatory measures? If so, can he share it now? If not now, will he publish it and share it with the House?
John Healey
We have indeed. As the right hon. Gentleman would expect, an economic impact assessment, which he may see in the Vote Office, has been published alongside the Bill. In rough terms—this is probably a conservative estimate—we think that the benefit of the measures in the Bill as it stands will have a value of about £1.6 billion over the next 10 years.
The UK is home not only to some of the deepest and most liquid capital markets in the world, but to some of the largest global banks, the world’s premier insurance market—Lloyd’s of London—and huge digital success stories such as Revolut and Wise. That is why I will always talk up the immense contribution that the sector makes to our economy and to the services that underpin everyday life: funding for the small firm looking to expand, mortgage finance for the first-time buyer and investment for the saver planning for the future. That comes not only from our world-leading banks, insurers and asset managers, but from our mutuals, building societies and credit unions, which are all essential parts of the UK financial system. Just last week, I was pleased to appoint my hon. Friend the Member for Peterborough (Andrew Pakes) as the first ever co-operatives and mutuals champion in Government. He will help to fulfil our aim of doubling the size of the co-operative and mutual sector.
Chris Vince (Harlow) (Lab/Co-op)
I was remiss not to mention my Harlow constituency earlier, so I will make up for that now. Will the Chancellor join me in paying tribute to Harlowsave, a brilliant credit union in my constituency of Harlow—I think that is three times—which supports residents in Harlow to save over the long and medium term?
John Healey
I had not come across the Harlowsave Credit Union, but I am sure that my hon. Friend will be encouraged by the provisions in the Bill, and will tell the members and trustees of the credit union about them. Its provisions, as well as those we will introduce in Committee, are designed to reinforce the strength of credit unions, their ability to extend membership and the common bond that binds them.
Gareth Thomas (Harrow West) (Lab/Co-op)
My right hon. Friend rightly mentions our commitment to double the size of the co-op and mutual sector. One key measure that is needed to achieve that aim is allowing financial co-operatives and mutuals to have better access to our capital markets. I understand that the Law Commission has completed the work to prepare the legislation to enable that to happen, but those proposals are yet to emerge into the sunlight. Does he have any indication of when those proposals might be made public?
John Healey
I cannot tell my hon. Friend exactly when our response will be brought into the sunlight and made public, as he puts it, but I can reassure him that we have followed closely the Law Commission’s work. My right hon. and learned Friend the Economic Secretary has the commission’s report, and we are giving it due consideration, as my hon. Friend would hope and expect.
Britain is in the midst of global economic storms and uncertainties. The conflict in Iran is driving up energy costs, inflation and the cost of borrowing. At the Budget, I rejected broad-based tax rises—keeping the promises made in our manifesto—and crude cuts to public services, but there were difficult decisions to meet our fiscal discipline, to fully fund the new policies I set out, and to provide some breathing space for families. Those included asking banks, through the bank surcharge, to help to pay for the energy help for households this winter. This is time limited and will end in March 2028. The time limitation is set out in the Finance Bill.
The ask that we made of banks at the Budget goes hand in hand with support. On my second full day as Chancellor, I convened a roundtable discussion with leading executives in the City, because I wanted to confirm my fullest commitment to the Government’s financial services and growth strategy and to this Bill.
Michelle Scrogham (Barrow and Furness) (Lab)
I welcome the commitment to make changes to the financial sector, but I have deepening concerns over security and cyber-attacks. The banks’ rush to go digital and pull out of our high streets has left a huge vulnerability for people, particularly in rural areas. What work is being done to ensure that cash services and face-to-face services remain in our towns and high streets, given that such attacks may occur in future?
John Healey
As a very active member of the Defence Committee, my hon. Friend probably knows better than many about the threats to our computer and cyber-systems from cyber-attacks. She will be aware that Richard Lloyd has recently completed a report on access to banking, which the Government have just received. In Committee, we will look to reinsert a provision that will allow us to respond to the recommendations of Richard Lloyd’s report. I aim to publish that report and the Government’s response shortly.
The Bill does four key things. First, it streamlines regulation and reduces administrative burdens on business while maintaining high standards.
Rupert Lowe (Great Yarmouth) (Restore Britain)
Why does the Chancellor not go the whole hog by, rather than reforming regulation, scrapping the Financial Conduct Authority and the Prudential Regulation Authority, which since 2000 have held back London as a risk-taking centre? That would allow people to return to the concept of caveat emptor, which is what our success was built on, and release the UK economy from the manacles that are holding it back.
John Healey
I think that most would regard the total removal of consumer protection or regulation as a reckless move. I hope the hon. Gentleman accepts that the Bill will reduce and remove unnecessary and duplicative regulation. I also hope that, where he has constructive, practical suggestions to offer, he will offer them as part of the House’s scrutiny of the Bill.
Vikki Slade (Mid Dorset and North Poole) (LD)
I am grateful to the Chancellor for talking about consumer protection, but one group of consumers is missing from the Bill: people who have been victims of economic abuse. They are trapped with financial products through no market failure or fault of their own, even if they want to move to something that is cheaper and therefore a smaller risk to their joint borrower. The Bill does not do anything for those people. Will the Chancellor consider some amendments to help them?
John Healey
If the hon. Lady wishes to table amendments for debate and consideration, she should please do so. If she looks at the detail of the financial inclusion strategy that we have published, with some of the measures now being put in place, she will see a recognition of concern for that group of people and some of the measures that may help in the future.
I will return to the four headline purposes and definitions of the content of the Bill, the first of which is the streamlining of regulation, and the second is allowing credit unions to expand, enabling more people to benefit from membership. Thirdly, the Bill modernises consumer protections and access to redress. Fourthly, it supports business lending and investment here in Britain. I am grateful that the Bill has received support from across the sector. UK Finance has confirmed that the Bill supports
“growth and competitiveness while strengthening consumer outcomes”.
TheCityUK has reasonably and rightly said, “Get on with it” and that the priority now needs to be on fully delivering these reforms. Before I move on, I want to pay tribute to my right hon. and learned Friend the Economic Secretary to the Treasury for all her work in developing the policy in the Bill and on the issues ranging from financial inclusion to the digitisation of markets.
Let me take those four major sections briefly in turn. First, on regulation, good growth demands an active state that is willing to deliver better regulation and quicker decisions. The Bill does that by updating the regulatory framework to support innovation, speed up decision making and streamline processes that at the moment add little value. It does so in five ways. First, it reduces the number of regulators that firms need to engage with by abolishing the Payment Systems Regulator and consolidating its functions within the Financial Conduct Authority. Secondly, it speeds up regulators’ decision making with ambitious new deadlines, including when deciding to authorise a new firm. The Bill also creates a new provisional licence regime to support innovative new firms while they apply for full authorisation. Thirdly, it strengthens oversight of the regulators. The Financial Conduct Authority and the Prudential Regulation Authority will now be required to publish long-term strategies, so that regulated firms and consumers can better understand their priorities, and Government and Parliament can better hold them to account against delivery.
Sam Carling (North West Cambridgeshire) (Lab)
The Chancellor mentioned the importance of widening access to lending, which I value very much. On the topic he is talking about, does he agree that it would be great to see in some of the new strategies brought forward by the regulators a greater focus on access to credit for people who are perhaps disadvantaged, who have thin credit files or who have had adverse experiences, such as domestic abuse, as the hon. Member for Mid Dorset and North Poole (Vikki Slade) mentioned, such that we can get them back on to the credit ladder?
John Healey
One of the things I like about my hon. Friend is that he is a regular attendee of a range of different debates in this Chamber, and I welcome him here tonight. He may not have had a chance to study it, so after this debate I will send him our financial inclusion strategy, in which he, like the hon. Member for Mid Dorset and North Poole (Vikki Slade), will see set out some of the points of concern he raises. If not, then either I or my right hon. and learned Friend the Economic Secretary would be happy to discuss it with him further.
Kirsty Blackman
The financial inclusion strategy does indeed highlight the problems and areas where improvements could be made. However, the actual strategies for doing that, and the things that actually need to be put in place to ensure better access to credit across the board, for example, are not quite solid enough. Could the Chancellor commit to looking again at how to improve fair access to credit for everybody?
John Healey
As my right hon. and learned Friend the Economic Secretary has just said to me, the strategy and action plan are relatively new. In many ways—the hon. Lady will know this from her own nationalist Government in Scotland—government is always, in some ways, a work in progress, and where there are improvements and strengthening measures that we can take, we are certainly willing to consider those.
The fourth measure on deregulation is that the Bill will give the Bank of England a new secondary innovation objective when regulating systemic payment systems and digital settlement asset service providers. This will ensure that the UK remains at the forefront of innovation in payments and digital finance. Fifthly, it reforms the senior managers and certification regime, retaining its core guardrails while saving firms an estimated £240 million a year.
Turning to the second part of the Bill, credit unions expand access to affordable credit, encourage saving and strengthen financial resilience in communities right across Britain. At the heart of a credit union is its common bond—the connection that brings together its members, be that place, employer or sometimes occupation. Yet in too many areas, the rules that govern how credit unions operate have simply not kept pace with the way people live and work today. In many cases, moving home, retiring or studying somewhere can stand in the way of someone benefiting from credit union membership. The Bill therefore ensures that credit unions will be able to admit a wider range of relatives, to deal with retirement and to accommodate students, even when they do not live or work in the same place as they study.
I turn to the third part of the Bill: consumer protections and redress. The Consumer Credit Act 1974 was designed and passed over 50 years ago. Research from the debt charity StepChange shows that parts of the Act can be harmful, resulting in many consumers feeling scared, depressed and overwhelmed by what they face. In part, that is because currently much of the information sent to consumers about their credit product is tightly specified by this 50-year-old Act—down in some cases to specific words and even which letters must be capitalised in the advice given. It requires the reading age of an undergraduate, when at least one in seven adults have the literacy skills expected of a nine to 11-year-old. The Bill repeals many of the prescriptive provisions in the 1974 Act, enabling the FCA to develop new rules around the information that consumers will receive, allowing this to be more flexible and tailored to the particular needs of different consumers.
Josh Babarinde (Eastbourne) (LD)
I have raised previously in this Chamber the situation of my constituent Pam Beevers, who had a cheque cashed in and misread, which meant she lost out on £125,000—down to a bank error. We are talking about punctuation being the real killer. What is in this Bill to help constituents such as Pam to find redress when a bank admits an error and the ombudsman says there is a problem, but they fail to properly compensate people?
John Healey
If the hon. Member would write to me or the Economic Secretary, she would be willing to take another look at that. I was not quite certain whether he was saying that Ms Beevers’s cheque was misread by a human or a machine, but it sounds in any case like there is an established error and that some form of redress and recognition is required. If he writes to us with the details, we will certainly take a look at it.
Alongside these measures, we are reforming the legal framework governing the Financial Ombudsman Service to improve the consistency and predictability of its decision making. Currently, decisions made by the ombudsman are not required to align with FCA rules. That has the potential to cause, and indeed has caused, delays in redress for consumers. It has caused uncertainty among firms on what standards they should apply. The Bill takes measures to ensure that all decisions taken by the ombudsman apply FCA rules, including the FCA consumer duty. That should deliver a more consistent set of standards across the board, both for firms and for consumers.
Dr Sam Rushworth (Bishop Auckland) (Lab)
The FCA failed to protect many people—mostly pensioners—who invested in legal investment scams. Does the Chancellor feel that the FCA’s current mandate and remit is broad enough to protect people from scams such as London Capital & Finance in future?
John Healey
The straight answer to my hon. Friend is, yes, I do regard it as sufficient. If he has a stronger case to make to the contrary, I encourage him to make it. To answer his question directly, as things stand, I do regard it as sufficiently robust and strong.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Financial Ombudsman Service is much loved by consumers because it provides an impartial fairness test. The Chancellor can correct me if I am misunderstanding this, but under the new proposed rules there is a presumption that the firm is right, and the consumer therefore has to go through more hoops to raise a concern. Is that really fair on consumers?
John Healey
My hon. Friend is so expert and well read in this area. In fact, her assertion about an assumption that the firm is always right is incorrect. At the heart of what is proposed in the Bill is the consumer duty of the FCA, with a single, clear set of standards that firms must meet and that consumers who feel their service has fallen short are able to use as reference for challenge, redress and appeal to the ombudsman. Instead of the ombudsman having its own set of standards and criteria and the FCA having its own, which has led to confusion and inconsistency, we will have a single set of standards that are clear and consistent for both the consumer and firms.
Turning to the fourth and final area, we must do more to increase lending and encourage firms to start and succeed here in Britain, as I did with measures in the Budget.
John Healey
The right hon. Gentleman has had one go. Quite a few Members wish to speak, and it is beginning to get into the evening, so I am going to make a bit more progress and let others come in. But if he wants to sit on the Bill Committee, he would be welcome— I am sure the Whips on his Front Bench will have noticed his keen interest in the debate. If that does not put him off, I don’t know what will!
The ringfencing regime requires major banks to separate their UK retail banking services from riskier investment banking activities. This regime has strengthened the resilience of UK retail banking since the financial crisis, but the independent Skeoch review identified areas where the ringfencing regime and the resolution regime could be better aligned. That is why we are introducing a series of reforms, such as the new growth allowance, to give ringfenced banks greater flexibility to provide growing businesses with the support they need as they grow. The measures in the Bill go a stage further, including allowing the Prudential Regulation Authority to remove unnecessary duplication in its rules, and we are introducing new powers to expand the commercial credit data-sharing scheme.
Graham Stuart
In lieu of other people seeking to intervene, would the Chancellor allow me to?
Graham Stuart
I am grateful to the Chancellor, who is being typically generous. On the subject of lending, he will be aware that the doubling of the bank tax, which was red meat for his Back Benchers, will raise £1.5 billion in just 15 months. The regulatory rules suggest that that could reduce the lending pot by a maximum of perhaps £25 billion. Is it not fair to say that that dwarfs any of the benefits of this Bill? My final question is, can he commit that it will be 15 months and 15 months only before this credit-reducing measure is brought back again?
John Healey
Two questions in one intervention—that really will be the last time I give way to the right hon. Gentleman. The answer to his first question is that, as I have said already, this is time limited. It will end in March 2028. If he looks at clause 7 of the Finance Bill, he will see that set out.
On the question of hitting investment, I have to tell the right hon. Gentleman that none of the discussions I have had with banking and financial sector leaders before or subsequent to the Budget suggests they want to do anything other than raise their levels of investment into British firms. I understand the reaction to and view of the temporary 3% additional surcharge that I put on banks to help pay for household energy help this winter. I certainly would not describe it as welcomed by the banks. I do believe it is manageable. I do not believe, and I have seen no evidence, that it is going to hit the levels of investment or the commitment they make to this country. As I said earlier, I will miss no opportunity to talk up the importance of the financial services sector to the UK.
John Healey
Given that the right hon. Gentleman has served with such distinction in the Cabinet Office and the Treasury, I will give way one last time.
John Glen
I am extremely grateful. Of course, one way of mitigating the anxieties of the banking sector is to ensure that the capital requirements directed by the PRA are significantly reformed. I understand from what the Chancellor has said that there is provision for that possibility, but what instinct does he have about the space that exists for the PRA to move decisively to signal to the banks that there is room for more capital to be lent by British banks in London, as a way of countering the concerns about the tax?
John Healey
I think I can do better than answer about my instinct on the scope for that. I would point the right hon. Gentleman to the measures in the Bill. I would also point him to my exchange of letters with the Governor of the Bank of England about capital requirements and the expectation to see material change, bearing in mind the importance of the internationally competitive position of UK banks. He will know that the Bank is undertaking its own review of this area at the moment, and I hope we will get the results and any consequent changes before too long.
Finally, I have spoken about the importance of maintaining the UK’s pre-eminent position as a global financial centre. That requires maintaining the very highest standards in tackling illicit finance. We have in the UK a strong set of anti-money laundering rules, but the supervision of compliance with those rules is currently fragmented and inconsistent. Last year, the Government announced that the Financial Conduct Authority will take on responsibility for the anti-money laundering supervision of legal and accounting service providers, as well as trust and company service providers.
The Bill enables the FCA to take on those new responsibilities, meaning that we can reduce the number of bodies that have a role in anti-money laundering supervision from 25 to three. Additionally, as financial crime increasingly involves cryptoassets held outside the UK, the Bill will enable the Government to update existing cryptoasset recovery powers through secondary legislation. [Interruption.] Madam Deputy Speaker, you are encouraging me to conclude, so I will, but I hope you appreciate that I have taken a large number of interventions.
I believe there is a shared determination in this House to ensure that the UK remains the global location of choice for financial services firms to invest, innovate and grow. This Bill is a necessary step to strengthen that leading UK position on financial services: streamlining regulation and reducing the burden on businesses, supporting financial resilience through our credit unions, reforming consumer protection so that it is fit for this digital age, and raising levels of investment in our high-growth firms, all while maintaining our high standards of regulation and oversight. It is a Bill to generate good growth in every postcode and provide fresh hope for the future. I commend this Bill to the House.
Mark Garnier (Wyre Forest) (Con)
I thank the Chancellor for his speech’s very positive tone. As he so rightly said, there was a lot of collaboration in the House of Lords as our colleagues were taking through this Bill, and I certainly intend to enter the conversation in a similar spirit of collaboration over the coming weeks and months.
As the Chancellor has said, the financial services sector is incredibly important to this country. It is the engine room that powers our economy. As the Chancellor has also said, it generates 8% of our national economic output, contributes £12 in every £100 of tax paid and makes up 3% of all jobs in the UK. As the Chancellor so rightly said, two thirds of those jobs are outside London.
The sector truly is a jewel in our economic crown, but it is important to remember that financial services underpin our everyday lives—for example, they support my constituents in opening and running businesses. They support all our constituents across this great country to get on to the housing ladder. They support people across the UK in ways that are not truly understood, including financial support for their employer; ensuring that their homes and other assets are insured; providing liquidity to buy expensive items such as a car; and helping to provide for our retirement. What happens just a mile or so up the road and across the country helps every one of us in pretty much every aspect of our lives.
Despite that, we must be careful. The UK’s financial services and related professional services sector are at a crossroads. TheCityUK published earlier this year its “No Time to Lose” report in conjunction with PwC, which I will quote directly. It said that
“the hard truth is that overall industry growth has stalled over the last decade and the UK is falling behind other financial centres.”
Our international competitiveness should be our priority, because the UK market is so internationally focused. As we know, London is the second-biggest financial services centre on the planet, second only to New York. However, while New York’s financial services market is 80% led by its domestic economy, here in the UK London is 80% international. At the most basic level, our international competitiveness is four times as valuable to us here as it is to the Americans across the Atlantic.
The Chancellor rightly mentioned the Budget, during which he said to the banks that
“I celebrate, and am grateful for, the role that you play.”—[Official Report, 28 October 2026; Vol. 792, c. 307],
But then he increased the bank levy by 3%. To be fair to him, bank stocks did go up on the day, because they were expecting a 5% permanent levy. None the less, we have to bear in mind that that takes the marginal tax rate on banks to 49.5%. That is not competitive on the international stage. We need to be mindful of that, because we need to attract international banks to come to our shores, and it is very important that we get this right. We understand that that generates a little more tax, but we want more people to invest in this country, and that is why we were against that measure. It sends the wrong signal.
Tom Hayes (Bournemouth East) (Lab)
Will the hon. Member join me in congratulating J.P. Morgan? It is in its 40th year of operation in Bournemouth, and this year it is investing £350 million into Bournemouth and the wider UK economy. It is doing that because it sees the overriding talent in Bournemouth and across the UK. The Bournemouth site is the second-most important site across 38 in Europe, the middle east and Africa for the world’s largest bank and seventh-largest technologist. Is that not a vote of confidence in the UK economy?
Mark Garnier
The hon. Gentleman is absolutely right. It is incredibly important to remember that banks such as J.P. Morgan invest in the wider community, but Jamie Dimon has said that he is worried about uncertainty around the tax regime on banks in the UK. He has warned that if we are uncertain and increase the level of tax on banks, they will not invest another £300 million or so into Canary Wharf. That is the point: we have to be mindful of international competitiveness. It does not take much, when we are taxing close to 50% on banks, for them to change their mind and go to another financial services centre. However, the hon. Gentleman’s point is absolutely right: the value of international investment by banks in communities such as his is really important.
Graham Stuart
Following that last intervention on the tremendous importance of banks to this country, does my hon. Friend share my concern? Notwithstanding what it says on the face of the Finance Bill, I rather fear that a Labour Chancellor with this particular set of Back Benchers will not turn up after 15 months and say, “I have a great idea, comrades: let us get rid of the doubling of the bank tax.” I fear that there will be some other new financial pressure—there are always financial pressures—that will mean that this socialist Government further reduce the credit available to this country and make us all poorer as a result of satisfying Government Back Benchers, who understand nothing about economics.
Mark Garnier
My right hon. Friend makes a very reasonable point. It is certainly easier to tax banks than it is to cut benefits, for example, but we have to be careful about this. He raises a very good point; if we reduce the amount of cash available to banks, we reduce the amount of money getting into the wider economy. I will come to that a bit later in my speech. We have identified certain areas where we can make it easier for banks to lend more money in the economy, but, as I say, I will come to that in a minute.
This Bill is an important opportunity to change the signal that we are sending to the wider world. We believe that, in general terms, this Bill takes steps in the right direction, so the Chancellor and the Economic Secretary to the Treasury will be glad to hear that we will not vote against it tonight. There is a one-line Whip, and it is fantastic that so many people have turned up on the Government Benches for this debate. However, while the Bill takes a positive step, it should be taking a positive leap. Just like the Budget, it feels like a missed opportunity to take the bold action needed. As I have said, we intend to work constructively with the Government, but we want them to be braver and go further.
Let me be clear: when it comes to this Bill, we should be talking about the level of risk that we are willing to accept, not how we can pursue perfection. This is about how we can keep talent in the UK, not about how we can make it jump through more hoops. This is about how we can empower the financial services sector, not about how we can bind it in further red tape. This is about the bold action that we should take to cement the future of the sector, not about how we can tinker at the edges. I hope that colleagues will follow that advice as the Bill progresses.
First, though, we should celebrate our past, because we have so much to be proud of in this country. The financial services ecosystem started in the UK in the 12th century, when the Knights Templar first issued receipts to pilgrims and crusaders for valuable assets such as gold. Those could be exchanged in the Holy Land for funds, creating what we recognise as the first iteration of bank notes. In the 17th century, Jonathan’s Coffee House was the first to advertise share prices. From there, the London stock exchange grew, setting up the model for equity ownership the world over. Similarly, Lloyd’s Coffee House created the insurance market that we see today. From that, the UK has continued to be a world leader in innovation, and we have built a reputation as a major financial centre.
The statistics do not lie. We are the largest net exporter of financial services in the world, at £119 billion last year. The London market alone is larger than its five closest international competitors combined. We have the most unicorns in Europe, the second largest asset management sector globally, the third largest insurance market globally and the fifth largest domestic banking sector globally. The point is that we start in a good position, and we have a great deal to be proud of. However, if we are to continue to succeed today and in the future, we must be bold, and we must be aware that others seek to steal our advantage. We must respond to that challenge and restore our economic powerhouse.
Where do we want the Government to go further? The first area is ringfencing. As the Chancellor alluded to earlier, the Bill talks about ringfencing, which, as we know, is the structural separation of certain retail banking activities from the activities conducted by international wholesale and investment banks. It was proposed by the Parliamentary Commission on Banking Standards back in 2013—following the Wright review, if I remember rightly—which was created in response to the global financial crisis.
Let me be clear that ringfencing was well intentioned— I know that well, because I sat on the Parliamentary Commission on Banking Standards and was part of the process that recommended it. However, 13 years later, I can see that the implementation of the ringfencing regime has not gone in the way that was intended. It costs our banking sector about £1.5 billion a year to implement. To go back to the competitiveness point, no other jurisdiction ended up bringing in ringfencing at all, and it has been superseded by more recent regulatory developments, such as the resolution regime. That last point is especially important. To quote the 2022 independent review of ringfencing and proprietary trading:
“The reduction in the implicit government guarantee and progress in ending too-big-to-fail was not found to be attributable to ring-fencing. The last point is instead attributable to the development of the UK resolution regime”.
As I say, that is from an independent review of ringfencing.
The Government are making changes in the Bill that will make ringfencing more flexible. That includes amending the PRA’s duty to make ringfencing rules, helping it to avoid duplicating protections that are already provided by the bank resolution regime. Along with other measures in the Bill, that measure takes a positive step forward, but we feel that the Government could have been bolder.
At times of change, we need to remove rules that no longer serve their intended purposes. Some of these rules have been superseded by subsequent legislation—last year’s Bank Resolution (Recapitalisation) Act 2025 is a case in point, together with bail-in bonds and the minimum requirements for own funds and eligible liabilities regime. We believe that ringfencing is the clearest example, so we will push the Government to go further and not just reform ringfencing, but remove it altogether.
Dame Meg Hillier
I am interested in the hon. Gentleman’s thoughtful comments and the research he is quoting, but he is now talking about removing ringfencing completely. Can he explain to the House how that would mitigate the risk posed by the bad players who led to some of the problems in 2008? As a result, some of us were in this place voting to nationalise banks, at a cost to the British taxpayer. How can the hon. Gentleman be confident that that could never happen again? We do not legislate for today; we legislate for the worst possible scenario—the mad, the bad and the dangerous—not the good people who I am sure he is talking about.
Mark Garnier
The point of ringfencing at the time was to separate the retail banks from the wholesale and investment banks. If the hon. Lady remembers, the Liikanen reforms sought to cage the tigers and ringfence the investment banks into units, whereas our reforms looked to put a fence around the deer park to look after the retail banks. The problem is that this creates a cliff edge as customers get past a certain turnover—I think they go from being in the retail bank to being in the wholesale bank when they get to £5 million of turnover. The only bank that has changed that is Barclays; it has set that limit at £100 million, which makes the retail bank much more open, and arguably could make it slightly more vulnerable.
Of course we do not want the big banks to fail—although, having said that, we have to have an element of risk within the banking system. It is important that we keep that. However, we have a number of systems that have come in later and that other countries have looked at, such as the bail-in bonds and the MREL regime. Returning to the competitiveness point, we now find ourselves with a ringfencing regime that creates extra costs and administrative burdens for banks that other countries do not have. We also have a system that can protect consumers, the bail-in bonds, whereby we have regulatory capital that can potentially be converted from bonds into equity to solve that problem.
Noah Law (St Austell and Newquay) (Lab)
I am sure that many Members of this House would entertain the idea of taking a targeted look at the way in which ringfencing regulation is implemented and agree that, where it is helpful, there should be much more of a free flow of information and discussions with clients across universal banks. However, can the hon. Gentleman categorically rule out the complete abolition of ringfencing that he has suggested, if only for the sake of consumers who do not want to see their retail money swirling around in an investment bank?
Mark Garnier
The hon. Gentleman raises a number of points. We are getting deep into the debate, but the very quick answer to his question is no, I cannot rule out getting rid of the ringfencing regime. It has already been made public that the policy of a future Conservative Government will be to do so. That is the debate we will be having in Committee, and I am sure the hon. Gentleman will be delighted to join us in Committee, where we can get into the debate in depth. It is great to see so many Members across the House putting themselves forward with their enthusiasm to get involved in the debate—my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) will have found a friend.
My second point—of a number of points, although I am conscious that I am taking up a lot of time—is that we would like the Government to go further on bank capital requirements. UK banks, building societies and PRA-designated investment firms are required to maintain minimum levels of capital in proportion to their risk-weighted assets. That is to help ensure that firms remain resilient and to reduce the impact of failure. Clearly, no responsible Government would abolish capital requirements, but we need to question whether banks should be required to hold capital beyond what is genuinely needed for resilience. This is an important point.
We should acknowledge that the Bank of England has eased bank capital requirements in recent years, specifically at the end of 2025, when it revised down the benchmark for tier 1 capital from 14% of risk-weighted assets to 13%. However, it is worth remembering that the Parliamentary Commission on Banking Standards recommended 11%, so that benchmark is higher than we originally asked for. We believe that the current level is still too high. The most recent stress test carried out by the Bank of England found that
“all banks remained above their set capital minima at the low-point of the scenario. No individual bank was required to strengthen its capital position as a result of the test.”
From memory, it was a one-in-250-year event that the banks were being stress tested on. The system has to allow an element of risk—when I was on the banking commission, we made it very clear how important that was. We made it clear that it was okay for a bank to fail, but it was not okay for banks to bring down the entire system.
The important point is that there has to be an element of risk in the system, but that is not what has been delivered, meaning that the potential lending and financing capacity of our banking sector is significantly reduced—to the tune of about £450 billion each year, we reckon. That is an awful lot of money that is not going into the economy. UK Finance has advised me that each percentage point of the tier 1 capital stack potentially represents about £600 billion in liquidity, so 2% above the recommendation of the Parliamentary Commission on Banking Standards represents about £1.2 trillion. Leverage that up under the banks and we are potentially talking about £12 trillion that is not in circulation because of over-interpretation of the rules. But we do not want to get ahead of ourselves; we reckon that £450 billion is not in circulation because of that over-enthusiasm on the tier 1 stack. That is money that could be used more productively. It could be invested in our communities or in businesses, but it remains stuck on banks’ balance sheets.
While the Bill does not contain any specific measures dealing with bank capital requirements, we believe that it is a perfect opportunity to make the necessary changes—specifically, to reform the parameters within which the Financial Policy Committee and the PRA operate. As such, we will be putting forward changes in areas where we believe the Government may be encouraged to take some advice from the Opposition.
As we have heard, the Financial Ombudsman Service plays an incredibly important role in the UK financial services sector. It provides redress for consumers and small and medium-sized enterprises against FCA and PRA-regulated firms outside of the court system, and crucially, it provides a service that is low-cost and accessible for consumers. However, over the years, the FOS has gone beyond being a dispute resolution mechanism and has become a quasi-regulator. This is creating significant costs for firms, with research from TheCityUK suggesting that the cost of regulatory compliance across the financial sector now exceeds £34 billion. Importantly, firms are also being retrospectively penalised, despite having followed the law on the day of an occurrence that was subsequently deemed to be problematic.
The Bill makes some positive changes in this area, which we welcome. It narrows the fair and reasonable test so that there is no longer a presumption of guilt, and creates a 10-year complaint deadline. Those positive changes will help prevent the FOS from acting beyond its remit. However, again, we do not believe that they go far enough, and there are a number of issues that we will raise during our debates in Committee.
Madam Deputy Speaker, you will be pleased that this brings me to my final point.
Mark Garnier
We are getting there. As I said at the beginning of my speech, the UK is a major financial centre with a rich history of innovation. We cannot afford to lose that reputation, so we must also be looking to the future. Digital assets will be a key part of that, as will the technologies that underpin them. We have been told time and again that the UK has no clear direction on digital assets, meaning that companies in the UK are being restricted from innovating, so we need to create a strategy that sends a clear signal to that industry. That is why the digital assets strategy in clause 50, which was introduced in the other place, is so important.
We tabled that amendment in the Lords for a few reasons. First, we want to send a clear message about where the UK is going; it is incredibly important that we define what the UK’s ambition is. Secondly, going back to the competitiveness point, other jurisdictions have these strategies. Thirdly, the significance of digital assets has not been identified in any recent Government strategy. Finally, the digital assets sector is incredibly diverse, beyond where the Government are currently looking—it is very innovative. For all of those reasons, we believe that the digital assets strategy and clause 50 are necessary, and that removing that clause from the Bill—if that is the Government intend to do—would send the wrong message to the sector.
Do not take our word for it; take the word of the organisations that support clause 50: the UK Cryptoasset Business Council, TheCityUK, Innovate Finance, the Payments Association, techUK, Global Digital Finance, the Crypto Council for Innovation, the International Digital Assets Counsel Association, CryptoUK and the Digital Money Association. All of those organisations know that
“Other jurisdictions are moving rapidly to attract digital-asset businesses, investment and talent.”
A clear strategy will help the UK to keep up with those other jurisdictions and demonstrate that we are embracing these new technologies. I know that the Economic Secretary to the Treasury feels passionately about this area of her brief, so I hope she will use her closing remarks—we will all be waiting in the Chamber until 10 o’clock to hear them—to reassure the industry and commit to retaining the digital assets strategy in the Bill.
To conclude, financial services and the related professional services are incredibly important to the UK. When they succeed, they help to empower our communities and unlock growth. The Economic Secretary to the Treasury understands that. She has a very good reputation in the City of London as being somebody who gets it, so I look forward to working with her over the next few weeks and months. I am sure we will have our disagreements, but where we do, it will be about the detail, not the overall direction of this Bill. I know we can remain focused on empowering the sector.
The financial services sector is also important to me personally. I spent the bulk of my working life—27 years—working in the City, and I know the amazing things it can do. Being the shadow Economic Secretary to the Treasury, I have seen at first hand that we still have so much potential across this great country of ours. If we get this Bill right, we can unlock even more. While the financial services sector may be at a crossroads, it is now time for us to get behind the sector, to shift into gear, to accelerate our efforts and to focus on the exciting journey ahead.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Chair of the Treasury Committee.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I agree with both the Chancellor and the shadow Economic Secretary, the hon. Member for Wyre Forest (Mark Garnier) that the financial services sector has an important part to play in our economy. As the shadow Economic Secretary said, the sector represents 3% of jobs in the UK, and it is important for growth and investment. It is therefore important that we understand its role and that we get things right. This Bill, in the Government’s terms,
“will modernise how the sector is regulated, and enable it to grow and lend more to businesses. It will also make consumer protections fit for the digital age”.
I do not think any of us would disagree with those intentions.
The Government have also set out clearly that they want to maintain high standards of regulation and oversight at the same time. There is a balance to be struck in leaning in to support a sector, while also protecting the many consumers—millions of our constituents—who are borrowing, investing and using the services of financial institutions. Having a strong and competitive financial services sector is important for driving growth, but the protection of consumers is important, too. The Treasury Committee has looked at that balance between the growth objective that the previous Chancellor set the Financial Conduct Authority and its role in regulation.
As a side point, I mention remit letters. The new Chancellor has not had a chance to write too many yet, but the number of remit letters that go to our regulators runs into quite high numbers. Those bodies then have to consider the “have regard to” comments in those letters in their work, and it makes for a very long list of things to do, some of which just cannot all be done at the same time. The Treasury could look to prune some of these requirements, or to decide what the key areas are at any point, so that those organisations know what they should be focusing on.
This Bill could be seen as moving the pendulum more towards the financial services sector and further from regulation to support consumers, and we should be careful about that. The Committee has made some comments on it, but for me, consumers should be front and centre. My question to the Government—the Economic Secretary may expand on this in her closing remarks—is: how far should that pendulum swing? How far is too far? Who is the arbiter of what level of protection constituents and consumers should expect? We have a number of bodies, and I will speak about the Financial Ombudsman Service a little later.
It is not just me or the Treasury Committee who have been raising these issues. Nikhil Rathi, the chief executive of the Financial Conduct Authority, said to us in July that the FCA needs a clear indication of the Government’s risk tolerance when it comes to markets. He is up for the challenge, but he needs to know as a regulator where to draw the line between promoting growth and consumer protection. We know that even a small increase in the percentage of customers harmed is a lot of people. One of the pleasures of our role as MPs is that we get to see people face to face at our surgeries. We see people in the raw. Whitehall is a long way from that direct contact, and it is us who will be picking up the problems if they arise. As this Bill proceeds through Committee, we need to be cautious and make sure that we are stress-testing that point about consumer protection at each stage.
The Government are encouraging more investment. In fact, the Economic Secretary, during her previous time as Economic Secretary, made a number of public statements encouraging people to invest more. I can understand the Government’s position. People can make a lot more money from savings if they invest them carefully and well, but it is about changing the language. There has been concern about investment, particularly since the financial crash of 2008—it is a bit like the “Smoking kills” signs on cigarette packets—so the Government are changing the language, but I need to ask what level of risk they are willing to take. As they change the language and encourage people to take not risky, but less safe approaches to managing their money, where will the Government draw the line?
My main concern is the changes to the Financial Ombudsman Service, which has been a vital consumer protection. It is popular with consumers, and the source of much complaint from the City. The shadow Economic Secretary highlighted some of those concerns, as did the Chancellor. We know that the Financial Ombudsman Service is not perfect. It has had a bit of a rocky ride in the past few years, but it is already undergoing some changes without the need for legislation. It is having to adapt to the modern world, and AI is no doubt causing it even more challenges, but it was dealing with a high volume and not always reacting quickly enough.
I have a couple of particular concerns to raise. One is the time limit on complaints. While 10 years sounds like a long time, some of the financial products that our constituents take out have a very long life, with pensions being the obvious example. When something goes wrong in that area, it can have a long reach back into the past. I understand the challenges for banks, such as we have seen with the motor finance issues. When the issue was payment protection insurance, I spoke to one bank that employed 10 people just to go through the complaints coming in from people who were not even customers of the bank. There is a lot to be done in that area. This partly relates to those online promising the earth to people if they take up a complaint, even if they do not have legitimate grounds. I do not believe setting the time limit at 10 years is the answer. The Economic Secretary might not be able to discuss it now, but perhaps she will meet the Committee or me—whoever—to talk about how the Government will protect people taking out long-term financial products, including pensions.
The Treasury Committee has heard evidence on the Financial Ombudsman Service from the Citizens Advice, which noted that although it believes that consumer protection and growth do not have to be competing objectives—I agree with that—this Bill reduces protections and access to redress for consumers. Which? wrote to the Committee and noted that the proposed referral mechanism in clause 6 risks making redress slower and more complex, creating additional barriers to redress for consumers. I know that the Chancellor answered that point to a degree in response to my question earlier.
Clause 7 constrains the fair and reasonable test that the FOS has worked under for such a long time, which will make it harder for consumers to receive redress, even when they have been treated unfairly. I can see clearly what the Chancellor and the Government are trying to do here. We have heard the noise from the financial institutions, saying, “We adhere to the rules of the FCA. We take into account the consumer duty, as the FCA requires us to do. Then something goes to the ombudsman and suddenly it seems to be judged by a whole different set of rules.” Most financial institutions do a reasonably good job most of the time and treat their customers fairly, and the consumer duty weighs heavily on them. When something goes to the ombudsman and is not considered to meet the fair and reasonable test, it should be something that is egregiously outside that consumer duty. It is important to have that backstop for our constituents. The Financial Ombudsman Service is already, as I said, undergoing non-legislative reforms. We should focus first on improving the system, rather than adding more layers of legal reform. Perhaps giving it that chance to reform itself would be the best first step.
In March this year, the Committee wrote to the Government outlining the importance of the Financial Ombudsman Service’s independence. The perception of that independence is vital. I propose—I would like to talk to the Economic Secretary further about this—that we introduce a statutory lock for the Treasury Committee on the appointment and dismissal of the chair of the Financial Ombudsman Service. There is precedent; the Chancellor of the Exchequer may not know it, but he cannot appoint or sack a chair of the Office for Budget Responsibility without the agreement of the Treasury Committee. That is a lock on a mad, bad or dangerous Chancellor taking away the independence of that important body. We think that there should also be a lock on a mad, bad or dangerous Chancellor doing the same for the chair of the FOS.
Catherine West (Hornsey and Friern Barnet) (Lab)
Does my hon. Friend, who chairs the Treasury Committee, agree that in other jurisdictions it is quite common to have more parliamentary oversight of these sorts of appointments?
Dame Meg Hillier
I agree with my hon. Friend, who is also a member of the Treasury Committee and a constituency neighbour of mine in London. We are not suggesting for a moment that the Treasury Committee starts rolling up its sleeves, conducting job interviews or getting in CVs. That is not our role. Our role is to be a check and a balance on the Government.
As I said to the Opposition Front Bench spokesman, the hon. Member for Wyre Forest, we are not legislating for the people here in this Chamber, who I believe are good and honourable Members with all good intent. We have to legislate for the worst possible set of legislators and the worst possible Government, and we need to make sure that we have that commitment to the independence of the Financial Ombudsman Service. This would be one small step that would take nothing away from the rest of the Bill. It would not damage any of the Government’s set-out intentions. I know that the Chancellor is a strong advocate for a strong Parliament, and he should be praised and recognised for that, so I hope he will consider this option. I am happy to share my thoughts with the Economic Secretary on how an amendment could be tabled; it may be that it can come up in Committee—I would hope that it would not have to wait until a later stage, on Report.
It is essential that the Chair of the Financial Ombudsman Service, which is a key public role, has the necessary independence and professional skills to maintain the balance between consumers and the financial services industry. The Treasury Committee has a number of pre-appointment hearings—more than a number of Committees do—and our measure is professional competence and independence. I would hope—and so far, Members will be glad to know, this has proved to be the case—that when the Treasury goes through a proper recruitment process, it recruits people with professional competence. We measure against that. Again, if there were a mad, bad or dangerous Government in future, that might not always be the case, but so far it has been. The independence point is important too, and that is what is often tested in the room when we have someone before us for a pre-appointment hearing. We do not have a power to sack, but in this case, we think we should have an extra power of a lock on that appointment.
The Financial Ombudsman Service is accountable to Parliament. The Treasury Committee was compelled, due to the actions of a previous chair of the Financial Ombudsman Service, to underline that point in our ninth report of the session 2024-25, which was entitled— I say this for Hansard’s purposes and I am sure that colleagues will avidly look this up in a moment—“Financial Ombudsman Service: Accountability to the House of Commons”. Providing the Treasury Committee with a statutory lock on the appointment of the FOS chair would help to guard against a repeat of that incident. I was saddened at the time to receive a letter from a public appointee to say that they did not have to appear in front of the Treasury Committee because they were a Member of the other place. That is another issue that I will take up in due course. The Second Reading debate is obviously about arguments in principle, but I am happy to have a further conversation with the Economic Secretary on the detail.
I want to raise a couple of other quick points while I have the floor. On financial inclusion, I know the Economic Secretary has played her part—I think four Economic Secretaries have dealt with the financial inclusion strategy. Now that it has been published, the Committee will keep an eye on how it is going. We published a report on the matter, and the Government told the Committee that the Bill would include a reserve power on access to face-to-face banking services, recognising the limitations of voluntary action. The power was removed in the other place following concerns about its breadth. In their response to our report, the Government said they intended to restore that power during the passage of the Bill in the Commons, and that they would use evidence from the access to banking services review to do so. I would be interested, if the Economic Secretary could cover that in her closing remarks.
Deirdre Costigan (Ealing Southall) (Lab)
I entirely agree with the point my hon. Friend is making. In my constituency of Ealing Southall, Santander and NatWest have recently closed down, although Barclays is still there and is being refurbished. There is a very large north Indian population in the constituency and many of them are first generation, with English as another language. Does my hon. Friend agree that face-to-face banking is particularly important for those people and for older communities?
Dame Meg Hillier
My hon. Friend raises an important point, because there are many excluded groups. There is an important challenge here, too. I am proud to be the Member of Parliament for Hackney South and Shoreditch, representing a very high percentage of fintech companies. Of course, those companies never had branches on the street, so it is not unreasonable for the larger banks, which have had a network of high street banks, to say that the playing field is not level. Some tech innovation has been amazing, making banking very accessible to some people, but there are still points in life—for instance, death, or maturity to 18 when products have to be turned from junior to adult—when we need to have conversations face to face.
Even if it is not very often, there will be times when even the most digitally-savvy will need to have face-to-face contact. I recognise this is a difficult challenge for the Government to wrestle with, and there is no easy, simple answer, but it is important if there is to be financial inclusion. The danger is that if there is no proper ability to have contact with trusted banks, people get advice from elsewhere—a friend or a relative—that is not good advice; I have seen that in my own constituency. There is a danger that people get driven to the wrong place if we do not have a lock on some sort of provision, though I recognise that particular challenge for the Government.
Gareth Thomas
One of the encouraging things in the financial inclusion strategy was a proposal to build a coalition of employers willing to offer a payroll deduction service to their employees to join and save with a credit union. Does my hon. Friend think that one of the ways to give that coalition new life and new energy would be if more parts of Whitehall—perhaps even the Treasury itself—were willing to make that commitment?
Dame Meg Hillier
There we go: a stretch target for the Chancellor to sign up every civil servant in his Department to a credit union. I am sure that he is listening closely to that suggestion.
I do not want to segue too much from the subject, but many years ago I tried to establish a mutual in Government and there was a limited understanding of what that meant. I am proud that we now have a co-operatives champion in my hon. Friend the Member for Peterborough (Andrew Pakes)—a Labour and Co-operative MP—who has access to all areas and can go in and challenge, shake up and educate parts of Whitehall about the benefits of mutuals.
To finish on financial inclusion, the financial inclusion strategy is a good first step, but we said that the Government cannot rely solely on voluntary action from financial services to drive financial inclusion. We have made our comments clear in our report, and I hope that we will continue that dialogue with the Government to ensure that financial inclusion is a real thing.
There has been some talk about access to capital markets in the banking sector, but there is a particular issue for building societies too. It is interesting how very few failures and repossessions there are with some building societies. I was talking recently to the chief executive of Skipton Building Society, whose default rate is very low—in fact, a number of those are people who have voluntarily given up their mortgage. That means the building society’s repossession rate is even lower, yet it has to capitalise to a very high degree to ensure that it is covering any potential losses. I think there is a real opportunity there.
As was raised earlier, changes to credit unions are necessary and overdue. We have seen some of the measures for co-ops and mutuals in government get stuck, whether with the Law Commission or somewhere in the depths of Whitehall. We now have an agenda in government to double the size of the co-operative sector. We are seeing a strong building society sector and a mutual sector in finance. We have an opportunity to get credit unions on a stable footing. This is the opportunity to ensure that we get those things in place so that they are embedded and we make sure that the sector works and delivers.
If it is about growth in every postcode, those are the organisations that reach every postcode, that are from the grassroots up and that can make this Financial Services and Markets Bill much more relevant to the people on the ground. It is not that the City of London is not relevant to me in my constituency and to a number of us who neighbour it, but for people in other parts of the country, Whitehall and the City seem like a long way away. Having co-ops and mutuals written in is important. I hope that the Economic Secretary will respond to some of those points when she sums up.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Bobby Dean (Carshalton and Wallington) (LD)
The UK financial services industry is vital to our economy. It enables us all to buy houses and cars, to save and invest safely and to insure against bad outcomes; it provides millions of jobs, not only in London but right across the UK; and it contributes hundreds of billions of pounds to GDP. It is one of the UK’s only world-leading industries. We have 160 foreign banks in the City and twice as many US dollars are traded on the UK foreign exchange in the UK than in the US. We have the largest source of pension funds in Europe—and if I mention Europe, as a Liberal Democrat I must also mention Brexit.
It is true that the UK financial services industry has remained strong after Brexit. Of course it has: it is a world-leading industry that has many advantages beyond its access to European markets. We have, for instance, the advantages of location, language and law, and there is enormous talent here in the capital. However, we should not mistake that resilience for evidence that Brexit did not harm financial services. Exports of financial services have declined by 5.9%, and, according to TheCityUK, that is at least partly due to Brexit frictions. The loss of passporting rights, for example, makes it harder to acquire clients across the continent. Compliance and administrative costs have risen, and we are now less attractive in relation to becoming a pan-European headquarters. Whatever the dispute may be when it comes to the precise numerical impact of Brexit on financial services, this negative track has to be acknowledged.
Bobby Dean
Uncertainty is always unwelcome in the financial services industry, but Governments must make decisions for the very long run, and I think that in the very long run it would be in our best interests to be part of the single market again.
The industry has remained resilient, not only in the face of Brexit but in the face of other challenges, but that should not be taken for granted. It is due, at least in part, to hard work and the reforms that were introduced after the 2008 financial crash. Prior to that, a reckless, deregulatory and ignorantly optimistic environment led to a complete and utter disaster, and not only for the industry but for society as a whole. The debts that stacked up in response to that crash are still squeezing the present Government’s potential to deliver better public services or lower taxes to this day, and the reputation of the industry among the public still suffers because of that event.
However, it is worth stressing that the reforms made in the aftermath have broadly worked. The sector has remained financially stable. Repossessions are low, pension funds are healthy and stable, and bank failure is rarely speculated about—and if it were to happen, I trust that it would happen in an orderly way. This has remained the case despite some serious stress tests in recent years, not least the global pandemic and the global energy shocks, and it shows that measures such as the bank capital requirements, the liquidity rules and the ringfencing have created a system that can hold. I think that the Government should be mindful of that as they set out on a path to—in their own words—deregulate again. They should resist the Conservative party’s calls to abolish ringfencing entirely. I think that savers across the country will be shocked to hear that there is a party advocating for that money once again to become available to the investment banking industry. In a wider context, the Government should tread cautiously. They should not fall for the same old cycle of deregulation, crisis, and then regulation again. Instead, they should try to plot a more stable path through this moment.
Nevertheless, there of course remains a case for reform. We are decades on from the financial crisis, and there will be plenty to do to modernise, to move with the times, to learn lessons, to tidy, to simplify, to clarify and to adjust, to make our financial services system work for the 21st-century economy. There is much to be supported in the Bill. I support, for instance, the move to make the Payment Systems Regulator part of the Financial Conduct Authority, and I hope that will mean we can continue some of the good work on open finance. I broadly support what I think is the intention in relation to improvements in access to banking, although we have yet to see some of the detail because we are waiting for the review to be published. I support the move to expand credit unions, and of course I support the intention to table amendments on child trust funds, for which I credit my hon. Friend the Member for Horsham (John Milne) and my right hon. Friend the Member for Kingston and Surbiton (Ed Davey).
More broadly, the Liberal Democrats support the thrust of the Bill, but there are some key areas where we want to work with the Government to get this rare opportunity for reform right. In particular, on consumer protection I fear that the Bill is in danger of overcorrecting. It starts from a false premise, which is that consumer rights and economic growth are somehow in contention. They are not; they are two sides of the same coin. There can be no booming economy without consumer confidence, and poorer protection and more difficult redress are in the interests of neither consumers nor firms.
I am struck by the volume of lobbying material that I receive from industry, and by how little I receive from the voice of the consumer. It is because of that inequality of arms that we in this place should be so mindful of the decisions we make in respect of this legislation. Some of it looks like a shopping list of demands from industry, and that should give the Government pause for thought. We should remember that the same inequality of arms in the lobby industry is repeated when it comes to legal disputes, and indeed at the point of purchase of financial products. Information asymmetry is a known economics concept, and in the development of financial products there is a huge information asymmetry. Experts are developing complex products that are inherently difficult for consumers to understand, and we should legislate accordingly with that in mind.
I therefore ask the Government to listen carefully to the 15 organisations—including Martin Lewis’s MoneySavingExpert, Citizens Advice and Which?—that have got together and warned that the reforms of the Financial Ombudsman Service could lock consumers out of independent redress, removing that vital safety net of free dispute resolution. Indeed, the former Member of Parliament for Makerfield, Yvonne Fovargue, has concerns that these reforms do not meet the Prime Minister’s “Makerfield test”. That should be a strong warning to the Chancellor.
The Financial Ombudsman Service stands accused of being a quasi-regulator, making precedent-setting decisions that firms cannot anticipate. I admit that there has been dysfunction in the service in recent years and that there is a case for better co-ordination and clarity, but the reforms, as they stand, will tip the balance too far in favour of firms, and I think we are in danger of making the FCA a quasi-ombudsman. The rules set by the FCA are necessarily high-level, especially if they are principle-based, and they cannot account for every situation in detail. The ombudsman must retain the power to make a judgment on what is fair and reasonable in the round, or we will descend into a dispute over strict legal compliance that will always favour firms in the way that I have described.
The chief executive of the FCA has repeatedly expressed concerns to the Treasury Committee about the possibility that the referral mechanism may create a back-door appeals mechanism for firms, gum up the system, and lead to the regulator doing the job that the ombudsman should rightly be doing. We will go into all the details in Committee, but I urge the Government to find a way through this that suits consumers too.
There are further issues that we will want to pursue in Committee. The Consumer Credit Act protections that are being rolled into the FCA are important provisions that need to remain in primary legislation. I recognise the need for regulatory power to respond to developments dynamically, but we must also ensure that such important provisions are protected in law, and I do not think that the FCA’s strategies will afford sufficient protection. Other Members have mentioned access to affordable credit, and this is a huge opportunity for us to take meaningful action in that regard, looking at some of the provisions proposed for the fair banking Act, and ensuring that when the washing machine breaks down or the car fails, people can access the credit they need to get through those crisis moments.
I have some simple asks in relation to the Bill, involving transparency and the current status of the access to affordable credit that banks are providing, and their links with credit unions and other community organisations to improve that access. I note that we now have a Co-operative Prime Minister. The Co-operative party backs such amendments, so I look forward to seeing whether they make it into the Bill. We would also like to see tougher action on the big tech companies in relation to fraud and scams. At present, the UK financial industry is on the hook for scams that nearly always originate on big tech platforms. Just last week I heard in the Chamber that Ofcom’s regulations would probably be sufficient, but we now have an opportunity to write into legislation liability for those tech firms, and I do not think we should miss it.
There is more that I could talk about, but in the interests of time I will move on. I support the Conservatives’ point about the digital asset strategy, and I think it would be a missed opportunity not to include something about that in the Bill. I would also like to speak up on the injustice facing mortgage prisoners, and I will say more about that in Committee.
Let me end by saying that we welcome the thrust of the Bill. It reinforces the position of the financial services sector as a great contributor to the UK economy, and its status as a global leader and a beacon of stability. However, there is a real danger of overcorrection and damage to consumer rights, as well as the potential to miss some big opportunities for long-running problems to be solved. I look forward to working with the Government in Committee to further the Bill’s progress.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
I, too, welcome this legislation and its goal of modernising consumer protection arrangements and making them fit for the digital age. I congratulate the Chancellor and the Economic Secretary to the Treasury on their work, and on their ongoing engagement with Members from across the House as the reforms proceed.
I am very pleased to see measures that enable credit unions to expand by widening access to membership. I have seen the challenges experienced over the years as a Labour and Co-op MP, and I have worked to increase access to credit unions for local people in Feltham and Heston. It has been a challenge, and I look forward to working with my hon. Friend the Member for Peterborough (Andrew Pakes) on these reforms and on making sure that they become a reality for our constituents. It is clear that if anything can focus our mind’s eye on how important this is, it is seeing the importance of household resilience and being able to plan financially, given the challenges that the cost of living crisis has brought.
It is important for us to think ahead and make sure that we do all we can to improve household resilience, and these reforms will help more than 200 credit unions across Great Britain to reach new communities, with millions of people having more access to affordable and community-based financial services. Credit unions are known and trusted by local communities, and trust is really important for giving people confidence about where to save, how to save and whom to trust. It is also vital that we take steps to protect access to in-person banking services for the future, and we look forward with anticipation to the publication of the access to banking review and the Government’s response.
I want to raise three matters that I believe need to be further addressed in the Bill, some of which have already been referred to: the proposed 10-year time limit on complaints, the referrals process, and the fair and reasonable test. Finally, I will mention mortgage prisoners, as discussed by the Liberal Democrats’ spokesperson, the hon. Member for Carshalton and Wallington (Bobby Dean)
First, on the 10-year time limit, the Government are putting forward a wide range of reforms to the Financial Ombudsman Service, but I am concerned that they are not being clear about the impacts on the public. The proposed 10-year time limit on Financial Ombudsman Service complaints risks locking thousands of consumers out of compensation. It can take years for people to realise that they have been ripped off, and firms often do everything they can to conceal misconduct.
Dame Meg Hillier
On that point, one of the issues is document retention. Firms do not necessarily keep information, so the process can rely on the consumer keeping it. Even if they can get redress from a firm, they may not have the documentation.
Seema Malhotra
I think we all agree with my hon. Friend’s important point.
I am concerned that the Government’s assessment appears to underestimate the true cost by assuming that historical cases are worth little more than average complaints, and by ignoring many complaints that firms will simply reject, without considering their merits, due to the application of the new time limit. I am very happy to share with the Minister more of my analysis of the implications and of what is in the impact assessment.
Secondly, the process of referral to the FCA could create a bureaucratic logjam, with firms incentivised to seek FCA rulings whenever a case looks likely to go against them, adding delay and administrative costs while allowing binding interpretations of the rules to be made without proper consultation. The referrals process should be reformed so that it is a rare occurrence, rather than the 1,000 to 3,000 referrals a year that the FCA expects will happen, which will cause delays as well as administrative costs and all the pain that that will entail. Proper consultation needs to be built in, so that the FCA gets full input from consumer groups before making binding decisions on what the new rules mean.
Thirdly, there are important questions about changes to the ombudsman’s fair and reasonable test, which could narrow the ability of the FOS to take account of industry codes and good practice, including protections that victims of economic and financial abuse rely on. If we want economic growth, we need consumers to save for retirement, take out insurance and engage confidently with long-term financial products. We need small businesses, like many of those across Feltham and Heston, to borrow and invest, and undermining trust in dispute resolution mechanisms risks undermining that confidence. Martin Lewis has warned that
“Restricting consumers’ access to free and fair redress is not a recipe for economic growth. Once consumers are warned about the erosion of their rights, it’s possible it will lead to disengagement from the financial services industry and diminishing trust.”
That is why we must look very closely at the proposals in order that we are confident that consumers will retain the necessary confidence in financial services.
Finally, in the last Parliament, the all-party parliamentary group on mortgage prisoners, which I co-chaired for a number of years following the experience of mortgage prisoners in Feltham and Heston, raised concerns that poor decision making at the FOS was leading to detriment for mortgage prisoners. In all honesty, no real progress was made. The situation is ongoing, as thousands of mortgage prisoners remain stuck and are suffering significant detriment. Many are still trapped on expensive variable rates with inactive lenders and are unable to switch to cheaper deals, so they are paying hundreds or thousands of pounds more each year and facing a far greater risk of losing their homes.
In 2024, the previous Prime Minister promised to get everyone around the table and ensure that this issue was properly addressed, but that has not yet happened. Mortgage prisoners remain trapped, and are paying higher interest rates to inactive lenders and vulture funds. They are told that they cannot pass affordability tests in order to pay less for their mortgage, and as the Bank of England increases interest rates following six cuts, there is nothing that vulnerable mortgage prisoners can do to gain any certainty on their payments. Many are former Northern Rock customers who are still experiencing severe harm because their loans were sold to inactive lenders by the previous Conservative Government. The London School of Economics report, funded by Martin Lewis, put forward solutions including improved access to financial advice, targeted equity loan schemes, and a Government-backed guarantee mechanism to help borrowers move back into the active market. I would be grateful to hear when the Government plan to respond in full to the proposals in the LSE report, and I would also be grateful for a meeting to discuss what more the Government can do to help mortgage prisoners.
I very much look forward to the Minister’s response and to working with colleagues from across the House on these reforms to make sure that, together, we can ensure the leadership and the fairness of our financial services sector, which is so renowned across the world.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. After John Glen, I will introduce an immediate eight-minute time limit.
John Glen (Salisbury) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests, and to my ministerial experience as the Economic Secretary between January 2018 and July 2022. Listening to the opening speeches gave me pause to reflect on some of my decisions. I hope that I am the sort of politician who is ready to concede where I did not go far enough or where mistakes were made, but after I have gone through some of the measures in this Bill, I want to offer some broader observations about the interaction between the Treasury, this place and our regulators, because it goes to the heart of how we move forward effectively as a country.
as the shadow Economic Secretary said, the Bill contains some very welcome measures. Although the detail will be worked through in Committee, I think we can be positive about the reforms to credit unions. I made some changes to expand the common bond, and I wish the Government well with their extension of it. I ask the Economic Secretary to examine the issue of the interaction of credit unions and Help to Save. For many of the people who use credit unions, the opportunity, on an automated basis, to sign up to Help to Save—it gives everyone on universal credit the opportunity to save up to £600 a year, and after two years receive a 50% bonus from the Government—in these times would be very welcome. I am not sure exactly how that would be achieved, and I realise it is complicated, but it just stands to reason that it should be more readily accessible.
I also welcome the reform of consumer credit. These matters were discussed in my office four or five years ago, and I welcome the Government bringing it forward. I certainly did not seek to slow it down, but it is an incredibly complicated piece of work to update our consumer credit framework and how we protect consumers in a world where financial products and the interactions of consumers when taking out products have transformed considerably over the last 52 years. However, as we look at the changes—I note the comments of the Chair of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), on the Financial Ombudsman Service changes—we have got ourselves into a bit of a mess in this country.
In the Treasury Committee, I found myself talking about motor finance, and reflecting on being told that harms have been done to me when, from my perspective, I had made a decision about the amount of the deposit and the monthly payment in a financial agreement. However, I fully accept that the consumer credit legislation as it is at the moment means there was an obligation of proactive disclosure on behalf of whoever provided me with that product, rather than some reasonable test of what I should reasonably ask of the person providing the product. To me, that goes to the heart of the dilemma we face in financial services: to what extent can we in this place legislate against risk or put some reasonable responsibility on an individual consumer to take ownership of the decisions they make?
Bobby Dean
I am sure the right hon. Gentleman was anticipating my intervention, as we have had this conversation in the Select Committee. I made a point earlier about information asymmetry. Does he not accept that when financial products can be so complex, if providers are not utterly up front about the conditions, it is quite impossible for the consumer to take the responsibility he implies they should take?
John Glen
I absolutely take on the challenge, but I think we need to level with the British public about this and have a better conversation about it, rather than say there is an ultimate backstop provision apparently for absolutely everything. We have to reset that dynamic.
I have mixed feelings about the proposed reforms of the Financial Ombudsman Service. I feel it has become an unreliable pathway to resolution, but I am also concerned that by wrapping it into the FCA, as with the decision to apparently streamline regulations by putting the Payment Systems Regulator into the FCA, we will just create a bigger FCA, with different functions under one banner.
Dame Meg Hillier
It is worth noting that, in the end, there were two redundancies as a result of the merger, all the backroom costs were the same and the only thing that will change, when the legislation finally goes through, is that the board will go, which is a saving of about £100,000.
John Glen
I am very grateful for the hon. Lady’s characteristic grasp of the detail of this subject, and she absolutely makes the point. Just removing a banner from a front office does not streamline, so I urge the Economic Secretary to retain a forensic view, as I know she will, of what processes faced by businesses and consumers are actually streamlined.
I note the streamlining of the senior managers and certification regime by abolishing mandatory annual employee certification below senior manager level. I note the comment of the hon. Member for Great Yarmouth (Rupert Lowe), who is no longer in his place, on that regime, which was, “Abolish everything.” I understand the frustration that leads to many people saying that, but I think we have some new challenges, which have not been properly addressed, when it comes to AI in financial services.
The Chair of the Select Committee mentioned this in passing, but AI, in automating the evaluation of which products would suit individuals, is transforming most consumers’ interactions with financial services. Following the Mills review, there does seem to be a bit of a gap in what will happen with appropriate regulation. It seems that the essence of the position of the FCA is that it does not want to slow down the pace of innovation and growth in financial services, so it will be very reticent to put in any regulation. That is not an unreasonable sentiment, but we must discuss where we as a society feel responsibility should lie. If a financial services firm essentially allows an AI regime to produce offers of products that are sold, somebody has to be responsible for the terms and the basis for such a product going to market.
I welcome the changes to the PRA to streamline the bank rules on ringfencing, but I was the Minister who commissioned the Keith Skeoch review, which essentially came to the conclusion that it was not really necessary, but because of the legacy of the global financial crisis, we had better keep it in place. I urge the Economic Secretary to ask this question: what does that ringfencing actually give us? Many senior people at the PRA told me that we do not really need it, and we have a resolution regime that would actually satisfy all our requirements. However, it has a totemic significance, because it is associated with that season of under-regulation that led to the global financial crisis. We must have an honest conversation, not one based on received wisdom about what happened 18 years ago. We should not be reckless, but we do not need to carry unnecessary burdens when they do not really add anything.
Time goes quickly in this place, and I respect the need for everyone to speak, but I would like to make two or three broader points. One is about the imbalance of power and expertise. When I became the Economic Secretary, I hardly slept for the first few weeks because it was just so complicated, after I had been the arts, heritage and tourism Minister. From museums to MiFID in one step was a big move, but I did my best to master it. Every six weeks or so, I met the head of the FCA and the head of the PRA. These are some of the most brilliant people in public service, who have at their disposal some of the most intelligent, numerate individuals who are aware of all the nuances of different conditions, the capital requirements of banks of different sizes and the different mitigations for them. I was trying to mediate all the representations I had had from TheCityUK, UK Finance, the Association of British Insurers, the London Market Group and all the consumer organisations, essentially to try to challenge them on the right way of liberalising the regime or having a strong and simple regime to, for example, make it easier for smaller banks.
I probably got that right sometimes and on other occasions did not press hard enough, while at times there was a reasonable expectation that I would be moved on. Indeed, since July 2022 there have been eight Economic Secretaries—I am glad the sixth one is now back again as the eighth one. I just do not feel that that is a grown-up way to deal with our financial services Minister—the person responsible for this industry that we have all said is so important in terms of the jobs it creates and the GDP it accounts for. There is well-meaning intent, when we come to this place, to mediate consumer groups’ concerns and the concerns of our constituents, but we need to think about how we can do this better. Perhaps there should be a joint committee of the Commons and the Lords, properly staffed with the sort of expertise and advice that would really allow us to take on our friends at the PRA and the FCA, but it is something that does need scrutiny.
The legacy of the global financial crisis is important. It obviously had an enormous impact on our country and our public finances. “Too big to fail” must never happen again, but we must recognise that financial services in this country compete on an international basis. Too often, when legislation is passed in this place, there is another “have regard to”. I have been in Select Committees where colleagues have asked about some piece of legislation—some provision or “have regard to” that I probably allowed to pass through the House of Lords because I wanted to be collegiate—that led the regulator to make assessments that were not going to go anywhere, but added significant compliance costs to our financial services industry with no material outcome. I urge the Minister to really think about what is a necessary legacy of the global financial crisis and what is a sort of received wisdom of defensiveness that does not serve us well any more.
My final point, which I alluded to earlier, is about the consumer reset. The Chair of the Select Committee rightly pointed to Nikhil Rathi’s challenge to us at the Select Committee that we, as politicians, need to be clear about what level of risk we are prepared to tolerate. That is a difficult question for us as Members of Parliament. We are never going to want to say to our constituents, “We are happy to allow lots of risk,” but we have to put it in context. The measures we put in place on risk mitigation, the mandate and responsibilities we give the FCA and the PRA, make quite a big difference to the way the industry functions and how competitive it is.
I welcome what the Government have done on financial education. The Economic Secretary and I were at the launch of a report by UK Finance this morning. I welcome the progress that has been made and needs to be made in that area, but we must get to a better place in terms of enabling people, when so much more information is available, to own the choices that they make. Of course the responsibility to look after consumer interest exists, but let us calibrate that appropriately for the age we live in.
Thank you for the opportunity to contribute.
Madam Deputy Speaker (Judith Cummins)
With an eight-minute time limit, I call Lauren Edwards.
Lauren Edwards (Rochester and Strood) (Lab)
I thank my right hon. and learned Friend the Minister for her work in bringing the Bill to Parliament, and the other place for its scrutiny to date. I should begin by making it clear that before being elected, I worked in supervision at both the Prudential Regulation Authority and the financial market infrastructure directorate at the Bank of England. I associate myself with some of the comments others have made about the importance of the financial services industry not just to London, but to the whole of the UK.
I would like to begin by welcoming the Government’s retention of the proportionality requirements, following debate in the House of Lords. Although I worked on the larger financial companies when I was a frontline supervisor, the proportionality lens was very important in day-to-day decision making, alongside a robust risk framework, not least because as the person who had to deliver a message to a firm, I needed to make sure that I could justify it. In line with that risk-based and proportionate approach to supervision, which I believe is the right one, I wonder if the Bill could make more of the opportunity to stimulate growth in the commercial and specialty insurance markets.
The London insurance market is a world leader, with annual income larger than its five closest competitors combined. It insures everything from planes to nuclear power stations, and has an important role to play in helping the Government to tackle climate change, protect against cyber-threats and unlock investment across the UK. As others have said, it competes internationally against markets in places such as New York, Singapore and Hong Kong. Its market is for sophisticated corporate clients, professional investors, insurance firms, banks and pension funds, rather than the individual purchasing travel insurance ahead of a holiday or pet insurance for the family dog, but currently the supervisory approach is rather similar for those very different types of customers.
Will the Minister and the Government consider whether more could be done in the Bill to differentiate the way we supervise wholesale insurance markets that have professional clients versus retail markets, where the focus, quite rightly, is on protecting the individual consumer? An obvious example to follow would be Australia, the country of my birth, which makes that distinction between wholesale and retail insurance through the Australian Corporations Act 2001, and tailors its supervision accordingly. There is scope in the Bill to consider what a UK version of that approach could look like to ensure that regulation is proportionate while maintaining strong protections where they are most needed.
I support the Government reintroducing the power to be able to act quickly after the access to banking services review reports, but hope that when it is reintroduced it will be narrower in scope to address the concerns raised in the other place that saw the original provision removed from the Bill. It is also important that any action that follows from that review is properly consulted on.
In my constituency, my initial efforts to get a banking hub were frustrated by the focus on access to cash under the current rules, when it is really access to face-to-face banking, advice and services that my constituents want to have, particularly on the Strood side of the River Medway and in the more rural populations on the Hoo peninsula. Digital inclusion is very important for people of all ages, but we know that the over-65s in particular place a lot of value on face-to-face banking services and it is important that they do not lose out. Age UK statistics from September suggest that 1.4 million over-65s are fully digitally excluded. Banking hubs can be part of the digital inclusion plan if we follow the example of places such as Singapore, which I know from a recent visit with the Public Administration and Constitutional Affairs Committee has very high levels of digital take-up and success using hubs to assist older citizens with building their confidence in using digital services for banking and public services.
Matt Rodda (Reading Central) (Lab)
My hon. Friend is making an excellent point, and I have a similar need in my constituency. Does she agree that the benefits of banking hubs extend to many disabled people, as well as to older residents?
Lauren Edwards
I absolutely agree with my hon. Friend that they should be part of our efforts to ensure that our services are as inclusive as possible.
Moving on to the Government’s aim to halve the burden of the senior managers and certification regime for firms, the cost saving is expected to be material. The Bank of England quotes an estimated £2 billion over a decade. It is important that those who present the biggest systemic risk to financial stability remain on the hook if things go wrong. There were very good reasons why the SMCR was introduced after the 2008 global financial crisis and there is scope for streamlining and shorter processes, but we must remember, as we do that, how few people were accountable for the risks that were run in the lead-up to the crisis and how the taxpayer was left to pick up the bill. Once again, it is a question of balance in proportionality and risk. We must always ensure that we maintain high standards of conduct and accountability.
Finally, on authorised push payment fraud, I believe that during debates in the other place the Minister said that there were other vehicles, such as the Government’s online safety legislation and fraud strategy, to address APP fraud and so provision was not needed in the Bill. However, we should consider whether the tech giants have been required to sufficiently take on their share of the responsibility for tackling this pervasive harm. The economic cost of APP fraud is significant. It was estimated at £450 million from UK businesses and individuals in 2024, although thankfully the Payment Systems Regulator reports that reductions have been achieved since then, thanks to the APP reimbursement policy. Call me cynical, but I think the only way that online tech giants will care about tackling APP fraud is if they also have some responsibility for reimbursement, rather than it all falling to the retail banks. They should also be held to higher standards for preventative measures, such as user identity verification and enhanced fraud monitoring.
To conclude, I welcome the Government’s approach and the progress being made through this legislation, but hope that Ministers will remain open to further refinement. Working in partnership with industry, regulators and Parliament, we have an opportunity to strengthen the UK’s position as a world-leading financial services centre, while maintaining the high standards and consumer protections for which our system is rightly respected.
Mike Martin (Tunbridge Wells) (LD)
We on the Liberal Democrat Benches broadly support the Bill. Modernising a framework that has grown complex over decades is sensible and there is much here to welcome, from wider credit union membership to protecting in-person banking and tougher defences against financial crime.
I want to use my brief time to talk about a missed opportunity, and I hope the Government will take me up on it. It relates to the Chancellor’s former job. The Government rightly want to rebuild our defence industry, and small firms are one of the bedrocks of that goal. With the way that warfare is accelerating, the cutting, bleeding edge is with small tech firms innovating in things such as AI and autonomy. The Ministry of Defence works with around 12,000 small and medium-sized enterprises through its supply chains, and spends about £5 billion a year with them. It is further set out in the defence investment plan and the strategic defence review that the MOD wants to spend a further £2.5 billion with SMEs by the summer of 2028. That is where defence is moving—if we want to win wars in the modern age, we have to have a robust defence SME sector,
Every small business, no matter what sector it is in, knows how hard it can be to raise finance, but many defence firms face an extra barrier. They are often refused bank accounts, loans or insurance simply because they work in the defence sector. SC Group—formerly Supacat—has won MOD contracts worth tens of millions of pounds, yet it has struggled to get investment or loans because it is not seen as acceptable. Another example is 4GD, which uses AI and robotics to run training simulators for British soldiers; the company stopped attending investment meetings and was actually turned away from one once the host found out it was a defence firm.
A couple of years ago, 15 SME defence firms formally raised the issue with their trade body, ADS, as they had actually had accounts closed by UK financial institutions. Obviously, those were just the firms that were willing to speak up; there are plenty that will have suffered adverse reactions when seeking credit but have chosen not to speak out—because what firm wants to advertise that they are unable to get capital or credit? The crucial point is that this is not because of regulation. In March 2025, the FCA stated very plainly that:
“There is nothing in our rules, including those related to sustainability, that prevents investment or finance for defence companies.”
The problem is that many investment and financial services firms have environmental, social and governance policies that explicitly name defence firms as being unacceptable for investment. The Government know that, because in the MOD’s SME action plan, which was published in July, they commit to working with everyone, from venture capital to high street banks, to make it easier for the financial sector to back defence SMEs. But there is a difference between knowing about a problem and setting out a robust way of fixing it, and that is what I want to focus on.
The Bill started in the House of Lords, where my noble Friend Baroness Kramer tabled amendment 67, which proposed a practical step that might go some way towards solving the problem. The amendment essentially required the Financial Conduct Authority to review how easily SMEs in sectors critical to our national security can get finance. More specifically, that review would examine the availability and cost of finance for defence firms, whether the FCA’s rules create barriers, whether lenders’ ESG policies, sector exclusions or risk assessments are shutting defence firms out, and whether defence SMEs find it materially harder to get finance than firms in other industries. Crucially, the review would finish with the changes that should be made to improve access to finance for defence SMEs—it should speak to the problems identified in the review.
When my noble Friend Baroness Kramer presented the amendment, among a package of others, the Government declined, saying that the framework was already proportionate to SMEs. I think something has been lost in translation there. Proportionality is not the issue; the FCA has told us that its rules are not the barrier. The question is about what regulated investment firms are actually doing. At the moment, nobody is monitoring that, but amendment 67 sought to do so, by mandating the FCA to carry out a review on a regular basis—once every two or three years.
I urge the Government and the Economic Secretary to use the Bill to honour the commitment made by other parts of Government to support SMEs—including defence SMEs—to have access to finance on a level playing field with other sectors. This is not a party political issue: in March 2025, more than 100 Labour MPs and peers wrote to banks and investors about exactly this problem, and it has also been raised on the Conservative Benches. On Report, pursuant to any conversations that the Minister might like to have with me, I intend to re-table the same amendment and seek cross-party support. I am pretty sure there will be robust support across the House. I would welcome the chance to meet with the Minister to discuss the issue, because I think we have an opportunity to strengthen the Bill as it goes forward.
Andrew Pakes (Peterborough) (Lab/Co-op)
This is my first speech in this House since being appointed as the Government’s co-operatives and mutuals champion, a role that speaks to my purpose in public life and gives me the responsibility of championing the co-operative and mutuals sector across Parliament and Government. It is a pleasure to contribute to a debate with my right hon. and learned Friend the Economic Secretary sat on the Front Bench; I know she is a champion for the sector in a diverse and resilient financial market. In the spirit of cross-party consensus that we have had this evening, I also pay tribute to the hon. Member for Wyre Forest (Mark Garnier), who I know secretly carries a co-operative dividend card in his wallet and is a champion of the sector as well.
I am proud that this Government have an ambitious plan to double the size of the co-operative and mutual economy, and this Bill will contribute to that ambition. I am proud to take on the role that I have been given, because mutuals, building societies and credit unions embody a simple but powerful idea: that financial services should work in the interests of the people who use them. They are owned by their members, rooted in their communities and focused on long-term value rather than simply short-term shareholder returns.
On taking the role last week, my first meeting was with the boards and executives of building societies from across the country, and this morning I met with Royal London. I put on record my thanks to the boards of all our building societies and credit unions, and the staff who work for them and support them in their endeavours, providing growth in every postcode already. We see people like this working in our building societies and mutuals across the country.
We have seen this movement in Peterborough, just like in many other cities. In 1954, the Co-operative Permanent Building Society opened its office in our city. More than 70 years later, now as Nationwide, it continues to serve and help people to save, buy a home and access trusted financial advice. That long-term commitment to communities is exactly why building societies and the wider mutual movement remain such an important part of our economy and financial services. It brings somewhere to save, somewhere fair to borrow and somewhere that understands the communities that the institutions serve.
Robin Swann (South Antrim) (UUP)
I am a director of Slemish ń tha Braid Credit Union. Will the new champion meet me, the Irish League of Credit Unions and the Ulster Federation of Credit Unions to ensure that the support he is talking about covers the whole United Kingdom and all the savers who use those services?
Andrew Pakes
One of the delights of my role will be juggling my diary to meet all the brilliant different mutual movements and community banks and assets across everywhere represented in Parliament—I will be delighted to do so.
In particular, I welcome reforms to the credit union common bond. By increasing the membership limit, we can help credit unions to reach more communities, widen access to affordable credit, and help more people to build savings and financial resilience. At a time when many families are still feeling pressure on household budgets, access to fair and affordable lending matters more than ever. Credit unions provide a trusted alternative to high-cost lenders and, as other Members have said, they play an important role in tackling financial exclusion.
The Bill also gives us an opportunity to recognise the contribution that building societies make to banking access. Across the country, many banks have reduced their physical presence, yet building societies have continued to invest in local services and maintain branches. Evidence cited by the Building Societies Association shows that building societies now account for around a third of UK banking branches, operating more than 1,400 branches nationwide. That commitment should be recognised and encouraged, but any future banking access requirements must also be fair—building societies cannot be expected to become the catch-all provider for responsibilities abandoned by others.
We need a framework that reflects local need, supports innovation and ensures that mutuals are not penalised for continuing to serve the communities that others have left behind. I echo comments made by my hon. Friend the Member for Harrow West (Gareth Thomas) and the Chair of the Treasury Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), that the rules governing capital and mutuals need to be looked at as well, so that we do not leave the mutual movement behind as we modernise and reflect on financial services as a whole.
More broadly, regulation should reflect the distinct nature of mutual organisations. We can maintain strong consumer protections while ensuring that the rules are proportionate and support growth, competition and innovation. Mutuals are not asking for special treatment—they are asking for a level playing field of access and role.
The test for this legislation is straightforward: will it help people to save, borrow and own a home? Will it support access to financial services in every community? Will it enable mutuals, building societies and credit unions to grow and serve more people? Mutuals, building societies and credit unions are a vital part of the future of our diverse, resilient and community-focused financial services sector, and I hope the Minister will ensure that the legislation helps them to grow, to serve more people and to continue making a difference in communities such as mine in Peterborough and those of the hon. Members we have heard from this evening.
Robin Swann (South Antrim) (UUP)
I want to pick up on the Chancellor’s comments in opening the debate, when he said that he wanted to continue moving the Bill in “the right direction” with a collegiate approach across the House. I intend to table an amendment to the Bill on one specific issue, which builds on the work of Baroness Hoey of Lylehill and the British Insurance Brokers’ Association. It relates to an ongoing campaign of mine to tackle the rising and disproportionate cause of car insurance costs across Northern Ireland.
The amendment will seek to include claims management companies in Northern Ireland under the FCA regulations. As it stands, Northern Ireland remains the only part of the United Kingdom where claims management companies are not regulated by the FCA, due to the fact that the Northern Ireland Assembly was not sitting when the legislation was introduced in England, Scotland and Wales. With no room to legislate under the current timetable and an Assembly election coming in May—who knows what happens after May—I believe that the Bill provides the perfect vehicle for bringing forward the solution to what is a technicality on the support of claims management companies and car insurance users in Northern Ireland.
Motorists across Northern Ireland continue to face disproportionately high premiums, placing severe financial pressure on our households and particularly on young drivers. Unregulated claims management companies actively pursue customers after collisions and can take anywhere between 15% and 30% of compensation payouts, which significantly inflates overall claims expenses. Those excessive costs then act as a major driver pushing up the cost of car cover for our drivers.
Claire Hanna (Belfast South and Mid Down) (SDLP)
I know that the hon. Member has been working extensively on this matter. He rightly highlights Northern Ireland’s higher premiums; there are also fewer providers, as well as the matter of the unregulated claims management companies. He will know that public transport and cycle infrastructure is failing as well, driving more people into their cars. Does he agree that it is a symptom of Stormont’s failure that another collapse meant that this gap was not plugged, and does he share my concern about the sluggish response of Stormont on providing data and agreeing to co-operate on this matter, and the belief of many drivers that nobody is really at the wheel?
Robin Swann
The hon. Lady is correct in some of her assertions on this matter, because correcting this legislative anomaly has not been on the Executive’s agenda. I do not think it will be on their agenda even after the election coming in May.
This vehicle—this piece of legislation—does provide the solution for those who need affordable car insurance in Northern Ireland more so than in other parts of the United Kingdom. Extending the FCA’s regulatory remit to Northern Ireland is a vital, practical step to properly govern those firms. It will prevent exploitative practices and bring much-needed fairness to our local insurance market.
While various factors contribute to higher insurance costs in Northern Ireland, closing that regulatory gap, which the Bill will be able to do, will actually make a tangible difference. As the Economic Secretary will see, there is support for such a measure across the Northern Ireland parties. It has also been brought in the other House, too. I hope she will listen, and meet me to explore this anomaly and bring about the solution.
Callum Anderson (Buckingham and Bletchley) (Lab)
It is a pleasure to contribute to this debate and to follow the hon. Member for South Antrim (Robin Swann). Members on all three Front Benches have rightly set out the importance of financial services to the UK economy. It is indeed one of the UK’s most international sectors, and one that holds great significance for the prospects of UK industry, businesses and households across the United Kingdom, including in my constituency.
I am very pleased to support the Bill this evening, as it retains the UK’s hybrid combination of strong institutions, high-quality regulators and, ultimately, clear rules that are critical not only to maintaining investor confidence—a currency more valuable than ever before in an incredibly volatile world—to put their money here, but to people and businesses across the UK who use financial services in their everyday lives.
Given the limited time I have, I will restrict my comments to a few areas. First, I will mention credit unions and clause 2. My hon. Friends the Members for Feltham and Heston (Seema Malhotra) and for Peterborough (Andrew Pakes), whom I congratulate on his appointment as co-operative and mutuals champion—a very wise choice by the Chancellor and the Economic Secretary—have made incredibly powerful points on credit unions. They are absolutely right to say that the current common bond rules date from another era, when society organised itself very differently. I am pleased that the Bill fixes those matters by ensuring that relatives can join in if they live in different households, that retirees can stay in and join after they stop work, and that students can qualify under the new locality bond. I also welcome raising the membership cap from 3 million to 10 million, as it enables credit unions across the UK to once again have a fair go at expanding and scaling.
I want to make a few comments about the regulators. Clauses 15 to 25 reshape how the FCA and the PRA do their jobs, and I welcome the broad direction of travel that the Government have set. Clause 16 makes regulators more considerately and thoughtfully weigh the experience of small and medium-sized firms by having greater regard for proportionality, which is important both in terms of the size of firms that are required to comply with rules and regulations and the cost and benefit of any rule that is made. Having worked supporting smaller quoted companies and then large institutions at the London Stock Exchange Group before I entered this place, it is to me pretty much intuitive common sense that a small firm cannot staff a compliance department or answer every consultation that is issued by Government or a regulator with the same vigour as larger counterparts.
It is therefore incumbent on all our regulators—in this case the FCA and PRA, but I would similarly make the comment with regard to regulators operating across our economy—to properly and proactively account for this if they want to be a genuinely constructive partner in supporting economic growth and cultivating meaningfully competitive domestic markets. I also understand that the Government will retain the Lords amendment to keep proportionality as an explicit test in the day-to-day work of both regulators. If that is the case, I very much welcome that.
Under clause 19, the FCA and the PRA will be required to report at least once a year on how they are advancing the competitiveness and growth secondary objectives. These reports will feed in the Treasury’s twice-yearly performance reviews with the regulators’ respective chief executives. I think that is a highly appropriate measure, given that almost all the financial institutions—be they large or small, market infrastructure, bank or insurer—were incredibly keen for the previous Government to ensure that regulators adopted such an objective. Given that it has probably been four or five years now since that obligation was placed on our regulators, it is right that those regulators who have such a large impact on our economy explain their record to Parliament, in particular the Commons Treasury Committee and the Lords Economic Affairs Committee.
In the three minutes or so that I have remaining, I want to close on the Bill’s most forward-facing clauses: those relating to cryptoassets and digital assets more broadly. FCA analysis has found that as many as 7 million Britons own or have owned cryptoassets, and just a few more—9.3 million—hold a stocks and shares ISA. I will spare the Economic Secretary one of my sermons on the virtues of retail investing, but I just mention that statistic because it demonstrates how the consumer landscape is quickly shifting and, with it, the risk that consumers are increasingly exposed to.
It has never been more important for the UK— Government and regulators—to ensure that we are keeping up with developments in cryptoassets and delivering appropriate consumer protections, as my hon. Friend the Chair of the Treasury Committee explained earlier. But we must also do that without restraining the inevitable opportunities that digitising our financial markets offers us and risking letting Britain fall behind.
On digital assets themselves, the Government are making welcome strides forward, particularly in supporting Chris Woolard’s first report as the UK’s wholesale digital markets champion. The main challenge facing the UK is how we maintain momentum in the years ahead, given that other jurisdictions such as the United States, Hong Kong and Singapore are pursuing these agendas with great pace. I hope that the Government will use their regular engagement with the Bank of England to ensure that it moves with as much vigour on stablecoins as the Government are on digital gilt. With the geopolitical volatility that I mentioned earlier, Britain can offer something quite rare: a consistent, predictable environment for innovation in stablecoin and across asset classes, be they fixed income or equities.
Turning to clause 50, while the digital assets strategy, which has been proposed by the Opposition, is an interesting addition to the Bill, I am not instinctively sure whether legally mandating the Government to produce a strategy is necessarily appropriate. But I am sure that the Minister will explain the Government’s position in her wind-up speech.
I am very pleased to support this Bill. A competitive financial services sector provides so much more value than just itself and is a massive asset to all the companies and people in our constituencies.
Kirsty Blackman (Aberdeen North) (SNP)
This is quite a wide-ranging Bill, as we can tell from the variety of speeches that we have heard. It focuses not only on financial markets and financial services, but on consumer protection. In some ways, those are opposite ends of the spectrum, and we can talk about anything within that spectrum.
I will talk about a few measures in the Bill, but first I want to raise a concern that I have raised before, which is that any piece of legislation that originates in the House of Lords does not take oral evidence. It is immensely frustrating that no oral evidence will be taken regarding this Bill, despite the fact that it is immensely technical and we would really benefit from that. I have been on many Bill Committees, so I know that oral evidence sessions are invaluable for providing information that we can take forward. I urge the Government to have a rethink about whether oral evidence can be taken on House of Lords Bills when they come to the Commons, because it is not fair that we miss out on that evidence.
Turning to specific measures in the Bill, part 1 on credit unions is really important, and I agree with widening the membership. I think that the “Fair Banking for All” movement is really positive, and I would be keen to support it, including with access to credit. A number of Members have said things like, “We all rely on banking services”, but some people do not, because they cannot access those banking services because they are so financially excluded. Ensuring that those people who have suffered from economic abuse, for example, have access to those services is really important.
I am glad that credit unions will have their common bond widened, but I do wonder about the timeline for the statutory instrument that is coming through to widen the limit of people from 3 million to 10 million. It would be really helpful if the Minister could let us know what is happening with that statutory instrument and when it will progress, because it is happening in parallel to this Bill rather than being included in it.
On complaints and consumer redress, I agree with the majority of what the Chair of the Treasury Committee said. I have concerns about the absolute limit of 10 years. I do not think that that is appropriate, and consumer organisations also believe that.
I also have concerns about the general principle that consumers should take responsibility for their decisions. As a general principle, that makes sense, but when it comes to specific issues it does not necessarily always work. Consumers can take responsibility in situations where they had the full information and the capacity to understand the information that they were given, but in some cases they will not have been given the full information or had the ability to understand it. They should be able to take responsibility for informed decisions but not have to take responsibility for those in which they were not properly informed. I would appreciate it if the Minister could clarify that before we come to Report stage—it relates to clause 7, which proposes amendments to section 228 of the Financial Services and Markets Act 2000.
On payment systems regulation, I absolutely agree that changes that can be made. I feel strongly that it is really important to future-proof the regulation of cryptoassets particularly and the transfer of those cryptoassets in relation to payment systems regulation and fees that are regulated by the FCA. Charities have seen a massive increase from a significant number of banking institutions in the payments that they make. For example, charities that have only a small amount of money and might be taking out a float to run a small event will now be seeing massive fees that they were not seeing before because of changes to charitable banking systems. I am not sure whether that exactly falls within payment systems regulation, but I do not think it is fair that they have to do that. Those changes disproportionately harm smaller charities and those who deal with small amounts of cash.
I have a specific question on anti-money laundering supervision. I understand the move away from professional body supervisors so that we can have fewer than 25 organisations doing that supervision, but I am worried about specialisation. For example, if we put the work of the organisation that supervises lawyers and solicitors in Scotland into the FCA as a regulator that supervises lawyers, that may not be appropriate for the legal system in Scotland, and we may end up with only one person—the one who understands Scottish law—having the knowledge and doing that supervision. There, again, we would have a single point of failure, and that is really concerning in a place supervising people who are doing anti-money laundering. Will the Minister confirm that there will be appropriate specialism and understanding of all the different organisations currently supervised by professional bodies as that work is moved into one organisation? I am concerned about potential failure points.
In relation to Scottish-specific things, those looking to get a child trust fund unlocked for someone in Scotland who has become an adult and does not have the capacity to manage their own finances has to go to the Office of the Public Guardian. Will the Minister please ensure that any changes in regulation made here do not make the system worse in Scotland? I understand that it is currently better than the system in England—there is no requirement to go through a court process—so will she talk to the people who understand the system in Scotland to ensure that our people will not be disadvantaged? I would love the system in Scotland to be made better, but at the very least it should not be made worse as we move forward here.
I believe strongly that we need access to in-person banking services, as have been mentioned. A huge many banks have closed in my constituency—a city constituency—and some people are required to go on public transport for an hour to get to banking facilities.
When banks close, they regularly say, “It’s fine, because there’s a post office.” That is not fine, because post offices are run by postmasters and postmistresses, who may get ill and have to step down at short notice, and post offices do not have to consult before they close to ensure that provision will always be there. Therefore, in terms of access to in-person banking services, if a post office is to be relied on as a backstop, that service needs to be better and better regulated, and we need to ensure that that backstop service will continue to be there.
On data sharing for consumer credit and ensuring that people have credit agreements, I am concerned that if the data sharing system is to be more flexible than currently, it may be more at risk given the number of hacks we are seeing. I urge the Government to ensure that the National Crime Agency, for example, has looked into that so that people’s data is as safe as possible.
I have one very last thing. On Henry VIII powers and the creation of things here, banking services should never have been a delegated authority; that should have been in the Bill. We should also have done the consultation before the legislation.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. I call Gareth Thomas, after whom the speaking limit will drop down to six minutes.
Gareth Thomas (Harrow West) (Lab/Co-op)
I welcome the Bill and commend both the Chancellor and, in particular, my hon. Friend the Economic Secretary for their commitment to modernising financial services. Like the hon. Member for Aberdeen North (Kirsty Blackman) and other Government Members, I welcome in particular the proposed changes to credit union rules as well as recently announced measures to increase funding for community development finance institutions through the British Business Bank. But I want to focus my remarks specifically on what more the Bill could do to ensure that our financial system works for everyone, particularly by improving access to affordable credit for people and businesses in every region.
The Prime Minister has rightly said that ours must be a “cost of living Government” putting money back into people’s pockets and giving families breathing space. That must surely include tackling the extra costs that people face simply because they are on a low income. Research published this summer by Fair By Design found that 95% of low-income households pay a poverty premium, of an average of £380 a year extra, for essentials such as energy, insurance, food and, crucially, credit.
That research suggests that some 98% of households in poverty in my constituency pay a poverty premium that includes £178 a year on credit. That is not by any definition a small amount for a family already struggling to make ends meet. A household with savings can, for example, replace a broken fridge outright, but almost 40% of UK adults have less than £1,000 in savings and one in four people in financially vulnerable circumstances have no savings at all. A household without savings in that situation might have to borrow at eye-watering rates, paying far more for exactly the same appliance. The people with the least paying the highest price during a cost of living crisis is particularly unjust, and sometimes the consequences are far more serious than higher interest payments.
The Centre for Social Justice estimated earlier this year that close to 2 million people in England are borrowing from illegal money lenders. These loan sharks can trap people in escalating debts, using intimidation, threats and sometimes violence to extract repayments. The number of people using them has risen and sadly will continue to rise unless people have safe, affordable alternatives. Credit unions and community development finance institutions already provide those alternatives, but they need support to be able to scale up and meet demand. Public funding, while important and welcome, cannot do the job alone.
Some 850,000 SMEs already view access to finance as a major obstacle to growth, fewer than half of SME loan applications to traditional banks are successful, and in surveys, 40% of SMEs cite the high cost of the loans on offer as a problem for their business. Women business leaders, businesses led by disabled people, ethnic minority business leaders and businesses in the poorest areas of our country all face higher barriers to accessing the finance they need to unlock their expansion plans.
Concern has grown that a number of high-cost lenders are exploiting this situation, targeting small businesses with slick, online marketing offering very rapid access to cash. As with the payday lending scandal of a decade ago, these lenders do not have to display or explain the total cost of borrowing or accurate representative rates. The often quite aggressive use of personal guarantees, loan stacking and the behaviour of some brokers are also significant concerns. Court judgments, ombudsman complaints and wider efforts to refinance these loans all underline the need for tighter regulation of the rules on high-cost credit and for bolder measures to improve access to affordable credit.
Research for the Treasury and the Department for Business, Innovation, Science and Trade published in January this year by the National Institute of Economic and Social Research underlined how much our increasingly centralised banking services had driven up the cost of lending for businesses, compared with other European countries with much larger regional and mutual banking sectors. The OECD’s most recent analysis of SMEs’ and entrepreneurs’ financing suggests that the UK had higher average SME interest rates in 2024 compared with the US, France and Germany.
I am therefore pleased that Ministers are backing with enthusiasm the CDFI taskforce that I initiated in government, and I welcome the progress on the Government’s financial inclusion strategy, but lasting change surely means looking beyond voluntary measures to ensure that people in the most vulnerable parts of the market are not excluded from essential financial services, including credit—a point members of the Treasury Committee made in their recent report. The Bill is the opportunity to bridge this gap and enact that change.
There is no consistent, transparent framework for assessing how well major banks serve the people and places excluded from affordable credit. There is no systematic way to compare their contribution or assess how they encourage partnerships with credit unions and CDFIs that can make a real difference. We should surely require the Financial Conduct Authority to assess and publish banks’ performance in meeting affordable credit needs, including their support for responsible community lenders. Assessments should be transparent, comparable and, of course, proportionate, with action expected where performance falls short. A similar thing is about to happen with pension schemes.
This is not about forcing banks to lend to people who cannot afford to repay. It is about ensuring that those who can repay are not excluded and that banks fulfil their part of the social contract. Banks have had huge success in the last decade—a decade when, according to Which?, almost 7,000 bank branches have closed, shutting down opportunities for basic advice, making access to financial services more difficult and leaving small businesses on our high streets facing yet another challenge.
Kirsty Blackman
Is the hon. Gentleman aware that a lot of this data is collected already, and that it would not place a significant additional regulatory burden on banks to have to gather it? It is just not being published.
Gareth Thomas
Indeed, the FCA said something similar to me at a roundtable with some charities. What is clearly needed is the will to publish that data and to sort out the remaining gaps in the data.
The banks’ success has come through being particularly selective in who they lend and offer detailed financial advice to. Their contributions to helping build the capacity of those financial institutions that do lend to everybody have been much more limited—in some cases, non-existent. It is the responsibility of Government to lead on tackling market failures, but as in other countries, banks in the UK have a responsibility to help, and not enough of them are helping to build the capacity of community banks, credit unions and CDFIs to do so. Just as it was right to ask banks to pay a bit more tax to support people with their energy bills, so we should ask them to work with us to create a more diverse, resilient and, crucially, inclusive financial system that will serve every community in the decades ahead.
Everyone in this House surely supports easing the cost of living and delivering good growth in every postcode. Fair access to credit is critical to both those ambitions. I hope that Ministers can be persuaded to back further steps on affordable credit as the Bill progresses. A financial system that works for everyone is fundamental to tackling the cost of living crisis.
Joe Powell (Kensington and Bayswater) (Lab)
I am proud of our world-leading financial services sector and the many constituents I represent who work in it. I put on record my thanks to the Chancellor for announcing measures in the Budget that will continue to help Britain attract global talent to work in those services.
Our reputation for strong financial services that respect the rule of law depends on our ability to keep dirty money out of the City and out of our country. The Bill will make huge strides on that through clause 13, on which I will focus. No one should turn a blind eye to the source of funds for an investment, whether into a company, a property, art or even some of our national institutions. The former Foreign Secretary, my right hon. Friend the Member for Tottenham (Mr Lammy), was right to say that this Government’s ambition should be to change our reputation from the dirty money capital of the world to
“the anti-corruption capital of the world”.
One of the historical weaknesses has been the regulation of legal, accountancy and company service providers, which are sometimes referred to as enablers or potential enablers of money laundering. It should not be a badge of honour that dirty money in our country has spawned an entire genre of excellent books: “Kleptopia”, “Treasure Islands”, “Butler to the World”, “London Falling”—hon. Members can read my review in “The House” magazine—and many more.
In my Kensington and Bayswater constituency, we similarly do not celebrate the fact that we are home to numerous sanctioned luxury properties and thousands more whose ownership is unknown or opaque. I invite the Minister to join my next “Kensington Against Dirty Money” walking tour, which will show her the impact of dirty money entering our country—often through the vehicles of anonymous trusts registered in the British Virgin Islands and other overseas territories and Crown dependencies. That distorts our property market, hollows out our local communities and, in the worst cases, leaves properties frozen in limbo. That is not sustainable investment. It does not promote economic growth or shine a good light on our professional services.
I am therefore delighted that the Bill will significantly strengthen anti-money laundering measures. The Financial Conduct Authority will take on an expanded supervising role, rather than the more than 20 different professional bodies that currently oversee lawyers’ and accountants’ compliance with money laundering rules. The capacity of those bodies simply does not align with the complexity of modern anti-money laundering efforts, and the incentive for private professional bodies to compete for membership does not align with the most rigorous oversight. For a long time, anti-corruption campaigners have called for this consolidation. I pay tribute to those organisations. As the Bill progresses, the transition will need to be managed. There is a clear risk that, as responsibilities shift to the FCA in cohorts, some firms will be left behind. It would be helpful for the Government to provide a reform road map that makes it clear that existing anti-money laundering duties will apply.
Funding is obviously key—other Members will speak to the benefits of an economic crime-fighting fund, which the Minister already knows my views on well—but enforcement also means ensuring that the FCA has the right powers to inspect legally privileged material when that is necessary for anti-money laundering supervision. The Minister will no doubt be aware of the action taken by Carter-Ruck against the Solicitors Regulation Authority to challenge its statutory power to compel disclosure, which the SRA has now appealed to the Supreme Court. There is a risk that the FCA will therefore inherit a legally flawed responsibility for anti-money laundering. It is crucial to get that right, and I hope this Bill is the place to do it.
On property investment, I know that the Government are committed to looking at the issue of abuse of trust, and the anti-corruption champion’s report into asset ownership in Britain will be published soon. In my constituency, over 40% of the foreign-owned properties are registered in trust. My concern with our registry of overseas entities and the exemption given to trusts is that we might create a perverse incentive to use more opaque corporate structures to shield the true ownership. Indeed, those opaque structures are likely to be the product of conversations with the very professional services to which the Bill aims to bring more consistent money laundering supervision. I hope that in the spirit of joined-up government, the Minister will work with colleagues across Government to look at this abuse of trust. That would be another significant step forward.
The measures in the Bill support our leadership on the global stage. We have the financial action taskforce review next year, which I am sure will welcome the steps in the Bill, as well as the G20 presidency and our flagship illicit finance summit, which I am glad the Government have committed to host next year. I hope the Minister will see the illicit finance summit as an opportunity to work with like-minded countries on consistent international anti-money laundering supervision of professional services.
Finally, it is well past time for action on the overseas territories and Crown dependencies. The uncomfortable truth is that while some of the most notorious and brazen enablers of illicit finance and money laundering operate as part of the UK family, we will not be able to claim the leadership role that the Bill has the potential to support. Despite years of commitments and communiqués, the overseas territories are still one of the main global destinations for dirty money, and it is high time for that to change. The harms are severe, from sanctions evasion to serious organised crime, and they damage our financial services here and support kleptocrats and criminals who take advantage of them. With the Joint Ministerial Council happening this month, I hope we can continue to take action on that front. I hope that the Bill can help end that reputation as the butler to the world and instead create the modern, secure financial services regulation that we need.
Neil Duncan-Jordan (Poole) (Lab)
I have spoken before about the issue of hidden credit liabilities and the role of the Financial Conduct Authority, and the Bill touches on some of the concerns I have raised.
My constituents James and Becky Glanville built a successful family-run nursing home business, but it was destroyed by undisclosed risks embedded in complex financial products sold by NatWest, part of RBS. They were never told that interest rate swaps carried significant liabilities that would be treated as secured debt, erode their borrowing capacity and trigger covenant breaches as interest rates fell.
Despite clear regulatory requirements for transparency and informed consent, those risks were never disclosed. The regulatory framework then let my constituents down, too. The FSA and FCA’s redress scheme excluded the hidden credit lines from its review, denying fair compensation to victims like the Glanvilles. The regulator effectively colluded with the banks to suppress this fraud and reduce compensation costs, and by 2019 the Glanvilles were owed £6.3 million, but to date they have received absolutely nothing.
The Glanvilles’ case is not isolated. It reflects a wider systemic failure and underscores the urgent need for a full independent investigation and a fair, comprehensive redress scheme. I would be interested to hear the Economic Secretary’s views on the issue and whether the Bill would have protected the Glanvilles had it been in place at the time.
After a decade and a half of austerity, an estimated 4.4 million people have taken out £13 billion-worth of credit to pay for essentials. According to the Centre for Responsible Credit, over a million households have potentially been lent to irresponsibly in the last two and a half years. We know that when the rules are vague, it is borrowers who ultimately pay the price. When the cost of living crisis has already pushed household budgets to breaking point, the Government must not undermine the vital safety net that underpins consumer trust in the entire financial system.
The FOS is a vital safety net for consumers when something goes wrong, but clause 7 introduces a vastly more complex system for how the FOS determines complaints. The shift from a level playing field with an impartial fairness test to one that initially presumes the firm was in the right means that consumers could now face a harder uphill battle to receive redress and could even be denied the redress they would have received under the old test.
The Bill’s stated aim is to introduce deregulation to stimulate growth, but there are serious questions to be asked. Who determines the rights of consumers? Who determines the obligations of firms? Who determines the balance between commercial freedom and public protection, and ultimately, who answers when that balance proves inadequate?
We know that the more authority Parliament delegates to the FCA, the more essential it becomes to preserve democratic accountability. That matters when the rights of ordinary citizens are at stake, and particularly when there is good reason to question the FCA’s judgment and priorities. We cannot simply place all the responsibility on to borrowers. I hope that the Economic Secretary to the Treasury will be able to provide some much-needed reassurance on these genuine concerns.
David Burton-Sampson (Southend West and Leigh) (Lab)
Having worked for more years than I like to remember in financial services, I recognise the importance of regulation, but I also recognise that at times, regulation can be restrictive to economic growth, and given the size and contribution of the financial and insurance services industry, it is rightly an area of focus for reforms. Consumer protection is vital, but I am pleased that the Bill looks to simplify regulation while maintaining high protections and regulatory standards.
I want to focus on two areas of particular interest to me. The first is the abolition of the Payment Systems Regulator and the transfer of responsibilities to the FCA. When I chaired the all-party parliamentary group on open finance and payments—the hon. Member for Carshalton and Wallington (Bobby Dean) has now taken over—this was a matter of regular discussion and interest for many members. Currently, four bodies are responsible for regulating different parts of the payments system: the Bank of England, the Payment Systems Regulator, the FCA and the PRA. Absorbing the PSR’s responsibilities into the FCA is a sensible reform, and it sits alongside the Government’s plans set out in the “National Payments Vision” in 2024.
The payments sector has spent untold resources trying to satisfy two distinct bureaucratic masters on identical operational metrics, submitting duplicate data on financial crime and systemic resilience. By integrating those systems under a single FCA handbook framework, we can strip out this waste and allow our scaling payments and open banking firms to reinvest that capital back into technical development and national and international growth.
The core message from the industry is that the absorption of the Payment Systems Regulator must be strictly managed to protect the open banking and payments sector from transitional friction, accelerate open banking rails and ensure that a single regulatory structure does not slow down the competitive dynamism of the UK’s payments sector. The Payments Association has warned that without precise detail of the merger, it risks being a “reshuffle” rather than a reform, and we must avoid that.
Another area of particular interest to me is the plan to widen access to credit unions through the expansion of their common bond in clause 2. When I was chair of the all-party parliamentary group on fair banking, I was often lobbied by organisations such as Fair4All Finance, which made passionate calls for the expansion of credit unions and CDFIs. In 2025, there were around 1.53 million credit union members in Great Britain, but that is equivalent to only 2% of our population, compared with around 40% in Northern Ireland and 64% in the Republic of Ireland. Credit unions are much closer to their communities and their members, and therefore much better set up to take objective, local lending decisions, made by a human, based on the circumstances laid out in front of them, as opposed to a “computer says no” approach.
Sarah Smith (Hyndburn) (Lab)
My hon. Friend is making a really important argument about the financial inclusion reforms. Does he agree that equally important is the Minister’s commitment to finally tackle in this Bill the age-old problem that the parents of disabled children are unable to access their child trust funds by bringing forward reforms that will take away the bureaucratic Court of Protection process?
David Burton-Sampson
My hon. Friend must have been reading my speech, because I am about to talk about financial inclusion, and I agree with her. Having worked in banking when child trust funds came out, I know that they were a fantastic initiative by the former Labour Government, but we now need to close the gap to ensure that those adults—they are no longer children—can get access to the funds, whoever they are.
In the drive for greater financial inclusion, the credit union model can be incredibly effective, so increasing the common bond limit from 3 million members to 10 million members is a positive move forward. While that measure is not in the Bill, I am pleased to hear that it will be implemented via secondary legislation. Relaxing common bond rules on who can be a member—for example, to relatives of an existing member, people who live in the same household as a member, retirees from a firm in the local area, and students who study but do not live in the area—is an excellent feature of the Bill. Those moves are all welcomed by the Association of British Credit Unions Ltd, Fair4All Finance and the Building Societies Association.
Credit unions are invaluable assets in ensuring that people are not financially excluded when they need support the most. An unexpected expense does not disappear because someone cannot access mainstream credit. Expanding access to safe and affordable alternatives to high-cost and illegal lending should remain an important part of the Government’s wider financial inclusion agenda. We should also recognise the key role that credit unions play in encouraging members to save on a regular basis.
I want to see more credit unions opening and expanding across the country. For example, in my constituency, we have access to only one credit union, which is in north London. However, if I search by my childhood home in Liverpool, I see that I would have had access to five different credit unions. In fact, Fair4All Finance carried out research involving 1,000 members across those five credit unions and found that they offered increased access to essential affordable credit, supporting people’s financial resilience. Nearly half of the members’ most recent loans were below £1,000—a market that is not typically served by mainstream lenders, but vital for households managing small ups and downs. The credit unions encouraged the development of saving habits, with nine in 10 members reporting that they saved regularly, and half of the members making regular deposits of £20 or more—that is not much, but it is better than nothing—including those on low incomes. Around eight in 10 respondents reported a positive impact on their wellbeing, mental and physical health and family life as a result of their membership.
Josh Fenton-Glynn (Calder Valley) (Lab)
My hon. Friend is making a powerful point, and he is right to identify credit unions as a brilliant opportunity. In America, some 145 million people use credit unions, compared with a very small amount of the British population. How can we catch up with our transatlantic cousins?
David Burton-Sampson
I agree with my hon. Friend; I was just about to conclude by saying that the continued growth of credit unions and the CDFI market is essential. I encourage the Minister and her team to continue to remain open to further options for expanding reach, including to SMEs, so that we can truly drive forward good growth in every postcode.
Phil Brickell (Bolton West) (Lab)
As a former banking employee, let me be clear that a strong financial regulatory system and strong economic growth are not competing objectives. If Britain is to remain one of the world’s leading financial centres, we must ensure that it is not also one of the world’s preferred destinations for dirty money.
As the chair of the APPG on anti-corruption and responsible tax, I have consistently worked with colleagues, including my hon. Friend the Member for Kensington and Bayswater (Joe Powell), to strengthen the UK’s response to economic crime. After a number of meetings with the Economic Secretary to the Treasury and her predecessors, I am pleased to see that she has taken up the cudgel of anti-money laundering supervisory consolidation—that is a bit of a mouthful. That matters, because those who wish to subvert our financial and professional services sectors, launder their ill-gotten gains and drag down the UK’s reputation as a clean place to do business will always seek to exploit the weakest point in our regulatory and supervisory armour. To that end, I am proud to support the Bill, which will modernise the way in which the legal and accountancy sectors, and trust and company services providers, are supervised for money laundering risk, with those responsibilities consolidated within the Financial Conduct Authority.
Working in the industry, it always baffled me that anti-money laundering oversight is currently divided among 22 professional body supervisors, many of which are also membership organisations. That creates an inherent conflict of interest—it leads to inconsistent supervision, variable enforcement, fragmented intelligence sharing and uneven suspicious activity reporting. The Office for Professional Body Anti-Money Laundering Supervision’s March 2026 progress report perfectly sums up the situation, stating that professional body supervisors
“still report common breaches…and no or inadequate firm-wide risk assessment by their supervised population.”
The FCA itself is not immune to this; it only took seven formal actions in the period 2024-25, down from a pre-pandemic high of 60 in 2018-19. The total number of on-site visits conducted by all 22 professional body supervisors has not yet returned to pre-pandemic levels.
Economic crime is not victimless—it fuels corruption, organised crime, fraud and kleptocracy. It distorts markets, undermines competition and damages Britain’s international reputation. That is why clause 13, which deals with supervisory consolidation, is so important. By ending the fragmented system of 22 separate professional body supervisors and moving towards a single supervisory model for those sectors under the remit of the FCA, this Government are taking a significant step forward. There are three important opportunities to further enhance the Bill that I would be grateful if the Economic Secretary to the Treasury would consider.
First, we need a sustainable solution to the chronic underfunding of economic crime enforcement. The anti-corruption APPG has long called for the creation of an economic crime fighting fund. The principle is straightforward: a proportion of receipts from economic crime enforcement, including confiscated assets, penalties and deferred prosecution agreement receipts, should be reinvested into the very agencies responsible for tackling those crimes. Rather than allowing enforcement proceeds simply to disappear into the consolidated fund, we should create a virtuous circle in which successful enforcement generates additional capability for future enforcement.
The Government’s 2025 anti-corruption strategy promised to explore the funding landscape for strengthening economic crime enforcement, and I think something could be done within the framework of this Bill. The FCA has secured more than £1 billion in regulatory and criminal fines over the past decade, yet enforcement receipts are largely either returned to the industry through rebates or transferred to the Treasury. I understand that the banks are paying their way via the economic crime levy, so I do not begrudge the principle of rebates, but as the Government are now legislating for the FCA to take on growing responsibilities in the face of increasingly sophisticated criminal threats, I encourage the Treasury to consider allowing the FCA to offset the costs of AML enforcement with the fines it imposes for breaches. The Competition and Markets Authority, Ofcom and the Information Commissioner’s Office already possess comparable powers. Giving the FCA similar flexibility would allow it to invest in specialist expertise, advanced technology and enforcement capability, thereby ensuring that it has the cutting-edge capabilities it needs to effectively police the regulated perimeter.
Secondly, the Government must ensure that the current supervisors do not take their eye off the ball during the transition period.
Finally, I urge the Government to ensure that legal sector regulation works effectively under the new regime. At present, there remains a significant problem concerning access to legally privileged material. When the Bill was in the Lords, Ministers confirmed that the FCA will not have powers to compel disclosure of privileged material, yet recent litigation involving the Solicitors Regulation Authority has exposed serious uncertainty regarding regulators’ ability to access such information when investigating misconduct. That litigation should prompt a rethink. If the FCA inherits the same limitations, there is a real risk that serious wrongdoing by solicitors involved in money laundering or abusive litigation practices will remain beyond effective scrutiny. The Bill should therefore clarify that the regulator can access legally privileged material where necessary for the purposes of anti-money laundering supervision, while continuing to protect clients’ rights and confidentiality.
I support the Government, and I trust that my right hon. and learned Friend the Economic Secretary to the Treasury will reflect on my constructive proposals as the Bill progresses through this place.
Jim Dickson (Dartford) (Lab)
I welcome the Bill, and the opportunity to follow so many excellent contributions this evening, particularly those of the Chair of the Treasury Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), and other colleagues from the Treasury Committee.
One of the key items on our agenda in the Treasury Committee over the past year or so has been the Government’s financial inclusion strategy. We made an important recommendation for Ministers to consider whether the Bill should include further targeted powers to intervene if voluntary action fails to secure reasonable access to essential financial services. I am glad that the Government is doing that; the measures in the Bill will give them more powers to protect access to banking services. So many Members have said this tonight, but I suspect we all have constituents who have seen their access to banking services dramatically reduce in recent years. It is right that the Government are giving themselves powers to address that.
We want our financial services industry to contribute as much as it can to economic growth, and I endorse the changes to the operation of the Financial Conduct Authority and the Prudential Regulation Authority, both of which are regular attenders at our Select Committee and play important roles in our economy. It seems eminently sensible that both should produce long-term strategies that balance their responsibilities as regulators with the Government’s growth objectives, and I know that many across the sector will welcome efforts to streamline their reporting requirements.
My children were of the generation who received child trust fund contributions under the last Labour Government. We promised to create that programme in our 2001 manifesto, and we set it up in 2002. It has assisted many young people with getting started in life. Many invested in ISAs to build up a fund to bring home ownership closer, or funded driving lessons or a first vehicle. It was a tremendous shame that the Government post 2010 scrapped that programme. Inclusion regarding how those child trust funds are managed is critical, and the Bill takes steps to facilitate access to those funds for parents and carers who manage them in situations where the young people concerned are unable to do so themselves. That is long overdue and I, like many others present, have received correspondence from constituents about the issue. I welcome the change.
Sarah Smith
It will come as no surprise that I also welcome what my hon. Friend is talking about. Does he share my relief that hundreds of his constituents will finally get access to their £2,600—as will mine in Hyndburn—just the same as those young adults who do not have that problem of lacking capacity?
Jim Dickson
My hon. Friend is absolutely right. The funds should be accessible to those young people, and hitherto they have not been. When the money is available, it can help that young person with a start in life and give them the financial means to better themselves at a crucial time. That is a critical measure in the Bill.
Credit unions are also critical to inclusion and to this Bill. The legislation contains some important reforms to help us modernise the sector. I was pleased to visit Wave Community Bank over the summer. Along with Greenwich and Bexley Credit Union, it plays a vital role in supporting residents in Dartford to access affordable credit in times of acute financial stress. Awareness of credit unions remains far too low, and these changes are welcome to ensure that more Dartford residents can join them. We know that 37,000 people across my constituency—almost half the adult population—are in financially vulnerable circumstances. Many people have limited savings and a life event, such as a job loss or a break-up, will leave them in a particularly dire situation. That is where credit unions, as we know, can play a vital role.
Earlier this year, the Government published the outcome of their call for evidence on reform of the common bond, which included proposals welcomed by the Association of British Credit Unions and Fair4All Finance to widen access to membership. Some of the measures announced in the Bill, including steps to allow students studying locally to join or those retired to maintain their access, are incredibly welcome. I understand that the measures to increase the potential membership cap of the common bond will come a bit later through secondary legislation, but I welcome indications from the Government that the cap is likely to be raised to cover a population of as much as 10 million, from the current 3 million. Taken alongside the very welcome credit union transformation fund, which is there to build operational resilience in the sector, I hope the measures will see a long-term, sizeable increase in membership of credit unions across the country and particularly in my constituency, and see the Government deliver an important part of their financial inclusion strategy.
Finally, I join others in expressing concern that the changes to the operation of the Financial Ombudsman Service in clause 6—and in particular the need to refer significant volumes of cases to the FCA—will “gum up the system”, in the words of senior figures in that organisation. This means that consumers may wait longer for less favourable outcomes, which is surely something that Members should not welcome. I am also concerned, alongside others, about the changes to, or indeed the weakening of, the fair and reasonable test in clause 7, as applied to future complaints. Again, this may well reduce the rights of consumers through the process. I hope that when the Minister responds, she will deal with the points made by myself and others about concerns that are clearly important to us all in an otherwise hugely welcome Bill.
John McDonnell (Hayes and Harlington) (Lab)
I declare an interest as the chair of the all-party parliamentary group on investment fraud and fairer financial services. It was admirably chaired by the hon. Member for Harrow East (Bob Blackman) for a number of years, and I took over 18 months ago. The all-party group grew organically: a number of Members were coming to Parliament with concerns about individual instances of fraud, and as a result, people came together and set up the all-party group. We work on the principle that we all support the idea that we need an effective and vibrant finance sector, but that the foundation of that sector is trust. “My word is my bond”—that is exactly what the whole element of trust is about.
There is a real concern at the moment that there is a lack of trust. If we look at the FCA’s polling, 36% of people said they did not feel that they had been treated fairly or honestly by a financial firm, and I can understand why. Let me run through just a few examples from my experience here: payment protection insurance; endowment mortgages; pension transfer mis-selling; London Capital, which I believe my hon. Friend the Member for Bishop Auckland (Dr Rushworth) mentioned; Connaught; Woodford; and hidden credit lines. I warn the House that the issue of micro-bonds is coming down the track as well, and that will be enormous.
We can see why people have lost confidence to a certain extent and why, as the hon. Member for Carshalton and Wallington (Bobby Dean) mentioned, we should listen to the 16 organisations that represent consumers, which have come to explain to us their concerns about the Bill. Concerns have also been set out by my hon. Friend the Member for Dartford (Jim Dickson). On clause 7, the concern is the interference with the fair and reasonable test. Way back in the year 2000, when that Financial Services and Markets Bill was going through the House, there was a long discussion that came to a fair proposal to establish the fair and reasonable test in the legislation. If I remember rightly, it was agreed on a cross-party basis. To now introduce conditionality, in terms of compliance with FCA rules, does not necessarily result in a fair outcome; certainly, in many instances, we have found that compliance with FCA rules is just not good enough to secure justice for people.
To reassure us, the Chancellor of the Exchequer said, “Don’t worry—the consumer duty will still apply.” It is not in the Bill, as far as I can see. I think that is a real issue. If we are to reassure people out there, we need to ensure that elements of that reassurance are in the legislation. As my hon. Friend the Member for Dartford also said, on clause 6, the issue of having to refer ambiguities from the FOS to the FCA draws the FCA into an adjudication role. I have to say that a number of the cases that we have dealt with have concerned omissions and failures on the part of the FCA. Again, there is an element of conflict of interests there. I know that an element of discretion can be involved, but it is a question of the elements of discretion to which the FCA is subject. The Bill states that the ombudsman must take into account
significant implications in relation to the functioning of relevant markets”.
I think that the FCA will be under pressure to ignore some of those elements if they fly in the face of issues relating to market success.
Clauses 42 and 43 undermine the ringfence between investment and retail banking. I was here in 2008. Others claim it, but it was I who first raised the subject of Northern Rock in this Chamber. We are seeing the same cycle: there is a financial crisis, regulation is introduced, memories fade, there is pressure to reduce that regulation, and we go into another crisis. That is what was happening from the 1980s onwards. Curiously, there were two books that people reached for when the crisis happened in 2008. One was J. K. Galbraith’s analysis of the 1929 crash. The other, funnily enough, was Marx’s “Capital”, but that is another discussion. J. K. Galbraith said that the best protection against another crash was memory. What is happening now is exactly what Andrew Bailey, the Governor of the Bank of England, has described: memories are beginning to fade, which is why people become so susceptible to the pressure for deregulation.
I want to make a couple of points before I quieten down. A number of issues have not been addressed in the Bill, and I should like them to be addressed. The first is the FCA’s treatment of whistleblowers. One of our advisers, Simon Andriesz, recently committed suicide. He was a whistleblower, and it was, I believe, as a result of the lack of support from the FCA that he took his own life. We have referred it to the FCA, and what has it done? It has launched an investigation, but it is not an independent investigation; it is an investigation by an incoming member of the FCA’s own board. That is unacceptable. We need to ensure that we protect whistleblowers.
The other issue is the Hillsborough legislation that we are introducing. I would like to see that legislation applied to the FCA, because I think that a duty of candour for the FCA would give reassurance to consumers outside.
Finally, this is not a choice between regulation and growth; both are essential for a successful finance sector.
Dr Sam Rushworth (Bishop Auckland) (Lab)
The Bill contains many good things that other Members have spoken to. The Chancellor pitched it as a Bill that will unlock investment for growth. If we want people to invest, we need them to have confidence. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) and I did not collaborate on our speeches, but, as he pointed out, 36% of people surveyed by the FCA believe that financial firms are not honest. When the Bank of England asked people to sum up the finance industry in a word, the word that the British people picked was “corrupt”. The Financial Services Ombudsman is receiving 216,000 complaints a year, and it is easy to see why: £1 billion is now being lost every year in investment scams. The most notable example is London Capital & Finance, but there are others, including Blackmore Bond, Basset & Gold, Astute Capital and Godwin Capital.
The Bill addresses complex issues in which I claim no expertise, but I take a strong interest in them because they are of interest to the people I represent. I want to share the experience of ordinary people who have lost their savings to unregulated investment products. I myself lost a few thousand pounds to a scam. I set up a Facebook group years ago, and the first person who contacted me was a man from Manchester. He had worked as a binman throughout his career, getting up early in the morning, working in all weathers and saving for his pension. He took the lump sum of his pension and invested it in Astute Capital. He lost all of it.
I want to talk about what that looks like as a process. It begins with an ordinary person searching to compare high-interest savings accounts with banks. They put their contact details on the internet, and then they get unsolicited calls from people with posh accents offering them investment advice and suggesting that they put their money in an ISA. They have probably heard of ISAs, and they know it is a Government-approved and tax-incentivised way to save. The person will admit to them that they are not FCA-regulated, but they probably have not heard of the FCA and may not know what that means. They may also be told that their capital is at risk, but then that nice person with a posh voice explains to them, “I have to tell you that—it’s the legal bit—but let me explain to you why you’re actually okay. Everything you’re investing is fully asset-backed up to several times its value, and we spread the risk across multiple portfolios.”
The individual trusts, they invest and they wait three years. They look forward to getting their money back with the interest they were promised, but when that time comes—this happened to customers of Astute Capital—they get told, “We’re sorry; we can’t pay you. But if you just stick with us for another six months, it’s better than causing someone to whom we’ve lent your money to default.” So they wait another six months. Six months later, their bonds are forcibly converted into shares and they are told, “Don’t worry; soon enough you’ll be able to sell those shares, and your shares are worth more than what you invested”—except they are not, and eventually the company goes into administration.
And then what happens? The person loses everything. When they investigate it, they find that a director of Astute Capital was simultaneously a director of the firm to which their money was lent. As a director of both firms, he took away the security on the debt. An ordinary person would expect that, in such a situation, there is some sort of recompense. They would think it is illegal, but it is not. People are told that they are at fault because they should have known that they were investing in an unregulated company. I had a man say to me on the phone, “I can’t look my wife in the eye. I’ve lost everything that we’ve saved over all these years.”
What happens to the directors? What happened to Timothy John Smith, who was the director of two companies? According to Companies House, he is now at Axecap Ltd, another unregulated offshore broker with many warnings against its name not to invest. For me, the most troubling part of this is that these unregulated investment schemes are entirely legal or, if there has been illegal activity, there has been no investigation and nobody has ever been held accountable. That is why the public are in disbelief, because they expect the Government and laws to protect them. They do not think this unregulated space should be allowed.
When I was elected, I raised this issue with the Financial Conduct Authority. It told me that it needs a bigger mandate to regulate this space, which it has not been given. In my last 30 seconds, I ask that the Bill be amended to give a mandate to the FCA to have oversight of unregulated activity, to make directors personally liable, to require directors of unregulated investment companies to demonstrate that they have acted responsibly, to automatically bring unregulated mini-bonds within FCA supervision, and to create a general compensation scheme for the victims of unregulated investments.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call Noah Law to make the final Back-Bench contribution. Those who contributed earlier should make their way back to the Chamber.
Noah Law (St Austell and Newquay) (Lab)
I warmly welcome the Bill and its goal of creating a more transparent financial services sector that can continue to play a key role in creating growth and prosperity for the whole of the UK. I refer the House to my entry in the Register of Members’ Financial Interests.
Having spent a decade in investment banking and financial advisory work, I have some understanding of both the potential of our financial services and the reforms that they need. The proposed reforms to credit unions are extremely positive. By virtue of being owned by their members, credit unions are uniquely incentivised to put surplus profits into providing better services, rates and returns for their members—something that, as a Co-operative Member, I am delighted to support. I am delighted to support the efforts of my hon. Friend the Member for Peterborough (Andrew Pakes) in this space too.
The Bill will make it easier for credit unions to accept new members. It removes unnecessary administrative blocks and provides greater support, allowing more people to join credit unions, which are rooted in their communities and committed to delivering for them. Expanding access to credit unions also means access to more affordable lending, which gives those in the most dire financial circumstances access to credit at reasonable rates, instead of leaving them at the mercy of predatory lenders. Credit unions encourage saving, responsible borrowing, and investment in our communities and local economies. The reforms in this Bill will make accessing them easier than ever. As my hon. Friend the Member for Harrow West (Gareth Thomas) pointed out, we eagerly await the response to the review of fair access to banking and capital markets.
More widely, I am glad to see the industry support the aims of this Bill and the support for the better regulatory strategy, accountability, deadlines and the proposed improvements to the senior managers and certification regime. By requiring the FCA and the PRA to report annually on their efforts towards competitiveness and growth, we ensure that the Government, regulators and the industry pull together in one direction for the financial sustainability of our country.
Additionally, by improving the way in which regulators make decisions, we can improve the confidence of investors in our financial services. The reduction in the statutory period of authorisations and variations of permission from six to four months, and the period for incomplete applications being reduced from 12 to 10 months, ensures a smoother system for firms and leaves a lot less up in the air. Delays in regulatory decisions can be hugely costly for firms, and can even mean postponing fund launches and major investment decisions, and affect firms’ ability to grow, innovate and compete internationally. A simple regulatory system provides greater clarity for firms, better transparency for the public and the Treasury, and benefits us all. I welcome the Bill’s allowing the Treasury to introduce secondary legislation to amend specified determination periods, once again demonstrating the Government’s willingness to work closely with Britain’s most valuable and prosperous of industries.
I am very grateful to the Chancellor for his acknowledgment that we have asked the sector to do its bit to contribute to sound and prudent public finances— I would argue that that prudence, to quote the right hon. Member for Beverley and Holderness (Graham Stuart), who is no longer in this place, “dwarfs” short-term fiscal interventions—and it directly contributes to sound and prudent finances in an otherwise globally turbulent macroeconomic environment, after the public did their bit to safeguard the sector through its most challenging of times. Consequently, we in this House must also give due care and attention to this incredibly valuable sector. I do believe that the Chancellor has shown that, even when those difficult decisions have to be made, this need not be a zero-sum game.
I would like to think this Bill can be just one of many stepping stones as part of an ongoing effort throughout this Parliament to ensure a healthy level of risk taking in this most expert of financial markets that we have in the UK. In that regard, I welcome the targeted reviews of ringfencing requirements alongside the Bank of England’s own review of capital requirements to promote thriving banking and capital markets—public, private and, of course, mutual.
Gareth Davies (Grantham and Bourne) (Con)
It is a great pleasure to close this debate on behalf of the official Opposition, and to follow on from my very good friend, the shadow Economic Secretary—my hon. Friend the Member for Wyre Forest (Mark Garnier)—who has done excellent work both in this Chamber and behind the scenes to engage extensively with the industry. Indeed, I am sure there is not a lunch table in the City of London that has not been graced by my hon. Friend—all, of course, in the service of his great country.
I draw the House’s attention to my entry in the Register of Members’ Financial Interests, particularly my long career in asset management, my active involvement in the industry going back many years, and my current chairmanship of the APPG for blockchain, which is relevant to this Bill.
It has been a privilege to be joined by many Members from across the House who clearly have extensive industry experience. I firmly believe, as I have for a long time, that we need more people in Parliament who have worked specifically in this sector, and who understand its importance and its power to help and influence our economy and our communities.
I thank all Members from across the House for their contributions to the debate, but I will name a few in particular. The Chairman of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) who is not currently in her place, provided a typically detailed and very thoughtful contribution. She expressed concerns about whether the pendulum is swinging away from consumer protection, as well as outlining her concerns about the reforms to the FOS. I do not agree necessarily with everything she said, but the House is better for the scrutiny that she and her Committee provide.
Let me pay tribute to our country’s longest-serving Economic Secretary, my right hon. Friend the Member for Salisbury (John Glen), who moved with grace from museums to MiFID back in the day. He spoke about his mixed views of the FOS. He acknowledged that it is—in his words—an unreliable path to resolution, and helpfully warned us that we need to consider the challenges posed by AI to the financial services sector.
I congratulate the hon. Member for Peterborough (Andrew Pakes) on his appointment as the Government’s co-operatives and mutuals champion. I have to say it is an appointment that passed me by, but I very much welcome it. One person who has always been a champion of co-operatives and mutuals is, of course, the hon. Member for Harrow West (Gareth Thomas), who spoke of the high cost and burden of credit, especially for those in poverty.
We on the Conservative side of the House want sensible deregulation. We want less bureaucracy in our system. We want lower burdens and more growth. Where the Bill does that, we will welcome it and we will help make it happen. The Chancellor was right in his opening remarks when he said that it is important to recognise the cross-party work that has gone on already with the Bill. He rightly echoed the views of those us on the Conservative Benches when it was said in the other place that the Bill moves us all in the right direction. Having said that—I am loath to depart from the happy and collegiate atmosphere of the debate so far—I am reminded of what Disraeli once said:
“No Government can be long secure without a formidable Opposition.”
So, if Members will forgive me, I have a job to do tonight. In certain areas, as my hon. Friend the Member for Wyre Forest set out, we believe the Bill does not go far enough. I would like to highlight two areas in particular.
First, on digital assets, the United States has legislated for stablecoin. South Korea and even the European Union have their own regimes. Our competitors globally are moving ahead. That matters because stablecoins could revolutionise the way we pay for goods and services. Blockchain technologies could transform the way we interact with companies and the state. The Bill was our chance to set out a more advanced vision and policy agenda in those areas, but the Government chose not to.
Secondly, ringfencing forces our largest banks to separate retail banking from the rest of their business. That was right after the financial crisis, but the world has now moved on and our resolution regime has moved on with it, as my right hon. Friend the Member for Salisbury pointed out. If we look at our competitors from New York, Amsterdam, Frankfurt and Paris, not one imposes ringfencing like ours—not one. We believe that we should not either. The Bill gives a little and takes a little, but there is a simpler option. If true deregulation is the aim, we believe the Government should adopt the Conservatives’ plan to scrap ringfencing altogether.
No matter how well intentioned the measures in the Bill are—and I believe they are very well intended— I am afraid that I must point out that they are being brought in alongside a barrage of anti-growth taxation and regulatory burdens imposed on our financial services sector and British business more widely. This afternoon, the Chancellor praised Britain’s financial services sector, and I welcome his words; 13 days ago, he spoke similar words but then doubled the bank surcharge—a £1.5 billion hit to the very companies and people he says he supports.
It is all about choice. The Chancellor could have chosen to cut welfare, which is spiralling above £400 billion, but he chose the easier route for a Labour Chancellor, as my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, and decided to tax one of our country’s most-important sectors. Be in no doubt that this will have an impact, and specifically, I fear it will lead to more bank branch closures on our high streets, which none of us in this House wants.
I have no doubt that the Economic Secretary will shortly reference banking hubs in her wind-up, speaking with pride about how the Government are rolling out more. She is right to welcome them—I welcome them too—but she should also be clear about who pays for them. Banking hubs are funded by the banks—every one of them. Cash Access UK is funded by the banks. The mobile libraries and the pop-ups in our communities are funded by the banks. We cannot celebrate banking hubs on a Tuesday and then the next day tax the companies that pay for them. I am in favour of banking hubs, but I would much rather the branches not be closed in the first place.
To her credit, the Economic Secretary understands the sector. She is respected in the City and she understands the importance of banks to our high streets, which makes it all the more disappointing for the sector that she did not act to prevent the latest tax raid. The high street bank tax is just one example, but we also have the hike to national insurance and higher taxes on carried interest. That all results in more jobs put at risk, more high street banks closing and investment and innovation heading elsewhere rather than contributing to growth here in Britain.
For the most part, the Conservatives of course welcome the Bill, and we have been clear about that. Sadly, however, it will do little to overcome the barriers and burdens that this Government have inflicted on the financial services sector over the past two years. Warm words cannot undo cold taxes. The world’s capital has a choice about where it goes, and the Government have not acted in our favour. The Chancellor has a choice: he can back the sector or tax it until it becomes uncompetitive, but he simply cannot do both.
The Economic Secretary to the Treasury (Lucy Rigby)
It is a pleasure to close this debate on the Financial Services and Markets Bill. I am grateful to hon. Members from across the House for their contributions, including those on the Conservative Benches who have joined us on a one-line Whip. I am grateful, as has been highlighted, for the spirit of collaboration in the other place, and for the constructive criticism—I think—that has been offered here. I know that Madam Deputy Speaker is being strict in the time limits applied to the wind-ups, so I will do my level best to cover as much as I can and spend most of my time addressing the reform of the regulatory landscape, which is where hon. Members have put most focus. To the extent that I cannot cover things, I will follow up in writing. As was pointed out by the hon. Member for Aberdeen North (Kirsty Blackman), I think the breadth of today’s debate reflects the importance of these reforms and, indeed, the importance of financial services to this country.
I will start by going back a step, if I might, because this party came into office with a really clear purpose: to bring stability back to the British economy, give working people greater security and get Britain back on the path to prosperity. At Budget, the Chancellor took the responsible decisions needed to protect the public finances and provide breathing space for firms and families across the country. However, stability and fiscal responsibility are the foundations, not the destination. If we want to see more good jobs, opportunities for our young people and people feeling more secure in their finances, we know that we need a thriving, dynamic economy that delivers for the British people.
Few sectors are more important to that task than financial services. From providing SMEs with finance to expand, innovate and hire to helping a family to buy their first home, getting capital to some of our most exciting start-ups and supporting people saving for retirement, financial services provide the ecosystem that underpins our economy and each of our daily lives. In Leeds, Bristol, Bournemouth, Manchester, London, Edinburgh, Belfast and Cardiff, financial services right across the United Kingdom provide the services we rely on every day, supporting more than a million good, highly skilled jobs and the ambitions and the aspirations of the country.
As hon. Members have pointed out, we are recognised as a world leader in financial services—something that all of us in this place should be very, very proud of, and something we must protect as a critical strategic asset. Members have also pointed out that global competition for capital is intensifying, and it is therefore vital that we strengthen the sector’s ability to deliver for the country, which is exactly what this Bill does.
Members have spoken to the key reforms in this Bill. Let me start with child trust funds, an issue raised by my hon. Friends the Members for Hyndburn (Sarah Smith), for Southend West and Leigh (David Burton-Sampson) and for Dartford (Jim Dickson), where we are righting injustice that has existed for far too long. Child trust funds were a product of the previous Labour Government, and they were based on a simple promise: every single child in this country, no matter their background, would start adult life with a financial asset of their own.
However, for far too many families of children with disabilities, that reality has been very different. Parents have been forced to go to court in a lengthy and complex process to access their children’s funds on their behalf. That is why we announced last week that we will use this Bill to make it simpler, easier and fairer for parents and carers to access child trust funds on behalf of young people who lack mental capacity. That means that up to 126,000 young people will be able to more easily access funds currently worth an average of £2,600. This money was always theirs, and with this Bill, it will reach them.
Many hon. Members—far too many to mention—have rightly highlighted the vital role that mutuals, co-ops and credit unions play in our financial services ecosystem. Member-led and rooted in their communities, mutuals and co-ops are central to this Government’s commitment to seeing good growth in every corner of the country, which is why we are committed to ensuring that the mutuals economy can flourish.
My hon. Friend the Member for Harrow West (Gareth Thomas) highlighted the importance of CDFIs, which, as he knows, we have backed in the Budget. I know that he wants us to go further, and I am more than happy to meet him to talk about exactly how we can do that. I can confirm that we intend to further extend the reforms to the common bond in Committee, bringing forward an amendment to enable credit union members who do not themselves directly meet the common bond to introduce family or household members on the same basis as other members. We have a lot more to do when it comes to the scale of our ambition on mutuals and co-ops, and I look forward to working with hon. Members across the House, and especially my hon. Friend the Member for Peterborough (Andrew Pakes) as the first ever co-operatives and mutuals champion in Government.
In addition to allowing our mutual and co-op sector to expand and best support growth, the Bill backs greater investment across our economy as a whole. It will give banks greater flexibility within the ringfencing regime to provide more capital to businesses, encouraging and supporting growth. The right hon. Member for Salisbury (John Glen) has urged us to be thoughtful when considering these reforms, and I can reassure him that we will be.
The shadow Economic Secretary, the hon. Member for Wyre Forest (Mark Garnier), spoke about capital requirements, as did the right hon. Member for Salisbury. The Chancellor and I acknowledge the importance of the Bank’s review of capital requirements. As the Chancellor said, that is made clear in his remit letter. I acknowledge the shadow Economic Secretary’s intention to table amendments in this regard, and I look forward to discussing those with him.
At the heart of the Bill is the protection of our global reputation for financial regulation. As has been said today, we have a reputation for sophisticated regulators, high standards and regulatory stability. We are very clear that we will protect each of those things. We are equally clear that where regulation can be made better, more up to date with the modern world, more effective in achieving its aims and more proportionate, we will do that.
The hon. Member for Tunbridge Wells (Mike Martin) raised an important point about how regulation affects defence SMEs. We are very clear that no legitimate company should be denied access to financial services solely because they are involved in the defence sector. The forthcoming defence finance and investment strategy will review how we can ensure that barriers to investment of the kind that he described are removed.
I thank my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) for his supportive comments on the regulatory aspects of the Bill. I know that he has tremendous experience in this area.
As I expected, plenty of hon. Members raised access to banking, including my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier). I am happy to confirm, as did the Chancellor, that we are going to insert back into the Bill our ability to act on the conclusion of Richard Lloyd’s access to banking review. We will publish the review and our response very soon.
The Chancellor noted earlier that the Consumer Credit Act was enacted more than 50 years ago. That was before the iPhone and the laptop, and probably before the shadow Economic Secretary was even born—[Interruption.] I know that it was. It was the same year that this nation was introduced both to Ceefax and, I found out, to Bagpuss. The Act needs to be updated to ensure that the regulator can develop new rules around the information that consumers will receive, including via digital means, based on rigorous consumer testing.
Let me come to the FOS. It is clearly critical that when things go wrong, redress is accessible, consistent and predictable. Some hon. Members have questioned the respective roles of the FCA and the FOS. Under the proposed reforms, it will be the FCA as the independent regulator that sets the standards that firms must meet, including in relation to the consumer duty, and it will be the financial ombudsman that applies them.
I thank my hon. Friend the Member for Hackney South and Shoreditch for her input on this matter, including in today’s debate. She raises really important considerations about protections. Even if I cannot fully endorse her likening of risk warnings on retail investment to those on smoking, I can say that we will consider her input further in Committee. She raised concerns about the referral mechanism, as did other hon. Members. We have had constructive engagement with the FCA and interested groups on the referral mechanism and intend to bring forward a number of amendments at Committee stage to ensure that the mechanism functions well.
Madam Deputy Speaker, I fear that you are running out of patience with me, so I will do my best to conclude. I want to acknowledge the 10-year rule, as that was raised by hon. Members including my hon. Friend the Member for Feltham and Heston (Seema Malhotra). It is entirely right that some products will not be suitable for the operation of the 10-year rule, and the FCA will set out exactly which products those are.
I will skip over my comments on anti-money laundering and fraud, although that is an important part of the Bill. I will skip over my comments on digital assets, save to say please do not doubt the ambition of the Government. We will carefully consider the Lords reforms in that regard.
Financial services, as hon. Members across the Chamber have said, touch every part of our lives, from the mortgage that turns a family into homeowners to the small loan that turns a good idea into a growing business, and indeed the savings that turn a lifetime of hard work into security. The Bill backs the sector and it backs our economy to succeed.
John McDonnell
May I put on record again my concern that, as we may be facing a significant global crisis as a result of AI debt problems, now is not the time to undermine the protections we brought forward after 2008 and, in particular, the separation between retail and investment banking?
Lucy Rigby
I am grateful to my right hon. Friend for his comments. We are approaching our reforms of the ringfence very carefully. A detailed review has been conducted. We have to ensure that where regulation exists, it is fit for purpose and fit for the circumstances of the modern age. I am more than happy to meet him and talk about the new growth allowance, for example, which will ensure that we can get more capital into the real economy, more homeowners on the ladder and more investment to businesses.
The Bill will deliver a stronger economy to deliver opportunity, hope and prosperity in every corner of the country. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Financial Services and Markets Bill [Lords] (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Financial Services and Markets Bill [Lords]:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 15 December 2026.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
Other proceedings
(7) Any other proceedings on the Bill may be programmed.—(Gregor Poynton.)
Question agreed to.
Financial Services and Markets Bill [Lords] (Money)
King’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Financial Services and Markets Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:
(a) any expenditure incurred under or by virtue of the Act by the Treasury, and
(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Gregor Poynton.)
Question agreed to.
Financial Services and Markets Bill [Lords] (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Financial Services and Markets Bill [Lords], it is expedient to authorise the charging of fees and charges under or by virtue of the Act.—(Gregor Poynton.)
Question agreed to.
Business without Debate
Delegated Legisation
Stepping Hill Hospital
(1 day, 12 hours ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Tom Morrison (Cheadle) (LD)
Stepping Hill hospital sits in my constituency. It is one of the busiest hospitals in the region, with over 91,000 patient admissions each year. It serves Stockport, parts of Greater Manchester and parts of Derbyshire. I have raised the issues faced by the staff and patients there many times in the House and been told repeatedly that the Government are working with Stockport NHS foundation trust and the integrated care board to solve them, but time and again we are let down by the lack of real action.
On Friday I visited the hospital with my hon. Friend the Member for Hazel Grove (Lisa Smart), and we met senior teams, clinicians, nurses and operational staff.
Adam Jogee (Newcastle-under-Lyme) (Lab)
On the point about nurses at Stepping Hill hospital, as the hon. Member for Hazel Grove (Lisa Smart) knows, my mother did her nurse training at Stepping Hill back in the 1970s. Since it is my mother’s birthday tomorrow, will the hon. Gentleman join me in wishing my mum a very happy birthday and acknowledging the hard work and commitment of the nurses at Stepping Hill hospital?
Madam Deputy Speaker (Ms Nusrat Ghani)
Mr Jogee, I am sure we would all like to wish your mother a happy birthday, but we are discussing the future of Stepping Hill hospital.
Mr Morrison
I absolutely respect that intervention, and I do wish the hon. Gentleman’s mother a happy birthday. If it were possible, we would all do a rendition of “Happy Birthday”, but we will leave that for another time.
This was not my first visit to the hospital—I have been there several times, both as an elected representative and as a patient—but it was the angriest and most emotional I have ever been while visiting it. On our visit, I saw staff and patients’ dignity taken away from them, I saw a building completely and utterly unfit for purpose, and I saw a health system that was left to rot, quite literally, over the years of Conservative neglect now being given only plasters by the current Government.
I am not exaggerating when I say that the visit was harrowing. To see staff and patients suffer in buildings that leaked, surrounded by walls that were rotting and floors that were sinking, was truly awful. It painted a stark and terrible picture of the way our health service is being treated by decision makers in Whitehall, with £120 million being spent each year just on mitigating the damage being caused by the hospital’s crumbling estate. This is an incredibly expensive sticking plaster that does not solve the underlying problems, but instead makes things worse. A comprehensive repair of Stepping Hill’s estate would cost just over £134 million, and the Government must commit to providing that amount to get the hospital back on its feet. It would save money in the long term and mitigate the huge risks the estate poses.
Lisa Smart (Hazel Grove) (LD)
My hon. Friend is absolutely right: what we saw on our visit was harrowing. He talks about value for money and how over £100 million is going on just maintaining the buildings as they currently stand. That is literally plugging holes in the wall. I am sure he agrees that a better use of the money would be to spend capital on building a new additional site in Stockport town centre. That would free up space on the site that is no longer fit for purpose and would be a much more sensible, value-for-money way to spend the money.
Mr Morrison
I thank my hon. Friend for bringing that idea forward. Yes, absolutely; I will talk later about how a new site in Stockport could alleviate the stress on Stepping Hill and save the Government a lot of money.
Stockport NHS foundation trust is clear that the £134 million would be over and above any Government funding already allocated. The trust simply cannot make the efficiency savings being asked of it when it is firefighting each day. I want to tell the House what this looks like and how this firefighting impacts the day-to-day lives of the staff and the patients they look after.
On our visit, nurses told me of the huge issues they face regarding infection control. There are genuine concerns that the outdated and inefficient building makes infection control even harder. Beds are too close to each other and people are unable to move around within a safe distance of each other. Parts of the site predate the NHS and, as such, the corridors are so small that two wheelchairs or trolleys cannot go past each other. Shockingly, the hospital has only around 20% of the side rooms it needs to isolate infectious patients, and in the electrocardiography zone there are no handwashing facilities. The nurses told me that during covid, they had to create massive one-way systems through the wards, making care and movement even more complex. That was a logistical challenge at a time when the NHS was already being tested to breaking point.
The building itself is also dangerous. On the visit, I was shown the relentless water damage and leaks across the estate. When it rains, staff race around the hospital putting out buckets to catch the water dripping through the ceiling, sometimes on to vital equipment.
Ward and shower rooms have become completely unusable because of leaks, which have further reduced capacity. I have seen wards where sewage comes up through the drains, meaning that nurses have to clean up rather than look after the patients they should be tending to. The glass windows in the cardiology unit are at a huge risk of falling out, posing a serious safety risk.
Clay pipework from 1905 is still in use and leaking, meaning that escaping steam is rotting the floors beneath. Some floors are now physically sinking. As I entered the building, I saw that the hospital’s café was closed for that very reason—I could actually see where the floor was beginning to slope down. Scaffolding is literally holding up the glass ceiling in the main entrance— a worrying welcome for patients entering the building.
Mr Morrison
Many of the hospital’s wards are Nightingale wards, which cannot support contemporary care. As I have already mentioned, these wards do not have enough side rooms. That poses a massive risk in terms of infection control, but it also poses challenges when providing patients with the privacy and dignity they need. When patients are receiving end-of-life care, the hospital cannot always provide a separate room, and instead beds are curtained off to give families the privacy they need. To ensure that people are aware, staff place a candle on the ward entrance to tell others that someone is having their last moments with their friends and family. That was the hardest thing to see on our visit. It makes me so angry and ashamed that families in my constituency are saying goodbye to their loved ones in this way.
It is not just the physical infrastructure that needs addressing. Some staff talked me through how outdated computer software and internet connections mean that they have to use memory sticks to take images from one computer to another. Some of the images are for time-critical operations, in which every second counts, yet clinicians, doctors and nurses had no option but to walk memory sticks from one computer to another, wasting precious time.
Finally, let me talk about the conditions the staff work in. The ward designs in the older buildings make staffing a serious challenge. Staff-to-patient ratios mean that nurses must look after no more than eight patients, but some wards have 14 beds, meaning that two nurses are required, despite one of those nurses being underutilised. The staff rooms are also completely inadequate; I saw one room that could fit only two people comfortably, despite there being 12 people on that ward, while the staff room on the cardiology unit, which serves 30 people, has only one toilet.
Navendu Mishra (Stockport) (Lab)
I congratulate the hon. Gentleman, my constituency neighbour, on securing this debate on an important issue for the three MPs who represent the local authority of Stockport. I refer the House to my entry in the Register of Members’ Financial Interests regarding my trade union membership and being chair of the all-party parliamentary group on cancer.
All of us in this House would agree that our constituents deserve high-quality, first-class, reliable care in hospitals and from our GPs, and that the staff also deserve high-quality services. I am not sure that I agree with the hon. Gentleman’s suggestion for a new location for a new hospital—I think there should be a wider discussion, but I do not wish to take up too much time in dissecting the Stockport local plan. However, I do agree that Stepping Hill hospital is simply not adequate for patients or staff. Does he agree that in the past two years this Government have allocated £2.5 million for targeted safety works, £26 million for the construction of a new pathology building and £75 million for the Stockport NHS foundation trust over the next four years? That is a stark contrast with the previous 14 years—the coalition Government, of which his party was part, and the Conservative Government that followed.
Mr Morrison
I respect the hon. Gentleman a lot; we all work well together as Stockport MPs. Although we should never say no to money coming into the hospital, even the NHS trust is saying that this money does not touch the sides, as I have said. We need more investment, and the £134 million repair bill needs to be sorted. We can discuss the need for a different site another time; I am fully behind Stockport needing a new hospital site.
I was talking about the staff room for the cardiology unit, which serves 30 people but has only one toilet. That is not to mention the fact that the toilet windows are not frosted over, so there is a massive privacy issue for the staff. I was also told about one member of staff who works in reception in one unit and who uses an electric wheelchair. Horrifyingly, their work environment is completely inadequate, not only because the doors to the unit are not suitable for wheelchairs to go through, but because they cannot access an accessible toilet and so are forced to leave the building in which they work to go to another a few minutes away. Often they have to go out in the rain just to use a facility that they should have the right to use. That is simply a disgrace, and I cannot believe it is happening in 2026.
I asked why that person still felt the need to work there even with such basic accessibility requirements not being met. I was told that it was because they cared so much about the hospital, about Stepping Hill and about the job they do that they would not leave. That was a running theme through our visit. Despite all the issues and problems I have laid out, the staff across Stepping Hill maintain excellent standards in conditions that are working against them. They continue to provide an unbelievably caring and wonderful service. They are a credit to the NHS and to Stockport. They never complain or down tools because of the conditions; instead, they get on with the job.
My partner Lou and I sadly needed to spend time at Stepping Hill recently. Despite the awful reasons we were there, we felt protected, supported and cared for. I want to take this moment to say thank you to the staff for everything they did for us, for keeping us safe and for looking out for us. I promise here that I will always have their back and will never stop campaigning to get them the hospital they deserve.
So what is the solution? The Government announce bits of support every now and then, and they often announce the same pots of money time and again in the hope that it looks like support is there, but that does not help. We need a fully funded strategy for how Stepping Hill will be saved. There were plans for a new hospital in Stockport that were originally rejected by the previous Conservative Government. The plans would have enabled some relief for Stepping Hill and helped free up much-needed space on the estate. The plans also had backing from the trust and the council, which partnered to develop them, and the integrated care board. They pushed as much as they could. Sadly, it does not appear that the hon. Member for Stockport (Navendu Mishra) supported them, but we will talk about that another time.
Whatever the solution, the fact is that action is now desperately needed. We cannot go on with more debates, more questions to Ministers and the Prime Minister, more letters to the Department of Health and Social Care and more meetings with officials—the Government have to act now. For over a decade the Conservative Government left Stepping Hill hospital to rot. This Government cannot do the same, and the Minister should not allow that to happen.
I want to end with a number of questions for the Minister. First, it is clear what help is needed and required, so why have the Government failed to act so far? Secondly, is it appropriate for 30 NHS staff members to share one toilet and that an NHS worker who uses a wheelchair has to go out in the rain to access the nearest accessible toilet? Thirdly, is it fair that patients at the end of their life cannot share their final moments with friends and family in privacy and with dignity? Finally, will the Minister come to Stepping Hill hospital along with the Prime Minister, who often talks about Stockport and the work he did there, so that they can see at first hand what happens when those in Westminster and Whitehall take our hospitals for granted?
The Minister for Social Care and Mental Health (Alison McGovern)
I congratulate the hon. Member for Cheadle (Mr Morrison) on securing this very important debate. Throughout it, he and other Members have paid tribute to the work that happens at Stepping Hill hospital, despite what are clearly often very difficult situations, and it is important that that is on the record.
Unfortunately, the Minister for Secondary Care, my hon. Friend the Member for Bristol South (Karin Smyth), who is the Minister with responsibility for this, could not be here this evening. I am sorry to be a poor replacement for her, but let me reassure the hon. Member for Cheadle and the House that I will report this discussion to her directly. I know that she is aware of this debate, and I am sure that she will follow up in the appropriate way with the Members concerned.
As I said, Members have rightly paid tribute to all the staff at Stepping Hill hospital. The hospital is extremely important to the communities it serves, and its patients and staff deserve facilities that are safe, resilient and fit to deliver high-quality care. I am going to make a few remarks about the overall position with capital investment and how we have got to this point, but none of that is to say anything other than that all patients and staff deserve good-quality facilities.
For too long, capital investment in the NHS was insufficient and short term, and the challenges at Stepping Hill reflect a much wider problem across the NHS estate. Capital budgets were repeatedly raided to meet day-to-day pressures, and the result is an estate carrying the consequences of years of under-investment, as has been made clear. There are no quick fixes, but we can change the way the NHS invests in its buildings, moving away from short-term fixes towards sustained investment and proper long-term planning. That is why our 10-year capital plan for health and social care is based on three core principles: more investment; greater certainty, so that investment can be planned over the long term; and greater autonomy for local leaders to decide how capital is best used.
First, we are investing more. After years of under-investment, we are providing the largest capital budget in NHS history, with annual spending rising to £15 billion by the end of this spending review period. Within this, the estates safety fund will provide £6.75 billion over the next nine years to tackle the poorest-quality parts of the NHS estate and ensure safe environments for patients and staff. We have already confirmed £1.5 billion of investment in projects through the fund, including £1.3 billion for maintenance, safety and resilience projects across the NHS estate and more than £200 million for major hospital projects. This means that more than 950 schemes are being delivered across the country.
That sits alongside around £21 billion in operational capital over this spending review period, empowering local health organisations to invest in their priorities, including their estates. We are also investing around £5 billion over the spending review period to expand and modernise diagnostic, elective, mental health and emergency services, helping to increase capacity, cut waiting times and improve urgent and emergency care performance.
Secondly, we are providing greater certainty over that investment. We have provided NHS organisations with multi-year capital allocations to 2030 and a further five years of certainty beyond that for estates maintenance funding to 2035. This stability is designed to provide the confidence needed for long-term investment decisions and responds directly to one of the key NHS capital planning challenges cited by stakeholders. Instead of planning from one year to the next, local NHS leaders can now look ahead, prioritise the most serious risks, plan investment over the longer term and secure better value for the taxpayer. That is particularly important for ageing estates like Stepping Hill, where we need to move away from repeatedly patching up ageing buildings and towards properly planned strategic interventions.
The hon. Member for Cheadle asked me about what Stepping Hill needs to put it on a different path. Local NHS leaders are best placed to understand their estates’ investment requirements and prioritise capital accordingly. The estates safety fund is designed to give regions flexibility and target that funding in this way, rather than decisions being taken centrally. That decision-making capacity is enabled by the long-term funding certainty that the Government have given them. However, the hon. Member has put very clearly on the record what is happening at Stepping Hill hospital. I will report back to the Department what I have heard tonight, and I feel sure that local NHS leaders in his region—which is also my region—will take what he has said very seriously and be in touch with him directly.
We are devolving more control to the frontline and streamlining capital approvals, giving NHS organisations more freedom to invest accordingly and respond to local need, as I have said. That approach should help projects to move forward more quickly, and it is already supporting some investment at Stepping Hill. Some £763 million of funding over the next nine years has been allocated to the north-west region through the estates safety fund, and local leaders have the flexibility to prioritise it as they wish. Stepping Hill hospital will benefit from that funding.
As my hon. Friend the Member for Stockport (Navendu Mishra) said, the hospital has been allocated £26 million for a new pathology building through the estates safety fund, protecting the vital testing services that doctors rely on. It is one of 10 major hospital schemes backed by more than £200 million nationally. Alongside that, Stockport NHS foundation trust will receive £17 million to support 11 critical repair projects at Stepping Hill, forming part of the £1.3 billion that we have committed to maintenance, safety and resilience projects over the NHS estate over the next four years.
Lisa Smart
As my hon. Friend the Member for Cheadle (Mr Morrison) said, any money coming to Stepping Hill hospital is to be welcomed, and the Government should be thanked when they get things right. The briefing we have had from NHS leaders in Stockport says that the total planned maintenance costs over five years are £134 million. That is only basic maintenance—it does not account for any new building projects and does not bring the buildings up to the current standard that we would expect of any new building. I am sure that the Minister agrees that all the money needs to be spent for good value for money. Will she and colleagues in the Department of Health and Social Care agree to look specifically at the project we are talking about for Stockport: a new building? The revenue cost of maintaining that building would be so much lower than continually plugging the holes—literally—with capital spend.
Alison McGovern
I understand entirely the case that the hon. Lady makes. There will be further opportunities for the region to fund projects at Stepping Hill hospital through its estates safety fund allocation. As I mentioned in response to the hon. Member for Cheadle, I urge the trust to keep working closely and effectively with the ICB and the region, particularly as other funding streams are available. The trust has been allocated another £75 million in operational capital over the next four years.
Before I get too close to the end of my remarks, let me respond directly to the other questions asked by the hon. Member for Cheadle. He mentioned issues with toilets, which sound extremely worrying; from the Floor of the House, I urge local leaders to respond. I will make sure that he and Stockport Members receive a written response to those issues and to those related to end-of-life care. Members will understand the importance of end-of-life care and what a priority it is over the coming months and years for us all, so I will look into those issues.
Navendu Mishra
Although Stepping Hill hospital is in the constituency of the hon. Member for Cheadle (Mr Morrison), it serves people from Hazel Grove, Cheadle and Stockport. May I reiterate the invitation from the hon. Member—I would go as far as calling him my good friend, even though we are in different parties—to the Health Secretary and any Ministers in the Department of Health and Social Care to visit Stockport and speak to volunteers, staff and patients there? Will the Minister pass on that message?
Alison McGovern
I will certainly pass that message on. As the hon. Member for Cheadle mentioned, the current Prime Minister is no stranger to Stockport, so I am sure that I do not even need to let him know what is happening there.
We are already seeing some capital investment translate into better facilities for patients at Stepping Hill. The new urgent treatment centre is now open, with five additional consulting rooms increasing capacity, improving patient flow and helping to reduce avoidable pressure on the emergency department. That builds on the hospital’s emergency and urgent care campus, which fully opened in May 2025; that is part of the £639 million of planned capital investment to support NHS performance in the north-west.
Given what we have heard this evening, I cannot pretend that what has been done resolves every infrastructure challenge at Stepping Hill—it clearly does not. The pressures facing the hospital have built up over many years and will take time to address, but we are putting the local NHS on a much stronger footing to tackle them. The reforms set out in our capital plan mean that local leaders can look beyond immediate pressures, plan investment over multiple years and target funding towards the areas of greatest need and importance, and that really matters for Stepping Hill.
Members from the borough of Stockport have raised very important issues this evening—they are absolutely right to advocate for patients and staff, and I ask them to pass on my thanks to those staff. We do not underestimate the scale of the challenge, but we are delivering vital investment to address the most pressing risks at Stepping Hill while giving local NHS organisations greater certainty and flexibility to plan properly for the hospital’s long-term future. Without doubt, there is much more to do, but this is how we move away from short-term fixes and towards a safer, more resilient Stepping Hill hospital that can continue to serve the people of Stockport for many years to come.
Question put and agreed to.
Deferred Divisions
That the draft Housing (Tenancy Deposit Schemes) Order 2026, which was laid before this House on 8 September, be approved.
The House divided: - Ayes: 310 / Noes: 114 - Question accordingly agreed to.
That the draft Private Rented Sector Database Regulations 2026, which were laid before this House on 9 September, be approved.
The House divided: - Ayes: 316 / Noes: 149 - Question accordingly agreed to.