Financial Services Bill

Andy Slaughter Excerpts

Monday 10th December 2012 Commons Chamber

Lords amendments 4 to 23 agreed to.

[Mr Andy Slaughter (Hammersmith) (Lab)]

On a point of order, Madam Deputy Speaker. On 29 February this year, I asked the Secretary of State for Justice whether he would name the 25 highest-paid lawyers and the amounts they received. I was told the information would be available in due course. I asked again on 19 April, and was told the information would be available later this summer—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Will hon. Members who are leaving the Chamber please so do quietly? Those remaining in the Chamber should listen to the point of order and if they wish to have private conversations, they should leave the Chamber. I cannot hear what the hon. Gentleman is saying. I got as far as 29 February so perhaps he will pick up his point from there.

[Mr Slaughter]

My initial question on 29 February asked for the names of the 25 highest-paid lawyers and I was told the information would be available in due course. I asked again on 19 April and was told the information would be available later in the summer. Yesterday, the answer to my question was spread over the pages of The Sun and The Sunday Telegraph with the Justice Secretary’s inimitable spin put on it. This afternoon, I received a reply to my question from Lord McNally. Is it appropriate to wait nine months for a question to be answered, and for it to be leaked all over the Sunday press the day before that answer is received? Even by the standards of this Government that is poor. Will you give me some advice, Madam Deputy Speaker, on how I can avoid a repetition of that?

Air Passenger Duty

Andy Slaughter Excerpts

Thursday 1st November 2012 Commons Chamber

[Mr Andy Slaughter (Hammersmith) (Lab)]

I was first alerted to the air passenger duty issue about four years ago, long before the fair tax on flying campaign. A large number of constituents were writing to me. Many of them, like the constituents of my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh) and for Dunfermline and West Fife (Thomas Docherty), had family in the Caribbean. They were concerned about the quantum level of the charging—and if they had known that the income from APD was going to double between 2010 and 2016 from just over £2 billion to almost £4 billion, they would have been even more concerned—but they were more concerned about the unfairness and the fact that under the ridiculous banding system, the capital city system, it costs more to fly to the Caribbean than to Alaska or the west coast of America.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

There is another impact of the banding. Alan Glen, who runs an independent travel agency in my constituency specialising in long-haul destinations, is finding that people trying to get these fares is having an impact on his business.

[Mr Slaughter]

I am grateful for that intervention. I was just going on to talk about the effects not only on families, which is often devastating, but on commercial organisations, and not just those in this country, but, to continue with an earlier example, in the Caribbean as well. I got to meet the Caribbean Tourism Organisation and Ministers from Caribbean countries—sadly, it was here rather than there, but there it is. We share a long historical tradition and we have not just family and cultural ties, but economic ties with the Caribbean. There was and still is a strong feeling that this country was letting the Caribbean down. It came up in many debates under the last Government, particularly during the passage of what became the Finance Act 2009. I found myself in the unusual and uncomfortable position of agreeing with the then Opposition Front-Bench team more than my own. I went to see the then Chancellor with a number of my hon. Friends, particularly my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), who took a strong stand on this issue. When we debated the Finance Bill, I was perplexed that the then Opposition did not push the issue to a vote, as I thought they might have won. I was a little suspicious about why they did not press it then.

Let me remind the present Government Front Benchers what their equivalent numbers were saying at the time, as it bears repetition. The hon. Member for Canterbury (Mr Brazier), who was a shadow Transport Minister, gave an interview to The Daily Telegraph in late 2009. He said that his party supported

“a per plane tax rather than the existing one based on passengers”

and that

“whatever tax is employed if the Conservative Party wins the next General Election, the ‘absurd capital cities rule’ of APD banding would be abolished.”

On 15 April 2010—some three weeks before the election—the hon. Member for Chelsea and Fulham (Greg Hands) gave a fuller interview to the Travel Trade Gazette, in which he outlined details of the plans for the first time. He said that the Conservative Government

“would scrap the much criticised system of distance bands, which have led to people travelling to the Caribbean paying more than those to the west coast of the US, which is further from Britain. A replacement system possibly using more bands and based on actual distance rather than distance between capital cities…would be introduced.”

He said:

“the reform would change APD to tax aircraft rather than passengers, apply to transfer passengers who are now exempt, and charge a lower rate for newer, more fuel efficient aircraft.”

Finally, he said the aim of the reform was to

“properly tax the environmental impact of aviation, not raise more revenue.”

Let us have a look at how many of those promises, made just three weeks before polling day, have been kept. Those same promises appeared in the manifestos of both coalition parties and in the coalition agreement. We are perhaps used to over-promising, particularly from this Government, but this is over-promising on a tuition fees scale. What happened as a consequence? We had the review during the Government’s moratorium on an increase, but after a year of engagement with the industry, the Government decided not to change the tax’s banding structure in regard to different classes of flights or in respect of the application of APD to the regions. The Government’s only proposed reform was to extend APD to business aviation from 1 April 2013. That may be welcome, but it will raise only about £5 million a year, without addressing the central issue that all hon. Members who have spoken today would, I think, wish to see addressed. The dismay that this has caused to those who lobbied so hard and were promised so much is very clear from a press release put out at the time the consultation was published by the Caribbean Tourism Organisation. It said:

“Today’s announcement on the APD is a slap in the face for all Caribbean people. It dismisses all of the research and information CTO has provided to the British Government over the past three years, and it contradicts the message sent by the UK Chancellor…in March 2011 when he cited the discrepancy between the USA and Caribbean APD rates as one of the reasons for holding a consultation on reform of UK APD. The Caribbean is the most tourism-dependent region of the world and the British Government’s decision totally ignores the negative effect that APD is having on our economies and the Caribbean’s business partners in the…travel industry.”

[Thomas Docherty]

My hon. Friend is presenting a compelling argument. He may be interested to know that in the last three years the Eastern Caribbean Currency Union has seen a 20% drop in the number of people travelling to the area.

[Mr Slaughter]

That is a good point.

The fair tax on flying campaign was organised very efficiently, but I do not think that the 200,000 UK residents and about half that number of people living abroad who have written to the Chancellor, either via their Members of Parliament or directly, have been treated terribly well. I have received letters from more than 500 constituents, and I note that the hon. Member for Chelsea and Fulham (Greg Hands) has received 1,281. Perhaps there is some justice, as that is only 10 shy of the highest number received by any MP.

I have seen the standard replies sent by the Treasury and by Conservative MPs, and I am dismayed by them. They are positively insulting to the people who wrote those letters. They do not deal with the issues at all; they simply mention that VAT is not charged on domestic flights, which is almost entirely irrelevant when long-haul flights are the issue, and that the business jet loophole will be closed, which, as I have already explained, goes nowhere near dealing with the problem. I feel that my constituents and those of many others have been treated with contempt. They have been betrayed by the Government’s broken promises, and they have received a wholly inadequate response to the campaign that they mounted.

The demands made in the motion are very modest, and an economic case has also been presented. I urge the Minister to accept the proposals in the motion, and I urge the House to vote for it in the event of a Division. I hope that there will be a review which, unlike the consultation that has taken place so far, will enable us to address the real problems that air passenger duty is causing, not only for my constituents—and not only for the poorer constituents mentioned by my hon. Friend the Member for Mitcham and Morden—but for the economy of this country, and the economies of many regions with which we trade.

Beer Duty Escalator

Andy Slaughter Excerpts

Monday 2nd July 2012 Commons Chamber

[Gavin Williamson]

It is always welcome when a Liberal Democrat speaks so vociferously against the European Union. I thank the hon. Gentleman, who has fought so hard for pubs not just in his constituency but throughout the country.

Almost 1 million jobs in the United Kingdom are generated by the UK beer and pub industry, which affects all our constituencies, including that of the Economic Secretary to the Treasury, my hon. Friend the Member for Norwich North (Miss Smith). Some 550 people work in the industry there, and I am sure that, like the rest of us, my hon. Friend wants the number to increase.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I am trying to extend the debate to the Opposition Benches. Although my local brewer, Fuller, Smith and Turner, is internationally famous, it is still a family firm, but last year it paid 37% of its turnover—not its profit—in tax, and beer duty will rise by 27% during the current Parliament. Should not the Government take notice of that?

[Gavin Williamson]

The hon. Gentleman has made an important point about how difficult it is for many pub and brewing companies to invest more money in generating new jobs and products in a sector in which we are world leaders. We in the United Kingdom are clearly paying far more duty than the European average. Although we consume only 13% of the beer consumed in the European Union, we pay 40% of the tax bill. I do not often talk about the need for European harmonisation, but I should like us to harmonise with the Germans, who only pay a tenth as much beer duty on their pints. Perhaps we should explore that idea further.

Homelessness

Andy Slaughter Excerpts

Tuesday 12th June 2012 Westminster Hall

[Grant Shapps]

One of the problems is that it depends where the figures are taken from. The high point in the number of people in bed and breakfast accommodation was in 2004, which was a long time—seven years—into the previous Administration. We may say that there was a big reduction in, for example, the number of homeless people in temporary accommodation, and that may have been from halfway through the previous Labour Administration, but we must be very careful when trading figures. I am much more concerned about the outcome for people on the ground, and when I talk about people on the ground, I sometimes mean people at the bottom of the pile who are sleeping on the streets.

I am sure that the hon. Member for Birmingham, Erdington and other Labour Members feel some shame that the true size of the cohort of people living on the nation’s streets was buried under the previous system of counting. For example, if someone was sitting upright in a sleeping bag, they were not counted, and they had to be there at a certain time and so on to be counted. One of the first things I did was rip up the system that tried to claim that only 424 people in the country were sleeping rough. Any observer with any knowledge of the system, let alone hon. Members who had spent a lot of time studying homelessness, knew that that was nonsense. I have tried to reveal the true size and scale of the problem and not to bury it or hide it away, but I want to go further.

Reference has been made to the importance of the Supporting People budget. Despite the enormous pressure on reducing budgets to deal with the record deficit, we have kept almost the entire cash amount for the Supporting People programme. In fact, there was a 1% reduction in Supporting People over four years—£6.5 billion. I know that there have been problems on the ground—the hon. Member for Westminster North described them clearly—about the way in which Supporting People money has been spent. I understand that there are challenges when such funding is not ring-fenced—it was not ring-fenced in 2009—and that with other pressures the Supporting People budget has been pressurised on the ground, but it is not that the money has not been going in. Nor is it the case that we have reduced by even a penny support for homelessness. The homelessness budget was £400 million—£100 million a year—for the spending review period, and that has not been reduced.

I do not know whether it has escaped the attention of the hon. Member for Birmingham, Erdington, but during the past year, I took another £70 million, which was not in the spending review and aimed at homelessness, and put it into homelessness programmes, because I passionately believe in maintaining that fantastic homelessness support in this country. When we talk about people being homeless, we generally mean that they have been accepted as being homeless so that they can get a home, but there is a category of single people who do not receive help and support through our system. If a single person—the sort of people we are familiar with from our constituency surgeries—turns up at their local authority, under the rules that have applied until now they would simply be told, “I’m sorry, you are not covered as a preference category. We can do nothing for you.” That is not good enough, and I am sure that other hon. Members agree, so I have made £18.5 million available in the last few months to ensure that tailored advice is available for individuals, in addition to £10 million to Crisis to do the same.

I would dearly like to make the category of single people without dependants a preference category, and that should be the objective of any Government when money allows. I have not only protected all the preference categories that Opposition Members talked about—the work of Louise Casey was praised, and I echo that—I have added to those preference categories and I am trying to go further.

It is crazy that anyone who sees someone sleeping rough in this country must call the local authority; they may or may not get a response, and will not know what has happened afterwards. That is not good enough, so I am setting up a national helpline and a website to ensure that assistance can be brought directly to that individual. It will be run with the assistance of Homeless Link and will be in place by Christmas, and I hope that the whole House will join me in supporting it. When we see somebody sleeping rough, we have a terrible moment of dilemma about whether we should try to assist them directly—even if we do not know whether the money will be used in that person’s best interest—or do something else for them. Now we will be able to use the helpline, and information will be available so that people can see whether that person was helped and in what way. I think that is important.

We have also announced the “no second night out” initiative nationwide. “No second night out” came from the first cross-ministerial working group report, and I hope that Opposition Members will welcome it. The £70 million that I mentioned includes £20 million to back that programme, and it means that nobody in this country who is found sleeping on the street should ever experience a second night in that situation. I slept rough for a night to see what it was like: it is frightening and one feels vulnerable. We do not want any of our citizens to be in that position, and there is no reason for them to be because we have also allocated £42.5 million of funding to the hostel system, to ensure that new and refurbished hostel places are available.

The problem in this country, and particularly in London where we have the excellent combined homelessness and information network—CHAIN—database, is generally not about whether a hostel place is available on any given night, but about finding the individual, connecting them with the hostel, and sometimes persuading them to go into it. “No second night out” and the national reporting line is designed to help deal with that, and I am pleased to say that it has been taken up in Merseyside, Manchester, Leeds and Newcastle. It is an excellent, practical example of the way that we are trying to work.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The Minister mentions telephone lines, advice and websites, but people need houses. In particular, those who are homeless, as well as those living in overcrowded and poor conditions, need new social rented homes. I am sorry that I was not in the Chamber for the speech by my hon. Friend the Member for Westminster North (Ms Buck). I understand that she mentioned Hammersmith and Fulham—perhaps the worst housing authority in the country—which builds no social rented homes. As a consequence of that, its homelessness strategy, which I commend to the Minister and ask him to read, states that anybody who needs a three-bedroomed house, or bigger, should be discharged to the private rented sector outside the borough. That is contrary to the housing policy of the Government and the Mayor, but is it something that the Minister supports?

[Grant Shapps]

No contribution from the hon. Gentleman would be complete without a reference to his own time as leader of housing in Hammersmith and Fulham. I think, however, that that council has a good record of looking for constructive measures that help to take people off the housing waiting list. For example, it was one of the forerunners in a programme that I launched recently with the Prime Minister to sell 100,000 homes under the right-to-buy programme. Critically, and unlike the previous programme, every penny of that money will be used to build more homes for affordable rent, and that seems to be a great solution. Not only can a family achieve their aspiration of purchasing their own property, but they can do so in the knowledge that somebody else is being taken off the housing waiting list. I have yet to hear whether the Opposition support the return to the right to buy, with the money going towards affordable houses.

Public Appointees (Tax Arrangements)

Andy Slaughter Excerpts

Wednesday 23rd May 2012 Commons Chamber

[Danny Alexander]

The new Treasury rules that I have announced today apply only to organisations under central Government control. That is how the rules work, but I encourage the right hon. Gentleman and other hon. Members who have made the point about local authorities to continue their campaigning in order to ensure that those organisations do reveal such information. He did not refer to the Northern Ireland Assembly Government, but he may very well want to take steps to ensure that that organisation also brings forward the appropriate degree of transparency about its arrangements, too.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The Chief Secretary to the Treasury is right to admit that without the work of Exaro and “Newsnight” he would not have a clue what is going on across Departments, but the action that he has announced today will affect no more than a tiny percentage of the abuse taking place throughout the public sector. He needs to do more than write letters to the NHS and to local government. One so-called consultant, Mr Nick Johnson, has received £1 million from Hammersmith and Fulham council in the five years since he retired on an ill-health pension of £60,000 a year from another local authority. On the Chief Secretary to the Treasury’s figures, Mr Johnson would have avoided £200,000 in tax, so when is the right hon. Gentleman going to act on such abuse?

[Danny Alexander]

The hon. Gentleman refers to the national health service, and I was very clear in my statement and in my response to the right hon. Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee, that the rules apply throughout the national health service and, indeed, to academy schools. I do not control the finances of local authorities, but I can make it very clear that I want to see them go through a similar process, and I am sure that campaigning local MPs such as the hon. Gentleman will not rest until their local authorities do so.

Pay and Consultants (Public Sector)

Andy Slaughter Excerpts

Tuesday 13th March 2012 Westminster Hall

[Mr Andy Slaughter (Hammersmith) (Lab)]

It is a great pleasure to be here, Mr Howarth, with so many hon. Friends and hon. Members, for what I hope will be an interesting, if somewhat controversial, debate. It is a pleasure to serve under your chairmanship. I look forward to the Minister’s response to some of my specific points, and to the comments of my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson).

To be clear about the topic, I intend to cover three closely related issues, which I believe raise the question of financial, moral and, in some cases, legal abuses in the employment practices of public sector organisations. Those issues are absolute levels of remuneration; the use of consultants—sometimes called interims—and agency and other alternatives to employed staff; and the avoidance and sometimes evasion of tax by the improper classification of employees as consultants. All three often occur together, although not always, and there are often other related abuses. I shall give examples of how that works and use one egregious example from my local authority that has wider implications.

Such practices would be offensive at any time, but when the country is in recession, when many, if not all, workers in the public sector at a lower level are facing pay freezes and when there are hundreds of thousands of redundancies, it is particularly offensive that what I can only describe as a new elite in the public sector appears to be immune to the worries, fears and constraints of ordinary working life and, in some respects, seems to be more comparable with those at the top of the banking or other private sector industries. The difference is, of course, that everyone thinks of bankers—outside the Royal Bank of Scotland, perhaps—as being in the private sector and responsible to shareholders. The people whom I am concerned about are responsible to us, the taxpayers or council tax payers.

The issue is not only controversial, but very topical. The Daily Telegraph has an article today headed “Council chief executives enjoy pay rises as services are cut”. It reports:

“Town hall chief executives have seen their pay packets rise by as much as £17,000 while cutting front-line services, including libraries, care for the elderly and bin collections.”

It goes on to point out that the average council chief executive is still paid more than the Prime Minister, with one in 20 earning more than £200,000 last year. At a time of pay freezes in the public sector, the average relevant salaries in local authorities were £143,995 last year, with total pay packages averaging £146,957.

[Stephen Hammond (Wimbledon) (Con)]

The hon. Gentleman may be right to point out that the average salary in that category last year was £143,000 and that the average remuneration was £146,000; but does he accept that before 2010, or before the Government took action in 2011, the average was something like £221,000? There has been a significant drop under the Government’s procurement rules.

[Mr Slaughter]

I cannot say that I will keep away entirely from party politics in what will be quite a long speech, but I will try to make a point with which I hope all hon. Members agree. The hon. Members whom I shall refer to come from both sides of the House. I take the hon. Gentleman’s point but would rather that he addressed his comments, and that the Cabinet and other Ministers would address themselves, to the current abuses, rather than playing some sort of tit-for-tat game.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

On the point made by my hon. Friend the Member for Wimbledon (Stephen Hammond), will the hon. Gentleman at least acknowledge that rocketing salaries in some public sector jobs are not a recent phenomenon? That is something that mushroomed in the previous 13 years, under Labour.

[Mr Slaughter]

I suspect that it goes back even beyond then and that the tradition of public service and people doing jobs not primarily for the remuneration changed in the 1980s, when a lot of moral values went out of the window in the era of Gordon Gekko and Margaret Thatcher. We could talk about that all night if we wanted to, but I would rather talk about the current situation—and the issue is very contemporary. At 8 pm this evening on Radio 4, “File on 4” will cover tax avoidance through personal service companies. I think—I am never quite sure, with the BBC—that it will cover some of the same examples that I will give today. The brief for that programme begins:

“How strong is the government’s commitment to ending schemes set up to minimise tax? A number of schemes have proved popular in the private sector, including Employee Benefit Trusts. These have been used by football clubs for tax planning purposes, but are now in the sights of HMRC as it attempts to recoup what it sees as unpaid tax. But how widespread are these trust schemes and why are they so popular with companies that have large government contracts?

As the Treasury reviews tax avoidance by senior government employees, it has emerged that employees in other parts of the public sector are using payment schemes that keep them off the payroll. There is growing concern that paying public servants through personal service companies may be inappropriate.”

I have received briefings in advance of the debate from the TaxPayers Alliance and the Public and Commercial Services Union. The concern that these issues cause across the political spectrum is such that I could read a paragraph from each briefing, seamlessly, without affecting the flow of my argument. That is not something that can be said about every topic.

The Treasury review, to which the “File on 4” blurb refers, is the one announced in the main Chamber on 2 February by the Chief Secretary to the Treasury, in response to an urgent question from my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown). That, in turn, was a response to the exposé of the funding of the head of the Student Loans Company. The investigation at the time was, I think, by “Newsnight”, but I am now referring to a report in The Daily Telegraph. The investigation showed that the

“chief executive of the Student Loans Company, was paid through a private firm he had established rather than being paid direct—a tax avoidance mechanism which could reduce his income tax liability by £40,000 a year.

The disclosure threatens to undermine Coalition pledges to crack down on tax avoidance in the private sector and opens ministers up to accusations of double standards.”

Heaven forbid!

“Documents show the deal was signed off by David Willetts, the Universities minister, who said in a letter that it had been ‘agreed by the Chief Secretary to the Treasury’ Danny Alexander.

Mr Alexander insisted he did not know that the arrangement allowed him to avoid tax, and has ordered an urgent investigation across Whitehall to see if the practice is widespread.”

I am sure that many hon. Members remember that urgent question and that many took part in the debate. I could not be there, but I have of course looked at the Hansard and will outline what the review was said to entail. After, rightly, quoting the Treasury’s “Managing Public Money” guidance, which states that

“public sector organisations should avoid using tax advisers or tax avoidance schemes as any apparent savings can only be made at the expense of other taxpayers or other parts of the public sector”

and making the bold assertion that

“There is no place for tax avoidance in Government”,

the Chief Secretary said in relation to his review:

“I have asked the Treasury urgently to review the appropriateness of allowing public sector appointees to be paid through that mechanism”—

the one used by the chief executive of the Student Loans Company. After being interrupted, the Chief Secretary continued:

“I have also asked the Treasury officer of accounts to write to all accounting officers across Whitehall to remind them that all appointments should, in line with existing guidance, consider the wider cost of lost revenue to the Exchequer when considering value for money.”—[Official Report, 2 February 2012; Vol. 539, c. 1001.]

[Jeremy Corbyn (Islington North) (Lab)]

Will my hon. Friend not go further and say that anyone working directly for the public sector in any capacity should be employed by, and accountable to, the public sector? There should be utter transparency about their employment, and we should not have these ludicrous schemes that are probably to do with tax avoidance and lack of accountability.

[Mr Slaughter]

As always, my hon. Friend has summed up my 40-minute speech in about 40 words. I agree with him, but I will not sit down.

[Daniel Kawczynski]

I am pleased that the hon. Gentleman is making this point about tax avoidance. How does he regard the Labour mayoral candidate, Ken Livingstone, and the panoply of mechanisms that he set up to avoid taxation?

[Mr Slaughter]

My earlier pleas clearly fell on deaf ears. If the hon. Gentleman wants to have a debate on that subject, he is entitled to request one. This debate is not on that subject. It is about people who are employed by the public sector—they are actually employees—who are receiving, in many cases, high remuneration, but who are falsifying their employment status not only to make more money for themselves and possibly for the organisation for which they work, but effectively to defraud the taxman. None of those points applies in the hon. Gentleman’s case, and if we go down those avenues, we will not get far with this debate. I hope that he has not come here today to score points—or to fail to score points.

Let me return to the urgent question on 2 February. I think that it is fair to say that the Chief Secretary was struggling that day. I think that he was trying to come to terms with what had effectively been exposed in the media a couple of days before. Hon. Members from all parts of the House raised other examples. The hon. Member for South Norfolk (Mr Bacon) raised the case of the chief operating officer of rural payments. The innovation director of the Technology Strategy Board has been referred to subsequently, as have at least 25 senior officials at the Department of Health and employees of health trusts.

[Stephen Gilbert (St Austell and Newquay) (LD)]

I am sure that the hon. Gentleman welcomes the review that my right hon. Friend the Chief Secretary announced. Is it not quite extensive in its scope, taking on board more than 4,000 contracts across Whitehall? Moreover, it is already having the effect of terminating some of the arrangements that the hon. Gentleman is talking about. It is, therefore, a review that he should welcome.

[Mr Slaughter]

Oh, I do welcome the review. I think that the hon. Gentleman may be quoting from The Guardian article in the debate pack. It said:

“Treasury review of the extent to which civil servants channel salaries into tax-efficient private firms is to look at more than 4,000 postings across Whitehall and its quangos—and is expected to conclude that such schemes must end for full-time permanent staff, even if the arrangement led to a net financial gain for government departments.

The Department of Health is deciding whether to cancel contracts paid to at least 25 staff via private firms worth over £4m… The Guardian has been alerted to similar schemes operating in NHS trusts and primary care trusts. In one recent case, the Milton Keynes Hospital paid its acting chief executive Mark Millar via a partnership called Millar Management Associates. There is nothing illegal in staff being employed as consultants, especially if they are temporary.”

[Ms Karen Buck (Westminster North) (Lab)]

While my hon. Friend is on the subject of acting consultancies in the national health service, does he share my concern about the signal that was sent out by the Imperial College Healthcare NHS Trust last year when it appointed an interim chief executive allegedly on an arrangement of £2,000 a day for up to 200 days. Does he accept that, with a £35 million deficit, that sends out a very worrying message to the public? Moreover, does he not think that the fact that the chief executive has now been appointed the permanent managing director—I welcome that move and do not throw any doubts on his competence to do the job—implies that that consultancy arrangement was wrong?

[Mr Slaughter]

My hon. Friend is absolutely right. Our constituencies share the world-renowned Imperial health care trust. When I was first introduced to the new chief executive, I assumed that he was just that—a paid chief executive. It was only when I read the articles in The Sunday Times that I understood that he was being paid £2,000 a day as a consultant. I do not know whether it was always the intention to regularise his position or whether it was The Sunday Times and perhaps my hon. Friend who acted as a prompt. I am, however, pleased that the chief executive, Mark Davies, applied for the job and has now been appointed to the full-time position. If that is a precedent in removing such anomalies and abuses, I hope that it will be followed.

Going back to the point made by the hon. Member for St Austell and Newquay (Stephen Gilbert), I do not object at all to the review. However, as he will have seen, the issue goes wider than Departments and non-departmental public bodies. It is my understanding—the Minister may want to correct me when she responds or even now—that that is the limit of the review at the moment. Even in the statement on 2 February, my hon. Friend the Member for Tynemouth (Mr Campbell) asked about local government—a topic to which I will return—and the hon. Member for Warrington South (David Mowat) asked about the BBC. Will the Minister update us on whether the terms of reference of the review have been extended to cover those areas, what progress has been made so far and when will we see a report?

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

To assist the debate in its early stage, I am happy to confirm that the review extends to all bodies that are covered by Her Majesty’s Treasury’s guidance on managing public money, with which Members will be familiar. That includes all central Government bodies, such as Departments and their arm’s length bodies. On the subject of the BBC, I can confirm that the review will not cover arrangements in public corporations, public broadcasting authorities or the publicly owned banks. I hope that that information is of assistance.

[Mr Slaughter]

That is disappointing. I wish that both local government and councillors were covered. The leader of Kensington and Chelsea is paid a six-figure salary. The days of councillors being volunteers or being paid small amounts have gone. The review should also cover health trusts, non-executive directors of health trusts, the whole panoply of organisations that surround the public sector bodies, the Local Government Association and the Local Government Improvement and Development board, because those are the organisations in which abuses are likely to take place. We are talking about bodies that recruit people who have retired from the public sector and who, because of restrictions on their earnings thereafter—such earnings affect pension rights—will be prone to adopt these devices to avoid being classed as employees.

The figures for high pay in the public sector speak for themselves. The Chief Secretary conceded that he had cognisance of more than 180 civil servants on packages in excess of £142,500. I commend the work of the TaxPayers Alliance—I have been doing that quite often recently—in publishing the “Town Hall Rich List”, which shows that the highest paid chief executives, who are, I think, in Wandsworth, are on around £350,000 a year. That list of shame, which is regularly updated and published, is a great public service.

Let me just say, though, that as someone who has spent 20 years in local government, I have worked with some very fine public servants who did not do the job primarily for money. I even had a chief executive who capped his own salary, which is not something that we see much of at the moment. However, I have also had the unedifying experience of seeing the last chief executive of Hammersmith and Fulham, which is one of the smallest unitary local authorities in the country, retire on a salary of £281,000 a year. That salary had been increased by £11,000 in the last year of service—the salaries of everyone else in the organisation had been frozen—in order, I suspect, to enable him to retire on the maximum pension. The authority would not divulge the details of that pension but the House of Commons Library calculated that it would be substantially in excess of £100,000 a year. In addition, he received a lump sum payment of a sum much larger than £250,000 a year. To my mind, that is not where local government should be.

I will return to the issue of consultants. I say again that I am grateful to a number of organisations for their help, particularly the PCS union, which takes an interest in this subject.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

I want to make a point before my hon. Friend moves on from consultants. Before I do so, Mr Howarth, I give early apologies that I have to leave Westminster Hall early as I am on Select Committee business with the Culture, Media and Sport Committee this morning. Coincidentally, the Committee will be taking evidence from the Under-Secretary of State for Culture, Olympics, Media and Sport, the hon. Member for Wantage (Mr Vaizey), who is the Minister at the Department for Culture, Media and Sport who is closing libraries up and down the country. Can my hon. Friend just clarify his earlier comments about chief executives being awarded something like a 17% pay increase? Is that accurate?

[Mr Slaughter]

It must be accurate—it is in The Daily Telegraph.

The PCS union quantifies the amount spent by Government on consultants at more than £1 billion; I think that that amount is based on figures from the National Audit Office. Before Government Members jump up and down, I accept that the figure paid to consultants has been too high for too long, but that is not any reason for not addressing the issue.

The PCS union says that, when hundreds of thousands of jobs are being cut in the public sector and its members on low pay are being forced to take pay cuts, it is not right that, for example, the Ministry of Justice—an organisation with which I am reasonably familiar—spent £43 million on consultants between May and November 2011. The Legal Aid, Sentencing and Punishment of Offenders Bill, or LASPO, is currently being mauled in the House of Lords, particularly about the issue of social welfare legal aid. If that figure of £43 million were annualised, the cost of consultants to the MOJ would effectively pay for the entire cuts in social welfare legal aid. So, all the agonising about cuts to citizens advice bureaux, law centres and to the funding for disabled people seeking advice on welfare benefits, housing or whatever would be unnecessary, if only the Lord Chancellor and Secretary of State for Justice could address his habit for consultants.

[Glyn Davies (Montgomeryshire) (Con)]

I thank the hon. Gentleman for allowing me to intervene, and I must say that I have a lot of sympathy with the general principle of some of the things that he has said this morning, but not with everything he has said. Is his opposition to the public sector’s use of consultants completely based on principle, even if such use of consultants adds to efficiency and does not cost any more money? Even if those situations existed, which in some cases I believe they do, would the hon. Gentleman still oppose the use of consultants just on principle?

[Mr Slaughter]

There is a definition of consultants that I will give—it is not the PCS definition, which I think is plagiarised anyway:

“People who borrow your watch, tell you what time it is and then walk off with it.”

The definition that I will use is:

“People who do a specific task, which is needed, usually for a short period of time, and which is a particular piece of expertise that is being bought in.”

What we are talking about this morning is—in very many cases—absolutely not that, and I will now give the hon. Gentleman an example. I hope that it is not a typical example, but it is certainly a very shocking example.

I will give way once more.

[Stephen Hammond]

The hon. Gentleman is being very kind in giving way. Just before he moves on from this issue, I want to ask him a question. He has talked about the £43 million spent by the MOJ on consultants. Can he tell the House exactly what that £43 million was for, and can he say whether there was a public sector evaluation of the cost if the work for which that money was paid had been carried out in-house? I think an answer to that question would aid the debate.

[Mr Slaughter]

I think answering that question would take us off on a siding, albeit an interesting siding, and I am not sure that the hon. Gentleman really wanted to come to Westminster Hall today to defend that spending by the MOJ. If he does, he is very brave, but there it is.

[Stephen Hammond]

I just want to know what it is.

[Mr Slaughter]

Of course, the MOJ pales into insignificance beside the Ministry of Defence and what are euphemistically—well, perhaps appropriately—known as FATS, which are framework agreements for technical support, and beside the hundreds of millions of pounds that have been spent through that route. The Department for Work and Pensions is another major offender. According to the PCS, “business consultancy services” cost the DWP £18.2 million in 2010-11. At a time when the Government could not find the money for the future jobs fund, that seems to be wrong. I could give a lot more examples in relation to Government Departments.

[Daniel Kawczynski]

Will the hon. Gentleman give way?

[Mr Slaughter]

I will not give way, if the hon. Gentleman does not mind, because I want to press on and hopefully finish by ten minutes past 10.

As I was saying, I could give a lot more examples about Government Departments, but I think that the point is made and I hope that it is a point that the Minister, when she responds to the debate, will say the Government are taking very seriously. I hope that takes seriously not only the issues about the levels of remuneration and taxation problems but whether the public sector is getting good value for money for the number and type of consultants that are hired.

I will give just one other little anecdote about consultants and again it is an anecdote from my own backyard. My local authority has got rid of 1,800 staff in the last five years—I think that is the figure—and that is a substantial proportion of its work force. A lot of that is related to cuts and a lot of it has proved unwise. However, the local authority has now cut so many staff that it is now “taking on”—to use the authority’s own words, which it uses to defend the number of consultants that it employs—agency staff and consultants, simply because it has got rid of so many PAYE staff. That cannot be the right way to run a public sector organisation.

Let me give another example of what I think we all know as IR35. Let me talk about a particular case in Hammersmith and Fulham. It has received some media attention, but I am not sure that the full horror of it has been expounded. It relates to a particular gentleman. I am sorry to have to talk about individuals, but obviously this issue is about individuals who have these consultancy contracts. That gentleman is called Nick Johnson. He used to be the chief executive of the London borough of Bexley, on a salary in excess of £200,000. His partner—his common-law wife, if that phrase is still in use—is a woman called Kate Davies, who is the chief executive of Notting Hill housing trust, and she is also on a salary of about £200,000. They jointly set up a personal service company, or PSC, called DaviesJohnson, to tender for work. I should point out that Ms Davies is still the chief executive of the Notting Hill housing trust, but Mr Johnson is no longer the chief executive of Bexley.

Rather than explaining their situation in my words, I will quote from a letter; although it is quite long, reading from it will save time. It was written by Councillor Stephen Cowan, who is the leader of the opposition in the London borough of Hammersmith and Fulham, to the Secretary of State for Communities and Local Government on 16 December 2010, which is some time ago. As far as I am aware, Mr Cowan is still awaiting a response to that letter. Mr Cowan wrote:

“I was interested to read your view that ‘Councils could cut chief executive’s pay’ as a means of saving money in these difficult times. You will no doubt have seen this article in the Mail on Sunday when it appeared on the 31st October 2010.”

The letter goes on to talk about the contents of that article. It continues:

“I believe that the issue it raises warrants investigation by your Department and the loopholes that have allowed this to occur need to be tightened. Such measures are likely to result in significant savings to the public purse. The Mail on Sunday reveals how Nick Johnson ‘receives a total of £310,000 a year, making him what is believed to be the highest paid council-funded official in Britain.’ However, this money is a combination of Dr Johnson’s ability to draw an alleged £50,000 local government pension as well as invoicing H&F Homes”—

that is, Hammersmith and Fulham Homes, which is the council’s ALMO, or arm’s length management organisation—

“over £260,000 a year. He is able to claim both these amounts because the ALMO’s money is paid to his private limited company (Davies Johnson Ltd) rather than directly to him. On the 24th of June 2010, Nick Johnson gave evidence to the Borough’s Housing Health and Audit Social Care Select Committee to say that he worked ‘full time’ for H&F Homes and now also LBHF”—

that is, the London borough of Hammersmith and Fulham. Mr Cowan went on:

“Nick Johnson worked as Bexley council’s chief executive. But he retired earlier than normal pensionable age on 4th November 2007. This happened after he was deemed to be ‘permanently unfit to discharge his duties or any comparable duties as defined by the Local Government Pension Scheme regulations.’ In a note to Bexley Councillors, the current Chief Executive of that authority explained that an ‘Independent Occupational Health Consultant’ reached the conclusion about Dr. Johnson’s health and the decision to retire him was made by ‘the Acting Chief Executive’…However, Dr. Johnson started work in Hammersmith and Fulham on 11th February 2008—fourteen weeks and one day after he retired. Since then he has billed Hammersmith and Fulham around £700,000…Bexley councillors have questioned why they are paying a pension to an individual who appears to still be working full time… Many people have raised concerns about this.”

Mr Cowan goes on to quote newspaper articles and adds that Conservative colleagues argue that Nick Johnson is good value for money. I think that £260,000-plus is a lot of money to pay a local government official. I question whether such payments have been correctly monitored. Only recently, the chief executive officer wrote to inform me that Mr Johnson’s company is paid £950 a day, which equates to an annual salary of approximately £160,000.

Mr Cowan then goes on to request action by the Department for Communities and Local Government, which has not been forthcoming.

[Kerry McCarthy (Bristol East) (Lab)]

Does my hon. Friend agree that what people find so shocking is not just the huge sums that are being paid out to these individuals, but the fact that many of the organisations in question do not even pay their lowest paid employees the London living wage, and the discrepancy between the pay at the bottom and the pay at the top is absolutely huge these days?

[Mr Slaughter]

My hon. Friend is right. If I have time, I will comment on the wider trend towards the involvement of such private sector companies in the public sector, which seems to be something that the Government intend to encourage.

I have calculated, from documents supplied to me, the sum that Mr Johnson has been paid so far since 2007. As a consultant—as a PSC—to the London borough of Hammersmith and Fulham and its daughter organisations, he has been paid £957,481, just shy of £1 million. That was for a series of contracts, but principally for being chief executive of the arm’s length management organisation running the council’s public housing in the borough, and subsequently as the council’s director of housing and regeneration. To my mind, that is a post of employment, not a post as a consultant.

Following that letter 15 months ago in December 2010, the matter was not allowed to rest there, despite the fact that the local authority wished that it would. Eventually, audit reports were commissioned to look not only at Mr Johnson and DaviesJohnson, but at the wider trend for Hammersmith and Fulham council to employ consultants. I want to put on record the shocking findings about how that local authority conducted itself. If this practice is common in other local authorities, I urge the Minister to consider that this needs to be looked at as surely as Government Departments are.

Following the complaints made by the leader of the opposition, a report from Deloitte was commissioned to undertake an internal audit of the use of personal service companies across the council and in Hammersmith and Fulham Homes, and in particular the contracts between DaviesJohnson and Hammersmith and Fulham Homes and the council. In summary, the findings were:

“There is currently no corporate policy covering the use of consultants appointed to interim positions or as temporary staff, regardless if they are self employed consultants or operating as Personal Service Companies (PSCs);

We were unable to obtain evidence of any formal, documented selection and recruitment process being followed for the appointment of any of the PSCs within our sample;

For the seven appointments examined that were procured by the Council, we were only able to obtain one agreement;

For the four PSC appointments within H&F Homes we identified a number of issues including agreements not being available for the entire period of engagement; the absence of signed original agreements; an agreement with a dissolved company and an agreement between the ALMO and the individual rather than the company;

PSC invoices tested were found to be authorised in all instances tested;

Departments are required to submit returns detailing all consultancies appointed; however this does not include individuals covering posts as interims. Therefore there is no complete, centralised listing of all PSCs currently in use by the Council; and

We were unable to obtain evidence of formal performance monitoring of PSCs.

2.2 These findings have led to a ‘nil assurance’ in this area and seven recommendations have been made that are currently being implemented. All the recommendations have been accepted by the council. Timeframes for implementation are given in the report and range through to September 2011 for all recommendations to have been implemented.

2.3 The internal audit identified three individuals in particular where the auditors thought that professional advice on tax status should be sought, including the contracts in relation to Davies Johnson Ltd that the Audit and Pensions Committee had asked to be reviewed.”

It separately looked at the issue of DaviesJohnson. Although the view of Deloitte is not necessarily that Mr Johnson was an employee, in words that may come back to haunt the local authority, it states:

“the application of the tax and NIC regulations in such situations is not clear cut and HMRC may form a different view. Therefore, to this end, we would strongly recommend that, if not done so already, H&F Homes Ltd documents the services provided by Davies Johnson Ltd during this period, which will support the tax/NIC application by H&F Homes Ltd and help counter any potential challenge from HMRC should it consider there might be a case to form a view that NJ was an officer holder and an element of the payments made were solely linked to that of NJ holding the office of Chief Executive.”

He held that post for more than three years on a remuneration of approximately £1,000 a day.

My next point deals with where the investigations are going now. I urge the Minister to consider how unlikely it is that organisations such as Hammersmith and Fulham will put their house in order. I am sorry to single out Hammersmith and Fulham, because it is my local authority. I am sure that the same malpractices occur elsewhere. I pay tribute to local media—the Hammersmith & Fulham Chronicle, the Shepherd’s Bush blog and the Hammersmith Today website—which have highlighted these issues constantly and have been the driving force, along with the opposition on the council, in getting any movement on the issues. The council remains stubbornly of the view that it will not investigate these matters. It has now instructed PricewaterhouseCoopers, following the Deloitte report, to look at whether it is or is not complying with the law—in other words, whether it has or has not broken tax law.

Deloitte has revealed that, on June 30 last year, there were 69 consultants working at Hammersmith and Fulham council, 17 of them working via personal service limited liability companies. It found that Hammersmith and Fulham council had broken all its own rules for hiring consultants. There was no evidence of a formal documented selection recruitment process and no evidence of formal performance monitoring. The council had potentially wasted up to £12 million in this way, potentially operating outside UK tax laws with a possible £15 million in back taxes, fines and other sanctions that could hit the borough’s finances. That was the reason for bringing in PricewaterhouseCoopers at the end of last year, but—this is an important “but”— PricewaterhouseCoopers’ remit is simply to look at the future. It is to look at whether— this is in the response from the director of finance to a member of the audit committee—contracts in Hammersmith and Fulham will comply with tax legislation in future. What it should be looking at is whether it has done that in the past. If it will not do that, HMRC should.

There was a council meeting on 29 February. The motion put by the opposition stated:

“This council is committed to full cost transparency wherever possible to enable tax payers to hold us to account. This council notes that it has employed 540 agency workers over the past year—20% of the directly employed workforce.

This council has also employed sixty-nine consultants, with almost twenty of those employees working via service limited companies. The Local Government Pension Scheme forbids retired local government employees from being re-employed in local government. However, a personal service limited company allows this rule to be side-stepped.

However, there are clear rules laid down by Her Majesty’s Revenue and Customs about what defines a consultant and there is a likelihood that the London Borough of Hammersmith and Fulham may have breached those rules in directly employing people to work in its management structure as “consultants” via personal service companies.

This Council therefore resolves:

1. To inform HMRC of all cases where it has employed individuals via personal service companies and ensure its tax obligations are met and up to date

2. To report to Cabinet and the Audit and Pensions Committee full details of any back-taxes and fines issues by HMRC on IR35

3. To review its use of agency workers looking for more cost effective means of employing individuals and to publish all details of agency workers employed by LBHF and/or its subsidiaries and details the salaries of all of those over £100,000 per year.”

That was proposed by the opposition and voted down by the administration.

The final and perhaps the most shocking matter is this. I have dealt in some detail with the DaviesJohnson contract, as it is such a significant contract—more than £1 million was paid to a private company—and because it opened the door to the other abuses occurring in the authority. However, when an opposition member of the audit committee asked whether the council should report the DaviesJohnson contract to HMRC, the director of finance said that

“given the high profile of the situation in the media, HMRC would be aware of the situation, and had not approached the Council. If the Council approached them directly, a further inquiry would take place, with further impact on officer time and resources. Given the PWC findings, she did not propose to refer the matter to HMRC.”

The opposition councillor

“then proposed that the decision to refer or not to refer the matter to HMRC be put to the vote. The vote having been tied 2-2, it was agreed, on the Chairman’s casting vote, that the committee should not refer the matter to HMRC.”

[Stephen Gilbert]

The hon. Gentleman has rightly given many examples of indefensible salaries and egregious working arrangements, but does he accept that there are 1.6 million freelancers throughout the country who contribute £21 billion? Is there not a danger of tarring the entire sector with the same brush?

[Mr Slaughter]

I do not disagree with that point, but the hon. Gentleman seems to be somewhat in opposition to his colleague sitting next to him, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski), who was tut-tutting earlier about a small business run by the former Mayor of London. I hope that they get their ducks in a row.

However, I have moved on from that point; I will draw my remarks to a close in a moment. I am now dealing with a different point: public authorities had it drawn to their attention, if they did not know it at the time, that they might be in breach of UK tax law, and are covering it up, refusing to engage with HMRC and making every attempt to suppress that information. That must be wrong, and it must be a matter for the Government, and above all for the Treasury and HMRC.

I do not have time, although I wish I did, to discuss A4e and the role that it is playing in the public sector. That organisation has multi-million-pound contracts in the public sector. It is taking huge sums of money and paying its chief executive huge sums of money, and it is now under investigation on five separate counts of fraudulent activity. McKinsey, too, was exposed three or four weeks ago in The Mail on Sunday for the role that it is playing in promoting the private health care industry. Again, to use an example from my own backyard, the Association Of British Insurers and the insurance industry have been pushing their own agenda with the Ministry of Justice in the drafting of the legal aid Bill. Those are all more than warning signs; they are indications that something is seriously wrong in public procurement, and the Treasury above all must handle it.

The two most infamous names in local government in my lifetime were probably Poulson and Porter. What is happening in my local authority has overtones of both. First, it involves a cabal of people who seem intent on feathering their own nests and earning huge sums of money from the public sector. Secondly, the project in which Mr Johnson is engaged involves the sale of two council estates for £100 million to a private developer so that they can be demolished to make way for luxury homes. The project will benefit the developer and Mr Johnson, but not the thousands of my constituents, mainly low-income, who live on those estates. Whether or not it is legal is not the point, although I do hope that there will be a proper investigation into the issue of tax law by HMRC, to which I have written; it is clearly quite wrong.

I pay tribute to the media. For every issue that I have introduced in my speech, I have referred to a media article. The campaign has been driven by papers from The Guardian to local newspapers, by blogs and by the BBC. They have done the job that the Government should be doing. I thank all those in the media who have taken the trouble to investigate the matter, and I urge people to listen to “File on 4” this evening.

I also pay particular tribute to the councillors in my borough—I am pleased to see that one of them has attended this debate—including the leader of the opposition, Councillor Cowan, whom I have quoted extensively. However, we cannot rely on volunteers and newspapers alone to ensure probity, fairness and economy in the public sector. I hope that the examples that I have given today are sufficient to show that something is seriously wrong, not just in the one or two examples that have been debated previously in the House and not just in central Government Departments and quangos but throughout the public sector. I hope to hear from the Minister that she is serious about tackling it and will talk to the Chief Secretary to the Treasury about extending the remit of the review to cover the matters that I have mentioned.

[Several hon. Members]

rose—

--- Later in debate ---

[Miss Smith]

I had better write to the hon. Lady, not being able to cover that matter under the terms of today’s debate.

The review is due to report to the Chief Secretary by the end of March, so hon. Members will understand that I cannot comment further at this time.

Local government is outside of the scope of the review, although I hear the points made by the hon. Member for Hammersmith (Mr Slaughter), including his wish for the review to go wider. He will know that the Secretary of State for Communities and Local Government has written to the Local Government Association to urge it to consider similar action.

It is right that light should be shone upon practices in the local government sector as well, although central Government do not control pay in local government: it remains, rightly, a matter for local authorities. We have taken several steps to bring greater local accountability and transparency to pay in local government, which I think local taxpayers welcome strongly. They now have the tools and information needed to hold their councils and elected councillors to account, through the Localism Act 2011.

[Mr Slaughter]

I hear what the Minister is saying and I look forward to the review, but will she at least hold open the prospect of widening its ambit, because what she has just said is not correct? In my experience, in my local authority, the audit committee is not meeting—it is being made inquorate by the majority party—and documents are being refused, not only to me but to the leader of the opposition, who has particular rights in law to get such documentation. If councils are going to abuse the position of trust, surely the Government and HMRC must act in this matter.

[Miss Smith]

Perhaps the hon. Gentleman feels that the council was better off his watch, when it was 363rd in respect of value for money out of 387 local authorities.

Let me provide one example of ways in which local authorities are now more transparent. I have no doubt that the good citizens of Hammersmith enjoy holding the pay practices of the council to account through measures under the 2011 Act. They can do that because local authorities are obliged to publish their pay policy statements by the end of March.

On the responsibilities that I am drawing attention to, the Government believe that there should be public accountability in this regard, not only for employees but for elected councillors. The responsibility for meeting the transparency that we all demand of the public sector rests not only with locally elected councillors through some of the measures in the 2011 Act, but with citizens who are now empowered to understand more about the choices that their councils take.

It is right that, as we call time on a decade of ever-increasing centralisation, targets, levers and poor value for money, greater localism must come with greater transparency and accountability. Opening up the pay deals of top town hall jobs to public scrutiny will mean that taxpayers know with certainty that their interests are being protected, complementing measures taken by central Government to control and cut consultancy spending under their areas of responsibility, while also freezing and tackling excessive pay elsewhere in the sector.

Air Passenger Duty

Andy Slaughter Excerpts

Thursday 20th October 2011 Commons Chamber

[Mr Andy Slaughter (Hammersmith) (Lab)]

This is the second time I have come to listen to what the hon. Gentleman has to say and I had hoped that his speech would be somewhat non-partisan. I remind him and the Minister that the Conservative party said in its manifesto that it would move to a per-plane duty and would not keep the current banding system, which is seen to be wholly unfair. I hope that both the hon. Gentleman and the Minister will address what will be done to remove the unfair anomalies in the system.

[Henry Smith]

I thank the hon. Gentleman for his intervention. He is absolutely right that a per-plane duty was discussed and I understand that there were some legal problems with it. It is important that we as a country should finally get right the future of aviation taxation in the round, not only for the sake of hard-working families who want to enjoy a holiday now and again but, most importantly, for our economy.

Quite apart from what we think in this place about the future of APD, let me quote what a few others have said. Southern rail has added its concerns about a future increase in APD by saying:

“Any tax regime that has the potential to impact negatively on Gatwick Airport’s growth plans also has the potential to impact on Southern’s growth plans. We work closely with the airport and in recent months we have seen growth in airport passenger numbers and growth in its public transport market share. We would not want this momentum to be lost or hampered as this will impact on the medium term growth aspirations of our business”.

The airport has said:

“Gatwick is a family airport. Our passengers pay £400 million in APD every year, which goes straight into the Treasury’s coffers. It is difficult to understand why hardworking families, whose household bills are rising every month, should pay so much extra just to go on holiday. For many of them, it’s a luxury they save all year to afford.”

The Gatwick Diamond Business Association, which represents all the economy and not just the aviation sector in the sub-region, has said:

“The tax regime is having a negative impact on the UK’s ability to connect with emerging markets.”

In his speech in Manchester just a couple of weeks ago, my right hon. Friend the Prime Minister pointed out how one of the keys to UK economic growth is the need to connect better with the growing markets in Asia and South America. The Gatwick Diamond Business Association went on to say:

“Increasing tourism from the Far East is important too and in total the hospitality sector is the fifth largest in the UK. This could grow by 10% over the next five years alone…provided they are given the ability to derive their fair share of the forecasted growth in global travel.”

Another local firm in the Gatwick diamond area, CGGVeritas, has taken about 1,500 flights to meet its global customers in the past year and estimates that it has paid up to £50,000 of its budget just on the APD portion of those air tickets.

Virgin Atlantic, headquartered in my constituency, takes the view that aviation has a critical role to play in UK tourism and the wider economic recovery through encouraging visitors to these shores ahead of the Olympic and Paralympic games, but this economic potential is being stifled by ever increasing levels of air passenger duty, which are already the highest in Europe.

--- Later in debate ---

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I congratulate my hon. Friend the Member for Crawley (Henry Smith) on securing this debate and thank him for his response to the air passenger duty consultation earlier this year.

I will address the content of my hon. Friend’s speech and some of the specific points raised by hon. Members in a moment. First, let me say as the new Minister responsible for APD that not only did it fall on my desk with a thump in my first week, but the main challenge is to get the policy right for the long-term benefit of passengers, the industry, the economy and those who have responded to the consultation. I very much agree with my hon. Friend about the importance of the aviation sector. That goes without saying for all of us here in the debate. It employs substantial numbers of people—my hon. Friend’s constituents and others—directly or indirectly in the UK and is among the most productive sectors of the economy. I recognise that aviation is also an enabler and a catalyst for many businesses in the UK. The hon. Members for Belfast East (Naomi Long) and for Luton South (Gavin Shuker) pointed out the vital need for joined-up government so that we can get taxation and regulation functioning sensibly together and contributing to growth in the economy.

Let us be very clear: we all want UK aviation, and sectors such as the travel industry that rely on aviation, to succeed. That was the starting point for the APD consultation launched at Budget. It is why my predecessor, my hon. Friend the Member for Putney (Justine Greening), spent a lot of time over the past year talking and listening to airports, airlines and various organisations, including those overseas, to understand their concerns, and I hope to do the same. I note that she will be spending more time on transport issues than she might have anticipated only a few days ago. It is because we understand the pressures facing consumers, as my hon. Friend the Member for Crawley has outlined very capably, that the Chancellor froze APD in the Budget in March.

Despite that, some people have called for a cut in APD. We must be frank about the situation in which we find ourselves, as my hon. Friend has said. When we came to office last year, we inherited a fiscal deficit of historic proportions, and action has been necessary to try to steady the ship, if you will forgive another transport pun, Mr Deputy Speaker. If we are to put the economy back on the path to sustainable growth, it is imperative that we tackle the deficit and that we take contributions from all parts of society. Unfortunately, I cannot promise the House that APD will be cut in the near future. I know that many hon. Members are concerned about other aspects of APD, including the changes that the previous Government made to the structure of APD in 2009. My hon. Friend has referred to some of those changes and their impact on our Commonwealth partners.

Many stakeholders have complained about the previous Government’s changes to the banding structure of APD. Some have pointed to the anomalies created by that structure, including my hon. Friend, and we have received a number of representations from those who feel that flights to Caribbean destinations are unfairly penalised. Following in my predecessor’s footsteps, I will hold a series of meetings with stakeholders on that subject.

[Mr Slaughter]

I congratulate the Minister on her appointment, although she has been handed a bit of a poisoned chalice.

My constituents who travel regularly to the Caribbean are concerned about the anomaly. Before the election, the hon. Member for Putney (Justine Greening), who was then shadow Economic Secretary, often posed in photographs with Ministers from the Caribbean and gave assurances about those anomalies. We understand that many other assurances will not be kept, including on the move to per-plane duty. Will the Minister at least give us the comfort that the Caribbean anomaly, if I can put it that way, will be addressed, whatever the Government propose?

[Miss Smith]

I can certainly give the hon. Gentleman an assurance that I shall carry on meeting representatives from the Caribbean and, indeed, from Australia and New Zealand very shortly, to discuss those concerns. I am afraid, however, for reasons I shall come on to, that it is rather difficult at this precise moment to give him further assurances, because the Government are due to respond to the consultation. I shall shortly deal with the detail of that, and with his points about per-plane duty.

The good news is that the consultation enabled Ministers to go into all those issues in more detail. The hon. Gentleman will know that in the Budget, the Chancellor announced that, for the first time, as my hon. Friend the Member for Crawley described, APD would be extended to passengers flying aboard business jets, which is another important feature that we have made clear. That addresses a clear unfairness in the system, and the consultation invited views on how that should be addressed.

I cannot promise the hon. Member for Hammersmith (Mr Slaughter) or anyone else that we will meet everyone’s wishes, but we will try to deliver an APD system that is fairer, simpler and more efficient, and the Chancellor will set out those details in due course. On the hon. Gentleman’s point about per-plane duty, to make the position clear, the UK’s international obligations in that area include air service agreements with more than 150 countries, including the 1944 Chicago convention. We will not introduce per-plane duty at present because of concerns about legality and feasibility. We will, however, work with international partners to continue building consensus.

Comprehensive Spending Review

Andy Slaughter Excerpts

Thursday 28th October 2010 Commons Chamber

[Stephen Williams (Bristol West) (LD)]

I begin by reminding the House of the background against which we debate this comprehensive spending review. We were borrowing £1 for every £4 that we spent, and that simply could not go on, whatever Government of whatever combination of parties had taken office after the general election in May.

There were more than 20 public meetings in Bristol West during the election, and at every single one I made it clear to my potential constituents that, if my party took part in a coalition after the election, as seemed likely from the polls at the time, we would have to make difficult decisions and would not shirk from doing so.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Did the hon. Gentleman make it clear at those same meetings what he was going to do on tuition fees after the election? Did he make it clear that the pledge that he was signing was not the worth the paper it was written on?

[Stephen Williams]

I thank the hon. Gentleman for his point. Yes, I certainly did address many student audiences during the election in Bristol West, and I made it quite clear that in an ideal world, and in ideal financial circumstances, the Liberal Democrats would have wished to abolish tuition fees from the outset. Financial circumstances did not allow us to do so, however, and that is why we had a phased plan. I spoke at the launch of the National Union of Students pledge on working with the Government for a fairer system of student finance, and I am still working with the Government and the NUS to produce such a fair system. If the Government come forward with a fair system, I will support them; if they do not, I will not.

We know that Labour planned to make billions of pounds’ worth of cuts whatever happened after the election; it has been confirmed in many memoirs. But Labour Members have since been in deficit denial. They have been in denial about the need to tackle the deficit itself, and, as today’s debate has shown, they have not been able to give us a single Government measure that they would support, or to put forward an alternative themselves. The coalition Government are taking the necessary steps to restore order and stability to our public finances. That will restore confidence among British businesses and confidence among countries abroad that Britain is serious about tackling its desperate situation. Confidence and low interest rates are the bedrock for ensuring that our businesses can grow.

--- Later in debate ---

[Bob Russell (Colchester) (LD)]

The reading comes from “Proverbs”, chapter 31, verses 8 and 9:

“Speak up for those who cannot speak for themselves;

oppose any that go to law against them;

speak out and pronounce just sentence

and give judgement for the wretched and the poor.”

I am grateful to Lexden Methodist church in my constituency for its notices for the week of Sunday 24 October and the thought for the week—political concerns. I mention that because of the deafening silence from the Church in the broader sense on issues of social concern, housing benefit and the housing crisis. There are enough bishops at the other end who could speak out on such issues, but I am still waiting for the Church—archbishops, bishops and cardinals, the whole lot—to speak. I am grateful to Lexden Methodist church for allowing me to put that on the record and I welcome the concept of fairness.

I am not one who says that all private is good and all public bad, or vice versa. It is important to keep a mixture of the two.

[Mr Slaughter]

I do not disagree with the hon. Gentleman, but I think he is being slightly unfair to the clergy. My local vicar has written asking me to join a campaign to get the Chancellor to pay his fair share of taxes following last week’s “Dispatches” programme.

[Bob Russell]

I am grateful to the hon. Gentleman for that point, but I was talking about the major, national Church leaders. There are excellent clergy at local level. Indeed, St Margaret’s church in my constituency, which is in a relatively prosperous part of one of the world’s richest countries, has started a food parcel system for hard-up families. The fact that the Church at community level is doing such things speaks volumes, but our national Church leaders are not. I look forward to the Archbishop of Canterbury speaking up.

--- Later in debate ---

[Mr Andy Slaughter (Hammersmith) (Lab)]

At the beginning of this debate, my hon. Friend the Member for Wallasey (Ms Eagle) quoted an article in The Wall Street Journal today that reported

“panic stations in the Treasury”

at finding out that the reduction in child benefit for higher earners was “unenforceable”. It continued:

“At root is a problem that should have been apparent to those designing the policy, if detailed advice had been sought from civil servants before it was announced at Conservative party conference.”

My hon. Friend the Member for Streatham (Mr Umunna) referred to himself—in all humility, I am sure—asking Sir Andrew Turnbull from the Treasury Committee this morning:

“Do you think it’s accurate to describe the UK as being on the brink of bankruptcy?”

The response was: “No I don’t.” Both those bits of hot-off-the-press news—

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mr Slaughter]

No, I have not got time—actually I will, because it gives me more time.

[Kwasi Kwarteng]

I thought I was attending one of those rallies in North Korea, so reluctant are Labour Members to engage in debate. However, I thank the hon. Gentleman for giving way. My question is very straightforward: does he acknowledge that the deficit was a problem that had to be dealt with?

[Mr Slaughter]

What a stupid question, although I thank the hon. Gentleman very much for the extra time that he has given me. Anybody else? No? Okay, let us move on.

What I have described shows that it is politics rather than economics that has driven the CSR. Far from fairness driving the CSR, it is a particular type of Tory ideology that has driven it. Nowhere is that more true than in housing, to which I shall confine my remarks and which some of my hon. Friends have also addressed.

The Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) apologised to the House earlier today—and rightly so—for inappropriate remarks that he made in the debate in Westminster Hall on the CSR and housing yesterday, when he said that Opposition Members had spread “lies and deceit”. I am glad that he apologised—it was good of him to do that—but the irony is that he made those comments in the context of the most selective quoting from the National Housing Federation’s brief. He managed to find two sentences in an excoriating brief that he thought supported the Government’s case. Let me read the bits either side of the bit that he quoted:

“This is a 60% cut in cash terms in comparison with the 2008-11 programme and in real terms a 63% cut. We are extremely disappointed that the Government has chosen to impose such significant cuts in capital funding…In an attempt to fill the gap caused by these significant capital cuts the Government is proposing to allow housing associations…to set rents on new lettings at levels between the current social rent up to a maximum of 80% of market rent.”

The briefing continued:

“However, we understand that any funds generated under this new ‘intermediate rent’…will only be allowed to be used to build more homes at this new intermediate rent and…across the four year spending period no homes will be built for social rent using these funds…there will be no further construction of social homes until at least 2015.”

That is the housing situation that we face, and for hon. Members who want to know what “intermediate rent” means, I looked at my Conservative council’s planning policies, which were announced last month. I found that the term excludes anybody on under £20,000 a year, which is 40% of my constituents and most of the people in housing need, but includes those on earnings of up to £79,400 a year—people in the top 2% of earnings. It is the Government’s policy that only intermediate housing will be built over the next 10 years.

Where does that leave my constituents? Where does it leave constituents such as the one whose case I was dealing with in my office this morning? That constituent is living with three teenage children in a highly damp one-bedroom flat, but has received the usual response from the local authority, which says:

“The average expected waiting time for a three bedroomed accommodation…is projected between 8-10 years. This is however only a projection but reflects the reality of…Social Housing waiting time as dictated by demand against availability.”

What tenants such as my constituent are being told is, “Give up your secured or assured tenancy, and take an insecure tenancy in the private sector. Then you may get some more space.” Up until now, people have not been told—they are being told now—that such accommodation is likely to be outside the borough, because of the restrictions on housing benefit. The situation now is that my constituents are being told that if they want decent accommodation, they should go into the private sector and be re-housed a significant distant outside the borough.

That is the reality of housing policy under the CSR. It is the reality for a constituent who came to see me this week, a teaching assistant taking £900 a week net and living in a shared room in a flat in Shepherd’s Bush, for which she pays £650 a month. She gets some housing benefit, but she can hardly make ends meet. Next year, she will not be able to, because of the cuts in housing benefit, and she will have to leave her job and move out of the area. That is the reality for people in my constituency.

While we are talking about apologies, perhaps someone else ought to apologise. The first interview that the Prime Minister gave after the election was to The Daily Telegraph. The article says:

“He was still angry over ‘appalling’ Labour lies that he blamed for preventing celebrated candidates such as Shaun Bailey winning in marginal seats”,

and quotes the Prime Minister as saying:

“‘They were telling people in Hammersmith they were going to have their council house taken away by the Tories.’”

Well, they are, and I will tell the House why. That candidate is at least honest, because he said at the Tory party conference:

“Inner city seats are so hard to win because Labour has filled them with poor people who are desperate and dependant on the state, so they vote for a party that they think is of the state.”

That is why those people are being punished. They vote Labour, and they want to live and work in the inner city, but that is not good enough for the Conservatives. That is what my constituents are facing, for ideological reasons of gerrymandering and social engineering.

--- Later in debate ---

[Justine Greening]

I do not accept that at all. The right hon. Gentleman needs to have a chat with the hon. Member for Hammersmith (Mr Slaughter), who was claiming that families on £79,000 a year are too rich to get support from the local council to access housing in London but too poor to have their child benefit withdrawn. That shows the incoherence of Labour’s policy on the economy, particularly on welfare—a budget that accounts for almost £1 in every £3 that we spend.

As my hon. Friends the Members for Harrow East (Bob Blackman) and for Brentford and Isleworth (Mary Macleod) said in their powerful speeches, work simply does not pay in our welfare system. People are put on benefits with no prospect of ever being better off in work and, as my hon. Friend the Member for Eastbourne (Stephen Lloyd) pointed out, successive generations are condemned to a life of state dependency. Opposition Members might think that that is fair, but I do not. It is one reason why over the coming years and next two Parliaments the Government will introduce the universal credit—to make sure that people on welfare will always be better off by moving into work.

[Mr Slaughter]

The Leader of the House will confirm that at business questions today, I quoted the Mayor of London on the reduction of housing benefit, which he described as “Kosovo-style social cleansing.” Since then, he has said:

“I do not agree with the wild accusations that reform will lead to social cleansing.”

Why has he changed his mind in the six hours between now and then? Is it by any chance anything to do with a call from No. 10 Downing street?

[Justine Greening]

That was a completely ineffective intervention. The hon. Gentleman ought to complain to Labour Front Benchers for their being so utterly ineffective at creating extra social housing in the capital during their many years in power. It was shocking how little affordable housing was created under the previous Government.

Even when spending is being reined in, we have found more resources for our schools and for the early-years education of our children. That has meant other Departments taking bigger cuts, but we believe that that is the right choice for our country’s future. The right hon. Member for Croydon North (Malcolm Wicks) quoted Eleanor Rathbone, who said that children are assets to the community. She was right, which is precisely why there will be a real increase in the money for schools in the next four years. In fact, my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) also recognised the importance of that. That is why the schools budget will rise from £35 billion to £39 billion, why we are maintaining cash spending on Sure Start, and why we are introducing a new £2.5 billion pupil premium to focus our resources on the children from the most deprived backgrounds in our country.

Our third and final principle in the spending review was public service reform. We are reducing back-office costs to free more resources for the front line. The right hon. Member for Barking (Margaret Hodge) spoke of the challenges of improving efficiency in government, but unlike her party when in power, we aim to be successful. We have started that process by finding every last penny of possible savings, and we are beginning to eliminate the monumental waste that became endemic in the past decade. We are tackling administration, improving procurement, and scrapping ineffective and expensive IT systems, which became a feature of the previous Government. When we started that process, we looked to make £3 billion of savings, but now we will make £6 billion of savings.

Finally, our reform agenda will see a massive devolution of power from the centre. Apart from schools and public health, we will end the ring-fencing of all Government grants to local authorities from April next year. More than 90 separate core grants to councils will be reduced to fewer than 10. Councils welcome that freedom even if the hon. Member for Leicester West (Liz Kendall) does not. We will change how services are delivered through increased payment by results and personal budgets, and by introducing new rights for communities to run services and own assets. We are therefore giving more powers to the front line and more to local government and communities—the very people who know their area best.

We are cutting the ridiculous levels of red tape that tie the hands of our police forces and so many other people who are working hard in the public sector to deliver the services on which our communities rely. Our approach is different to that of the previous Government. By cutting waste and abolishing unnecessary targets, we will free the public sector to deliver a more efficient, transparent and better-tailored service to the people and communities who rely on them most.

Let me conclude the debate by saying that the decisions that we have taken have restored credibility to our public finances and stability to our economy. When the coalition Government came to power, we faced the worst economic inheritance in modern history. The previous Government spent our money like there was no tomorrow, but tomorrow has now arrived. The Labour Government left debts that undermined the funding of our public services and threatened every job in the country. They wanted to introduce a jobs tax at the very time when employers were crying out for help.

We have had to make tough choices, but they are the right choices. We are determined to ensure that everybody pays their fair share. I simply reject the comments of Opposition Members. As ever in such debates, they spent several hours explaining what they did not like, but simply failed to say what they did like. It is unacceptable to participate in such a debate without offering a meaningful alternative plan.

We have ensured that everybody pays their fair share. We are reforming welfare and cutting waste, and we are investing in growth, schools and health. That is how we will drive growth in this country and create jobs for the future. With no help from the Labour party, we have taken our country back from the brink of bankruptcy and we will build the more dynamic, prosperous and sustainable economy that Britain so badly deserves.

That is why this spending review is how we will get our country back on track. I believe that generations to come will recognise that when our—