Tuesday Volume 591 27 January 2015 No. 100

HOUSE OF COMMONS OFFICIAL REPORT

PARLIAMENTARY DEBATES (HANSARD)

Tuesday 27 January 2015

£5·00 © Parliamentary Copyright House of Commons 2015 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 707 27 JANUARY 2015 708

Mr Gauke: I suspect that, a couple of weeks ago, the House of Commons hon. Gentleman walked through the Lobby in support of the charter for fiscal responsibility, which requires us Tuesday 27 January 2015 to find £30 billion of savings, either in tax increases or in spending cuts. If he is not prepared to take action The House met at half-past Eleven o’clock in that area, he has to tell his constituents where he is prepared to take action.

PRAYERS Mr Philip Hollobone (Kettering) (Con): I congratulate Her Majesty’s Treasury on its successful efforts to reduce [MR SPEAKER in the Chair] the tax gap. Where are the main hiding places that people are using to try to avoid tax?

Mr Gauke: My hon. Friend raises an important question Oral Answers to Questions to which I could give a lengthy reply. But what I will say is that, as a Government, we have taken action, for example, to improve the automatic exchange of information TREASURY between various jurisdictions, so that there is nowhere for people to hide their money. The net is closing in on The Chancellor of the Exchequer was asked— those who have evaded their taxes, and we are increasingly effective at dealing with tax avoidance as well. Uncollected Tax Chris Leslie (Nottingham East) (Lab/Co-op): With 1. Katy Clark (North Ayrshire and Arran) (Lab): economic growth now showing signs of slowing and What recent estimate HM Revenue and Customs has wages stagnating, is the Minister not worried that the made of the amount of uncollected tax in the UK. amount of income tax and national insurance that he [907233] said he would collect is failing to live up to expectations? The Financial Secretary to the Treasury (Mr David Will he tell the House by how many billions of pounds Gauke): Her Majesty’s Revenue and Customs published income tax and national insurance receipts have fallen its latest tax gap estimates on 16 October 2014. In short because of low wages, compared with the original 2012-13, the tax gap was estimated at £34 billion, 6.8% Office for Budget Responsibility forecasts back in 2010? of total tax due. Mr Gauke: We are aware that, since 2010, the economy Katy Clark: The Government’s own figures suggest has had to face challenges, which in 2010 were not that the tax gap has increased by £3 billion. Independent anticipated by the OBR to occur in the way that they experts say that the tax gap could be up to £120 billion. did. We have had to deal with the eurozone crisis, the In North Ayrshire, the local tax office has been closed high commodity prices at the time and the aftershocks by this Government, and since 2010, 10,000 people in of the financial crisis. The consequences have been the Treasury have lost their jobs, despite the fact that significant, but if we want wages to rise we need to every tax inspector brings in far more—in taxes—than improve productivity.That is about improving our education they cost. Do the Government believe that they should system, and having more apprentices and a competitive rethink their strategy? tax system, and that is what this Government are delivering.

Mr Gauke: The reality is that the tax gap for 2012-13 Chris Leslie: The answer is that income tax and was lower than in any year under the previous Labour national insurance receipts are down by a staggering Government. As for the yield—the money that is brought £95 billion over this Parliament. Is it any wonder that in by HMRC as a consequence of its activity—that has the Minister and the Chancellor have failed so woefully gone up by £9 billion since 2010-11, and is forecast to be to eradicate the deficit, and when will he realise that it is £26 billion this year. That is a very good record. the low-wage economy that is the recipe for more borrowing, more welfare spending and more debt? Andrew Jones (Harrogate and Knaresborough) (Con): Will the Minister confirm that the compliance tax yield Mr Gauke: We discovered this morning that in 2014 for this year has been revised up to £26 billion, which is the UK was the fastest growing major western economy. an increase of £9 billion since this Government came to Employment is at a record level and unemployment has office? fallen dramatically, contrary to the Opposition’s Mr Gauke: My hon. Friend is absolutely right to predictions—but, yes, we have got further to go to make that point, and there has been an increase— reduce the deficit, which is why we need a Government [Interruption.] It is a point that bears repeating. Members who are prepared to make difficult decisions. All that really should take in the fact that, under this Government, we have heard from the hon. Gentleman is that he is we have seen a significant increase in HMRC’s yield. going to put up fees on gun licences, which is not going HMRC is more effective than ever in dealing with tax to solve the deficit. evasion and tax avoidance. Sir Tony Baldry (Banbury) (Con): Am I right in Nick Smith (Blaenau Gwent) (Lab): Two thirds of thinking that under the charter for fiscal responsibility, people getting tax credits are in work, so why does the to which everyone recently signed up, we have made it Chancellor want to cut tax credits again? That will clear that part of the savings that we are going to make penalise hard-working families. involves bearing down on tax avoidance? Indeed, we 709 Oral Answers27 JANUARY 2015 Oral Answers 710 have set out clearly exactly where we are going to save Oil Prices every penny of the £30 billion that needs to be saved. How is it possible for anyone to sign up to a charter for 3. Michael Fabricant (Lichfield) (Con): What fiscal responsibility without making it clear where they assessment he has made of the effects of recent trends are going to make those savings? in the price of oil on the economy; and if he will make a statement. [907235] Mr Gauke: My right hon. Friend is absolutely right; the Opposition have given no indication of the balance 5. Andrew Percy (Brigg and Goole) (Con): What between tax and spending and how they are going to assessment he has made of the effect of falling oil find that £30 billion. At a time when Labour Back prices on households. [907237] Benchers are saying that Syriza shows the way while those on the Labour Front Bench apparently support a The Chancellor of the Exchequer (Mr George Osborne): £30 billion fiscal tightening, all we get from the Opposition The fall in the oil price clearly means that certain is chaos. sectors such as the North sea face real pressure, which the Chief Secretary and I are determined to help them Bank Bonuses with, but overall this is a good thing for the United Kingdom and for British families. Today’s GDP figures 2. Kerry McCarthy (Bristol East) (Lab): What recent confirm that the recovery is on track, and our plan is representations he has made to the EU on the cap on protecting Britain from the economic storm with the fastest growth of any major economy in 2014. However, bank bonuses. [907234] the international climate is getting worse, and with 100 days to go to the election, now is not the time to The Economic Secretary to the Treasury (Andrea abandon the plan and return Britain to economic chaos. Leadsom): The Government keep their opposition to the EU-wide cap on bonuses, but we withdrew our legal Michael Fabricant: We have all noticed that we no challenge in November 2014 after it became clear that it longer hear about the cost of living crisis. Could my was not likely to succeed. We believe that the cap is right hon. Friend tell me precisely how the change in oil flawed, and will just serve to put up fixed salaries, but prices has affected the retail prices index and how that instead of pursuing the legal challenge we are looking compares with wage inflation? at other ways of building a system of pay in the banking system that only rewards excellence and clearly promotes Mr Osborne: Inflation is at 0.5% and wages are responsibility. growing at three times that rate. If the oil price is fully passed on—and we have put pressure on the petrol and Kerry McCarthy: Can the Minister tell the House utility companies to do so—British families will on how much the Chancellor spent on legal fees alone in average be £750 better off. If we had accepted the that failed legal challenge? Was that not a huge waste of ludicrous price freeze proposed by the Opposition we money when the priority should have been to help those would have locked in those high oil prices and people people most in need? would not see the benefit in their utility bills.

Andrea Leadsom: No. The amount of money spent Andrew Percy: The good folk of Brigg and Goole was £43,000. The Government believe fundamentally have noticed that the price of a gallon of petrol has that we need to have the toughest regime in the world of fallen significantly and they welcome that. Many of my any global financial centre on pay, and that is what we residents, however, are off the grid and their heating oil have. We have ensured that bankers will be remunerated bills have not necessarily fallen as they should have. in future on performance and that pay can be clawed What steps can the Chancellor take to put pressure on back. We have put in place a system that is far better heating oil companies to make sure that the cost of and far more accountable than anything that the previous heating also falls for those residents off the grid, in line Government attempted. with oil prices?

Mark Garnier (Wyre Forest) (Con): In the light of all Mr Osborne: My hon. Friend has been a champion the hard work by the Government to ensure that bonuses for his constituents and for all the 1.5 million people are held back by banks to secure better behaviour by who are off the grid and rely on heating oil to warm staff and greater stability for banks, is not the bonus cap their homes. That price has fallen by 20%, so people are a crude measure that will increase bank instability and seeing the benefit of the falling oil price, but we continue bad behaviour by bankers? to put pressure on the heating oil companies, and we have met them in the Treasury to continue to reinforce Andrea Leadsom: My hon. Friend is exactly right. the argument that those prices must be passed on and The Government wanted to challenge that cap because must continue to be passed on. it would push up fixed pay, which not only means bankers being paid not for performing but for simply Stewart Hosie (Dundee East) (SNP): The oil industry turning up, but raises prudential risks associated with has told us that the softening in the oil price has higher fixed costs. It was vital to the interests of this highlighted the underlying problem in the North sea, important sector to the UK that we introduced a better which is the high cost of doing business there, driven by regime, and I am delighted that the Chancellor has an up to 81% tax on production. Instead of waiting written to the Governor of the Bank of England in his till the Budget, will the Chancellor take urgent action role on the Financial Stability Board to ask him to look on investment allowances and on a cut to the supplementary at other ways of ensuring accountability. charge? 711 Oral Answers27 JANUARY 2015 Oral Answers 712

Mr Osborne: The Chief Secretary and I certainly out of the North sea, that is bad not just for the recognise the pressure on the North sea producers. We economy of Aberdeen and north-east Scotland, but for want to make sure that we continue to extract the the economy of the UK. maximum amount of oil from the North sea basin. That is why we cut oil taxes at the autumn statement, Mr Osborne: I agree with the hon. Lady and I know published a consultation on the investment allowance that she is deeply involved in these issues as the Member and made it clear that further action may be required at of Parliament for Aberdeen South and chairs the all-party the Budget. committee on these issues. We have to work out how we May I draw it to the House’s attention that what the protect the industry as best we can from a rapid fall in hon. Gentleman calls the softening of the oil price the world oil price, and we must make sure that the would have done disastrous damage to the finances of brilliant skills, jobs and investment in north-east Scotland an independent Scotland? The Scottish National party’s continue. That is why we anticipated the challenge by projections for its oil revenue were out by almost threefold. launching the consultation in the autumn statement It is a reminder of the strengths of the United Kingdom and making immediate cuts to the tax regime. We have that we can bear pressures such as a falling—or, indeed, to take further steps over the coming year because we a rising—oil price across the entire UK. are determined that this brilliant industry has a brilliant future. Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co- op): Industry and economic experts say that thousands Mr Andrew Tyrie (Chichester) (Con): Will the Chancellor of jobs in the North sea oil sector are at risk, yet both confirm that when the oil price halves, as we have just the UK and the Scottish Governments seem to be seen, that is likely to be extremely good news for the passing the buck, rather than taking the urgent action British economy? Will he also confirm that this fall in that is needed. Will the Chancellor give a commitment the oil price is particularly good news for the 70% of car to bring forward tax measures immediately to support owners who need cars to get to work? The House will the industry, as we have called for, rather than delaying realise that no Chancellor will want to commit himself for another seven weeks until the Budget? now, but will he at least agree that there is now great merit in a period of stability in fuel duty? Mr Osborne: As I said, we have already cut the supplementary charge. I announced that in the autumn statement and it came into effect at the beginning of Mr Osborne: My hon. Friend is right. As I said at the this year. We have launched a consultation on an investment beginning, the fall in the oil price, for all the challenges allowance. We meet regularly with the industry; we met it poses in the North sea, is good for the British economy industry representatives last week. They think the Budget and good for British families. It is being felt at the is the appropriate time to make further announcements, pump, where petrol is now cheaper than when this if there are further announcements, on the North sea oil Government came into office. One of the reasons why is and gas tax regime, but the hon. Lady and the industry that we abolished Labour’s fuel duty escalator. As a have my assurance that we will do everything we can to result, petrol is 20p per litre less than it would have been support the North sea oil and gas industry during this had we stuck with the shadow Chancellor’s disastrous difficult time. Of course it is impacted by the fall in the tax plans. We have to make sure that motorists feel the oil price. We want to make sure that we get the maximum full benefit of the falling oil price. As I say, it was a good amount of oil out of the North sea and that the record move to abolish that disastrous escalator. investment that we have seen over the past year is sustained. National Insurance

Mr John Baron (Basildon and Billericay) (Con): Given 4. Nigel Adams (Selby and Ainsty) (Con): What the financial short-termism of the previous Government, assessment he has made of the effect of lowering the I welcome the Chancellor’s comments about a shale gas rate of national insurance on levels of employment. fund. When he is Chancellor after the next general [907236] election, will he consider expanding the concept to create a North sea sovereign wealth fund for the benefit of the country as a whole? 6. Adam Afriyie (Windsor) (Con): What assessment he has made of the effect of reducing employers’ Mr Osborne: Of course, our challenge is to eliminate national insurance contributions on employment. the deficit and to get our debt falling. Sovereign wealth [907238] funds are built up by countries that run consistent budget surpluses, which is exactly what we need to do in The Chancellor of the Exchequer (Mr George Osborne): the United Kingdom. In particular, I would like to see This Government inherited damaging plans from the some of the revenues from the shale gas industry used previous Government to increase the jobs tax. We responded to support local communities. That would be a boost to by reducing the burden of national insurance. Since communities across the country, especially in the north then, we have introduced an employment allowance of England. that cuts national insurance for almost 1 million firms, and now we are going to cut national insurance for Dame Anne Begg (Aberdeen South) (Lab): Although employing under 21-year-olds and young apprentices. the Government cannot control the world oil price, they These measures have contributed to record falls in can do things such as drive down the costs in the unemployment. A rise in the jobs tax of the kind industry. If the oil price remains low and perhaps drops contemplated by Labour would have the reverse effect further to the level where it costs more to take the oil and destroy jobs. 713 Oral Answers27 JANUARY 2015 Oral Answers 714

Nigel Adams: I am very grateful to the Chancellor. jobs in Northern Ireland. Is it not absolutely striking Will he join me in congratulating the entrepreneurs and that on a question about the jobs tax and a question risk takers who, across my constituency, have stepped about unemployment, not a single Labour MP gets up up to the plate since 2010—so much so that we now to speak? have 60% fewer people claiming out-of-work benefits? What further measures can my right hon. Friend deliver Business Support to ensure that the economic recovery continues in my part of North Yorkshire? 7. James Morris (Halesowen and Rowley Regis) (Con): What progress his Department has made on supporting Mr Osborne: My hon. Friend is absolutely right that businesses. [907239] unemployment in his constituency has fallen. Twelve thousand extra jobs have been created in his constituency. The Exchequer Secretary to the Treasury (Priti Patel): That is because local businesses are benefiting from the This Government champion British businesses. We are employment allowance, and there is more to come with delivering a significant programme of reform to enable the cuts to national insurance for employing under-21s businesses to grow, expand and, importantly, become and apprentices. One of the reasons businesses are successful. The reforms are all part of the Government’s coming to his constituency is that he is such a champion long-term economic plan to secure business-led economic of his constituency as a place to invest and employ. He recovery. goes out of his way to bring businesses and jobs to his constituency. That is why unemployment has fallen so James Morris: The number of new business start-ups fast there. in my constituency has increased by 100% since 2010. Adam Afriyie: It seems to me that we would be wise Does the Minister agree that creating a good business as a nation to reduce taxation on the activities that we environment, with lower taxes and incentives to invest, wish to encourage. I therefore very much welcome the is crucial to the future of the black country economy in reduction in employers’ national insurance, which has the west midlands, part of which I represent? created jobs in my constituency, and I suspect in every constituency around the country. Does the Chancellor Priti Patel: My hon. Friend is absolutely right. [HON. agree that we would do well to push on with these MEMBERS: “Is he a champion?”] He is, indeed, a champion, reductions in employers’ national insurance, which, to and a strong voice for his constituency and his constituents. all intents and purposes, is a tax on jobs that discourages He is of course right in every respect. This Government their creation? are backing business every step of the way. Our long-term economic plan is making it easier to start and grow Mr Osborne: My hon. Friend is absolutely right that businesses, as he has seen across his constituency. national insurance is a tax on jobs— Mr Andrew Love (Edmonton) (Lab/Co-op): Figures Ed Balls (Morley and Outwood) (Lab/Co-op): He is a published by the Bank of England last week show that champion! net lending to business is still negative. After four and a half years of this Government, when can we expect the Mr Osborne: My hon. Friend is a champion of businesses figures to go positive, and will we see out the last in his constituency. That is one of the reasons 100 days of this failed Government, who need a fresh unemployment has fallen in Windsor and 2,000 businesses Government to do the job for them? in Windsor are benefiting from our employment allowance. We are going to go on reducing national insurance on Priti Patel: To put it bluntly, this Government have employing 21-year-olds and apprentices. The alternative turned around not only the economy, but the business path—the path offered by the Labour party—is to put environment. This Government have backed British the jobs tax up. That would increase unemployment businesses and business lending every step of the way, and return Britain to the economic mess it was in when which is a stark contrast to a Labour Government, Labour was last in charge. under whom that would only go backwards.

Mr Gregory Campbell (East Londonderry) (DUP): Sir Robert Smith (West Aberdeenshire and Kincardine) The lower-paid, particularly those who are earning (LD): Does the Minister recognise that when the £15,000 a year or less, should benefit from the Chancellor’s consultation on tax reforms for the North sea finishes, decision to raise the personal income thresholds, but it will be crucial to businesses in the north-east of will he also look at raising to the same level the threshold Scotland for the Budget to set in place permanent at which national insurance contributions are made, so reforms for the long term, not just for the crisis? that the lower-paid pay neither income tax nor national insurance contributions on £300 a week? Priti Patel: My hon. Friend touches on a very significant point. The reality right now is that the reforms are all Mr Osborne: We increased the employer’s threshold about long-term economic security. This Government when we came into office to reverse the damage done by have worked assiduously to ensure that every measure the jobs tax increase proposed by the previous Labour undertaken, whether to back businesses or to create the Government. We have used the personal income tax right tax environment for businesses—he has championed allowance as the best method of lifting people out of that in his constituency—is the right way forward. income tax. It stands at £10,600, and our long-term economic plan proposes to raise it to £12,500. I am Meg Munn (Sheffield, Heeley) (Lab/Co-op): What happy to work with the hon. Gentleman on other discussions has the Minister had with her colleagues in measures we can undertake to support employment and the Department for Business, Innovation and Skills 715 Oral Answers27 JANUARY 2015 Oral Answers 716 who, in answer to a recent question, admitted that they will be proper guidance, with fully qualified guiders expect to spend less than £1 million of the employer who are able to help people through the process. There ownership fund, which was allocated £30 million to is now a further line of defence, because pension providers help businesses? What will she do about this failure to will be required to point out to people the vital importance help businesses? of taking guidance or regulated advice.

Priti Patel: I emphasise again that this Government Unemployment have supported businesses and lending to businesses. That is in stark contrast to the failed policies of the Opposition, and to the fact that the hon. Lady’s party 9. Mark Hunter (Cheadle) (LD): What assessment he would just put up business taxes and take away the has made of the implications for his policies of recent support given to small businesses under this Government. trends in unemployment figures. [907241]

Defined Contribution Pensions The Chief Secretary to the Treasury (Danny Alexander): Since the Government came to power, employment has increased by 1.75 million and now stands at its highest 8. Nigel Mills (Amber Valley) (Con): What level ever; unemployment has come down by almost assessment he has made of the further steps which 600,000; and the number of jobseeker’s allowance claimants are necessary to ensure the fair treatment of defined has fallen by more than 40%. That is one of the many contribution pension customers in response to the ways in which the stronger economy that we are building recent market reports published by the Financial is leading to a fairer society in this country. Conduct Authority; and if he will make an assessment of the potential merits of introducing second line of Mark Hunter: Does my right hon. Friend know that defence protection for such pension schemes. [907240] unemployment in my constituency is down to 1.3%, which is precisely half what it was at the last general The Economic Secretary to the Treasury (Andrea election and one of the lowest figures in the north-west Leadsom): We welcome the Financial Conduct Authority’s of England? Does he agree that without the Liberal announcement yesterday that it will introduce new rules Democrats and the coalition Government, we would in April to protect consumers accessing their pension not have had the political stability that was essential for pot. The rules will introduce a second line of defence, the recovery to take hold? with pension providers required to give consumers wanting to access their pension pot very clear risk warnings and to highlight the fact that guidance from Pension Wise or Danny Alexander: I wholeheartedly agree with my regulated advice can help them to avoid making a hon. Friend. Not only has unemployment halved in his poorly informed decision. constituency, but employment has risen by 1,300 since 2010. That is testimony to the work of Liberal Democrats Nigel Mills: I thank the Minister for that answer. I and the Government in creating stability and to his role welcome the fact that the FCA, perhaps at the last of supporting and championing local businesses in the minute, recognised there was an issue and took the right north-west of England. action yesterday. What more will she do to ensure that when people make free choices about their investments Stephen Timms (East Ham) (Lab): A striking feature after April, they buy the right thing, not make a terrible of the recent trends in unemployment is the increase in mistake in that situation? youth unemployment, which has risen for three months in a row. In the figures that were published last week, it Andrea Leadsom: I congratulate my hon. Friend on rose by 30,000, which is the biggest jump for almost two expressing the importance of a second line of defence. years. Why is it that while overall unemployment is The Government are determined to give pensioners the coming down, youth unemployment is going up? Why opportunity to make their own decisions about what to are young people losing out? do with their pension savings. Nevertheless, it is vital to ensure that they have reasonable protections. Danny Alexander: I am sorry to have to correct the right hon. Gentleman, but youth unemployment Sheila Gilmore (Edinburgh East) (Lab): There were has come down by 171,000 over the past year and is reports yesterday that some people who exercise these 175,000 lower than when the Government came to rights might face large tax bills that they did not know power. In his constituency, it is down 53% since 2010—a about. Will the Minister be absolutely clear about what fact that I am sure he will join me in welcoming. I would measures will be put in place to ensure that people are agree with him that we need to continue for a number of not disadvantaged, because she knows, as I do, that years with the successful policies that are reducing people are already being approached informally to get unemployment in this country, to ensure that every them to exercise these rights? young person has the opportunity to make the best of their life. Andrea Leadsom: I reassure the hon. Lady that we have sought to give people the opportunity to make Richard Drax (South Dorset) (Con): May I congratulate their own decisions about what to do with their lifelong the Front-Bench team on their economic policy and savings. That is far better than in the past, when they their long-term economic plan? Unemployment in South were effectively told, “You buy an annuity and that’s Dorset has halved over the past five years. Does the that.” We are putting in place clear protections, with a Chief Secretary agree that to hand the country back to criminal measure on scamming and on pretending to be the Opposition in a few months’ time would be an the Government’s pensions guidance service, and there absolute disaster for the economic future of this country? 717 Oral Answers27 JANUARY 2015 Oral Answers 718

Danny Alexander: I agree that the right course for the Mr Gauke: If we want wages to increase, which we country is to continue with the balanced, sustainable, do, we need to improve our education system, ensure fair action that we have taken to deal in a common-sense that we have a welfare system that makes work pay, way with the country’s financial problems. Lurches improve our infrastructure and have competitive tax away from that path are offered by the Labour party systems. In brief, we need a long-term economic plan. and, I am afraid to say, the hon. Gentleman’s party. That is what we have got with this Government, and it is That is why it is necessary to have the Liberal Democrats not what we would have with the Labour party. to keep the country on the straight and narrow. Alec Shelbrooke (Elmet and Rothwell) (Con): My Sammy Wilson (East Antrim) (DUP): Although hon. Friend will recognise that getting the deficit under unemployment in Northern Ireland is lower than would control is vital if we want a strong economy. For all the be expected at this point in the economic cycle, growth posturing that we have seen today from the Labour has not reached out to many of the regions of the party about the NHS, does he recognise that Greece, United Kingdom, including Northern Ireland. What which had a smaller deficit than we had in this country steps are the Government taking to address the when we came to power, had to cut spending on health concentration of growth in the south-east of England services by 14%? Does he agree that only a strong and the fact that it does not extend out to the regions? economy can deliver a strong health service?

Danny Alexander: I do not accept the hon. Gentleman’s Mr Gauke: I completely agree with my hon. Friend, characterisation, because we see strong economic growth who puts it well. We want a strong NHS, but a strong in London and the south-east and in Scotland, and the NHS requires a strong economy, and that requires the economy of the north-west of England has been growing Government’s policies to continue. well, particularly in employment. We are seeing a more balanced pattern of growth and job creation than in Steve McCabe (Birmingham, Selly Oak) (Lab): In the previous economic recoveries. long-term economic plan—[HON.MEMBERS: “Hurray!”] None the less, the hon. Gentleman is right to say that I would wait for the second part of the question. In the there are significant problems of unemployment in long-term economic plan, is missing a target by 50% Northern Ireland. That is why we have put in place a evidence of success or failure? range of policies to help support the Northern Ireland economy, some of which we will be debating this afternoon. Mr Gauke: We have turned the British economy around, and we grew faster in 2014 than any major western economy. Employment is increasing and Fiscal Consolidation unemployment is falling, including by 40% since 2010 in the hon. Gentleman’s constituency. That is a success. 11. Daniel Kawczynski (Shrewsbury and Atcham) (Con): What progress he has made on his fiscal Northern Powerhouse consolidation plans. [907243] 12. Miss Anne McIntosh (Thirsk and Malton) (Con): The Financial Secretary to the Treasury (Mr David What recent representations he has received on creating Gauke): The Government inherited the largest deficit a northern powerhouse. [907244] since the second world war. Since then, we have made substantial progress on reducing the deficit. Borrowing The Chancellor of the Exchequer (Mr George Osborne): has already fallen by more than a third since 2009-10 We are making good progress in building a northern and is forecast to have fallen by half this year as a share powerhouse. Over the past year, private sector employment of GDP. The Government’s consolidation plans have in the north has increased by more than 200,000, a been central to the reduction of the deficit. faster increase than the national average and faster than in the south. We want to sustain that by investing in new Daniel Kawczynski: I thank my hon. Friend for that transport, new skills and new science, by devolving answer. Given the eye-watering amount of British taxpayers’ power and by bringing our northern areas closer together money that is spent on paying the interest on our into that powerhouse. national debt, I am pleased that the Government have already reduced the annual structural deficit by half. Miss McIntosh: May I applaud the Chancellor and Does he agree that it is vital to continue with the policy the Government for their work on creating a northern of reducing the annual structural deficit in order to powerhouse? Will he ensure that rural communities tackle our national debt? participate in that wealth growth, and that rural broadband reaches farms and rural businesses that want to drive Mr Gauke: I completely agree with my hon. Friend, the rural economy and economic growth? who is right to make that point. We need to go on and run an overall surplus, to ensure that our public finances Mr Osborne: My hon. Friend is absolutely right that are sustainable over the longer term. we want our rural communities in the north to be part of the powerhouse. It is not just about connecting the Clive Efford (Eltham) (Lab): Is the Office for Budget cities; it is about ensuring that the rural economy is a Responsibility not right to say that stagnant wages have vibrant part of the northern economy.Superfast broadband led to more borrowing? Is that not the key reason why is a key part of that, and as she well knows, we have the Government have missed their borrowing targets by made special efforts to develop it in North Yorkshire. more than £200 billion? Rural transport is also incredibly important, as is supporting 719 Oral Answers27 JANUARY 2015 Oral Answers 720 agriculture. The investment that we are making in Ian Swales (Redcar) (LD): The north-east chamber agricultural science will benefit agriculture all over the of commerce recently said: country, including in her constituency. “Businesses are surging into 2015 on a wave of sustained growth and positivity”, Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) and unemployment is falling faster in the north-east (SNP): The Chancellor will have noticed that, for the than anywhere else in the country. Will the Chancellor first time in a recessionary period, the unemployment ensure that the north-east is properly connected to the figures in Scotland—our northern powerhouse—are northern powerhouse and that the necessary infrastructure consistently better than in the rest of the UK, as the investment is delivered? SNP Government, where possible, have followed different economic policies. Is his opposition to proper economic Mr Osborne: I assure my hon. Friend that that will be powers for Scotland based on a fear of being further the case. The north-east is an incredibly important part outperformed by the Scottish Government? Is he afraid of the northern powerhouse, and that is why we are of the competition from a real northern powerhouse? investing in road and rail links there. We are also putting investment into science there, for example at Newcastle university, and of course in his constituency Mr Osborne: I am delighted for Scotland that he has seen steelmaking begin again after it ended unemployment has fallen and it is seeing growth. I under the Labour Government. People will have a clear remember, however, that the SNP predicted that our choice at the general election. economic plan would cause unemployment to rise in Scotland and shrink the Scottish economy. That has not Tax Credits and Employment been the case because Scotland has been part of a stable United Kingdom that is following a long-term economic plan that is benefiting the entire country. 13. Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): What proportion of recipients of tax credits are in employment. [907246] 20. [907255] Andrew Stephenson (Pendle) (Con): On 4 November at Treasury questions, I raised the issue of The Exchequer Secretary to the Treasury (Priti Patel): Brierfield Mill, the largest redundant mill complex in Seventy-one per cent. of households in receipt of tax Lancashire and situated in my constituency. Following credits are in employment. that, my right hon. Friend the Minister for Universities, Science and Cities visited the project on 16 January. Now, Tom Greatrex: I thank the Minister for that confirmation inexplicably, the Lancashire local enterprise partnership that more than two thirds of people getting tax credits has failed to bid for even a penny of funding as part of are in work. How can she claim to be helping working the second round of the growth deal. Will my right hon. families when the Chancellor wants to cut their tax Friend agree to meet me urgently to discuss Government credits again, causing real-terms economic pain? support for that important project? Priti Patel: Let us put this into some context. For a Mr Osborne: I am well aware of the economic potential start, tax credit spending rocketed under the previous of the Brierfield Mill development and when I met my Government and throughout this Parliament we have hon. Friend in Nelson recently we talked about those made it abundantly clear that we support those with benefits with local businesses. He is a champion of that low incomes. Let us not forget either that the impact of development and it is extraordinary that the Lancashire Labour’s great recession is still being felt. We continue LEP and, in particular, Lancashire county council have to help people with the cost of living through the not promoted the project. He is promoting the project increases in personal allowances, the freeze in fuel duty, because he is a champion of his constituency and I will cuts in council tax and, of course, by reducing the cost happily meet him to see how we can progress the of child care. Brierfield Mill project and bring more jobs to the Pendle constituency. Richard Fuller (Bedford) (Con): Working tax credits are in effect a form of corporate welfare for employers who could pay higher wages, especially if tied to increased Jonathan Edwards (Carmarthen East and Dinefwr) skills. Will the Minister continue her conversations with (PC): The Centre for Cities recently reported that for the Minister for Skills and Equalities about ways in every 12 new net jobs created in the south-east of which we can create a combination of those two, perhaps England, only one is created in the rest of the UK. in the form of tax credits for training, such as proposed What is the Chancellor doing to address that two-tier by Premier Inn? economy? Priti Patel: I thank my hon. Friend for his suggestion. Mr Osborne: The hon. Gentleman says it is a two-tier He is right that more can be done through working with economy, but youth unemployment is down by 45% in business and learning from their suggestions. his constituency and unemployment down by 31%. I agree that the Labour Government in the Welsh Assembly 17. [907251]Pat Glass (North West Durham) (Lab): are doing damaging things to the Welsh economy, but How can the Minister claim there is no cost of living thankfully the UK Government are promoting Wales crisis when average full-time wages are down by £2,000 and the Welsh economy and, as a result, we are seeing a year, when huge and increasing numbers of workers jobs being created. I am happy to continue to come are dependent on state benefits to make ends meet, and forward with policies that support Wales and its economic when the gap between chief execs’ salaries and the development. people who work for them is growing all the time? 721 Oral Answers27 JANUARY 2015 Oral Answers 722

Priti Patel: Let us be clear. There are a couple of those analyses, but they are helping to ensure that points I would like to make. The Government have young people have better life chances under this shown that the only way to improve and increase living Government. standards is by tackling head-on the country’s economic problems, which are down to the legacy of the previous Charlie Elphicke (Dover) (Con): Does the Minister Government, and by supporting those who do the right not agree that it is important to note that real wages are thing and aspire to work. I hope the hon. Lady welcomes rising, real disposable income is rising, child poverty is the fact that in her constituency things have improved, down and inequality is down under this Government? with employment down substantially by 47% and youth unemployment down by 52%. Danny Alexander: It is very important to note all three of those facts, but it is also important not to be Richard Graham (Gloucester) (Con): Tax credits have complacent. There is a lot more to do to ensure that we helped many people, but it is also true that some have continue to deliver the successful growing economy that been prevented from taking a promotion or a salary is creating jobs, because ultimately getting into work is increase because they would lose more in taxpayer-funded the best route out of poverty for families. benefits than they would gain from their employer. That has to be wrong. Does my hon. Friend agree that as Shabana Mahmood (Birmingham, Ladywood) (Lab): universal credit is rolled out across the country, so we I am not surprised that the Chief Secretary to the return to the crucial principle that work always pays? I Treasury does not want to acknowledge the full truth am afraid that that got lost under the previous Government. unveiled last week by the Institute for Fiscal Studies’ figures. Its report shows clearly that tax and benefit Priti Patel: My hon. Friend is absolutely right. He changes under this Government have left households mentions the very important universal credit roll-out. £1,127 a year worse off on average, and that families As it rolls out—[Interruption.] It is already being rolled with children have been hardest hit of all. Does that not out, and it is going well. As it rolls out, more and more make a complete mockery of the Government’s claims people will benefit. He is right to point out that this is that they would be the most family-friendly Government about both the value of work and aspiration. We are the ever? only party that stands for aspiration and value in work, and inspiring people to get off benefits and back into Danny Alexander: As I said, the published analysis is work. incomplete because it ignores public expenditure. Public expenditure is a very important part of fiscal consolidation, Household Budgets but it is the shift in public expenditure, towards such things as early years education, the pupil premium and supporting disadvantaged young people through the 14. Helen Goodman (Bishop Auckland) (Lab): What education system, that is a vital part of improving life recent estimate he has made of the effect on household chances. I hope the hon. Lady will want to recognise budgets of tax and benefit decisions taken in the that the measures the Government have taken have present Parliament. [907248] been aimed at improving the life chances of people. That is why we are making so much progress on attainment The Chief Secretary to the Treasury (Danny Alexander): in schools, reducing child poverty and so on. Since 2010, I have published regular distributional analysis of the impact on households of our reforms to tax, Topical Questions welfare and public spending. It is the most comprehensive analysis available. The most recent analysis we published, T1. [907223] Nadhim Zahawi (Stratford-on-Avon) (Con): alongside the autumn statement last month, shows that If he will make a statement on his departmental the wealthiest continue to make the biggest contribution responsibilities. towards reducing the deficit. By 2015-16, the net contribution of the richest 20% will be larger than the The Chancellor of the Exchequer (Mr George Osborne): remaining 80% put together. The core purpose of the Treasury is to ensure the stability and prosperity of the economy. Helen Goodman: Today, the second independent report in as many weeks shows that proportionately the Nadhim Zahawi: We in Stratford-on-Avon are rightly Government have hit the poorest and those with small proud of our world-class chamber orchestra, the Orchestra children the hardest. Today, half a million more children of the Swan, which, as well as playing to packed audiences are living in absolute poverty than when the right hon. in Stratford, is busy exporting British culture to the US Gentleman walked into the Treasury. Will he tell us and China. What assessment has my right hon. Friend why, instead of tackling that, he supported tax cuts for made of the extra jobs and growth resulting from the millionaires? new tax relief for theatres and orchestras?

Danny Alexander: Those analyses ignore some of the Mr Osborne: The new tax relief for theatres has been most important and most progressive policies put in a real success. It has been taken up by many theatres place by the Government. They ignore the pupil premium, and is supporting regional productions. Separately, at which is investing money in the life chances of young my hon. Friend’s request, we have also helped the Royal people. They ignore the extra early years education Shakespeare Company to take its plays to China. The provided to three and four-year-olds, and to the most orchestra tax relief, the consultation on which we announced disadvantaged two-year-olds. They are not included in last week, will be another huge boost for British culture 723 Oral Answers27 JANUARY 2015 Oral Answers 724 and music. We will set out further details in the Budget the Office for Budget Responsibility says will take us about how it will work, but it will be there to support a back to levels in our economy not seen since the 1930s— thriving orchestra industry—if that is the right word! before the NHS existed. Every developed country with spending as low as he is aiming for has widespread Ed Balls (Morley and Outwood) (Lab/Co-op): First, charges for health care. Is that not the real Tory economic on a note of consensus, today is Holocaust memorial plan? day. Following our conversation last night concerning today’s report by the cross-party Holocaust commission, Mr Osborne: We have a free-at-the-point-of-use national on which I am proud to serve, will the Chancellor health service, which we are proud of and will continue confirm the cross-party agreement to fund the commission’s to fund. What is clear is the total confusion in Labour’s recommendations, alongside ongoing funding, for the health policy today. This morning the Labour leader rest of the decade, for the vital work of the Holocaust said he was going to use his so-called mansion tax to Educational Trust, to ensure we have a new and permanent pay down the deficit; six days ago the shadow Chancellor memorial and that future generations never forget that said that money would be used to pay for his NHS plan. terrible atrocity? It is total confusion today. The only way to have a strong Turning to today’s GDP figures, is the Chancellor, national health service is to have a strong economy. like me, concerned that economic growth is slowing? Let me end on this note. We read in the last couple of With just 100 days until the election, will working days that the shadow Chancellor has been sidelined people be better off than when he became Chancellor, from the general election: or will they be worse off? “In a major humiliation, party bosses have quietly shunted” Mr Osborne: First, this being the 70th anniversary of him the liberation of Auschwitz, we should remember the “out of the media spotlight”. inhumanity and the suffering of those who died and Let me reach across the Dispatch Box and offer the those who live with the memories of the holocaust, and hand of friendship. Let us resolve that we are both we should vow as a nation to keep their memory alive. going to put him at the centre of this general election The right hon. Gentleman and Members from other campaign. political parties served on the Holocaust commission, the chairman of which, Mick Davis, briefed the Cabinet today on its proposals for a permanent memorial and T2. [907224] Stephen Phillips (Sleaford and North an education learning centre. I made it clear in the Hykeham) (Con): By sticking to our long-term Cabinet meeting that the Government would provide economic plan, huge strides have been made towards £50 million to support this brilliant plan, and of course reducing the deficit—something that seems to evade we will continue to fund the work of the Holocaust the shadow Chancellor. Does my right hon. Friend Educational Trust, which takes Members and many agree that there is only one party that can be trusted to school children to Auschwitz to see for themselves the take the difficult decisions needed for prosperity in this horror that happened there. Across the House, we can country and for sound public finances, and it is the one come together to commemorate this day and ensure that he and I represent? that the holocaust is never forgotten and that we never repeat its mistakes. Mr Osborne: My hon. and learned Friend is absolutely I hope you, Mr Speaker, will allow me a slight change right. In Lincolnshire and across the country, people of tone for a couple of seconds. The GDP numbers, have seen unemployment fall and businesses grow. We which the shadow Chancellor complains about, show have got to stick with the long-term economic plan, that Britain’s was the fastest-growing major economy in particularly at a time when the global economic risks the world in 2014. He kept telling me to listen to the are increasing. By working through that plan, we can IMF—well, the head of that organisation said that few deliver that economic security for his constituents and countries were driving growth like America and the mine, and make sure this country has a brighter economic UK. Growth is improving, the deficit has been reduced future. and unemployment is falling, and the President of the United States says we must be doing something right. T4. [907227] Mr Jim Cunningham (Coventry South) When the shadow Chancellor complained about the (Lab): Is the Chancellor aware that of the 150,000 Prime Minister’s going for dinner at the White House, people employed in Coventry, 50,000 of them—mainly he said, “I haven’t been neglected. They invited me in women and young people—are in part-time, low-paid and gave me coffee and biscuits.”That is all the endorsement jobs? What are the Government going to do about it? he is going to get for his economic plan anywhere in the world. Mr Osborne: Of course we want to get unemployment down further, and for those who want full-time work, Ed Balls: It is good we have cross-party agreement we want to make sure it is available. However, I would fully to fund the Holocaust commission’s report. point out that, in the hon. Gentleman’s constituency, If things really were fine and if the economy really youth unemployment is down by 73% over this Parliament were fixed, people would be better off, but instead they and unemployment is down by more than a half, so we are worse off, and the Chancellor would have balanced have got to go on with our long-term plan, which is the books, as he promised, but he has not—he has delivering those jobs in Coventry. Eighty per cent. of completely failed to do it. It is because of that failure on the jobs created in the UK at the moment are full time, the deficit that he is now planning spending cuts in the so we need to sustain that plan, not go back to the next Parliament that the IFS calls “colossal” and that chaos we saw under the Government he supported. 725 Oral Answers27 JANUARY 2015 Oral Answers 726

T3. [907225] Mr John Baron (Basildon and Billericay) T7. [907232] Mr Stephen Hepburn (Jarrow) (Lab): The (Con): May I suggest that the Chancellor heed no Chancellor will be aware of the importance of criticism from the Labour party about deficits, given the success of Newcastle international airport and that it more than doubled the national debt when last of the need for successful businesses to plan ahead. He in power? As we have heard, the Government have will understand, then, how the possible cut in air done much to help small businesses, which is why passenger duty north of the border is felt as a threat. unemployment is falling across the country and in my Will the Chancellor give an assurance to the business of constituency. As the country’s finances continue to the Newcastle international airport and to other improve, will he look further to ease the tax burden on potential businesses affected that we will match any cut small businesses—particularly corporation tax—which in APD funding north of border? are very often the backbone of our local economies? Mr Osborne: The hon. Gentleman raises a serious Mr Osborne: My hon. Friend is right that small point, and there is agreement on it across the political businesses are absolutely central to our country’s economic divide. The devolution of air passenger duty to Scotland growth and job creation in the future. We have cut small raises the potential for real pressure to be put on airports companies corporation tax in this Parliament. From in north-east England, but also on Manchester airport, April, we will have a single corporation tax, as it is which is partly in my constituency. We will of course consolidated around 20%, which removes a lot of the have to see what the Scottish Parliament does when the bureaucracy. On top of that, we have taken the smallest powers are devolved, but the hon. Gentleman has my businesses out of business rates, and the employment assurance that we will work together to ensure that we allowance has helped with the national insurance bills minimise the impact on the north-east if this happens, of small businesses. Of course I will bear in mind and that we will protect regional airports in England. anything else we can do to help small businesses. We We have a couple of years to work this out—it does not have got some measures in the pipeline, but there is have be done tonight or tomorrow—and we can work clearly more to do. out a plan that protects the brilliant Newcastle, Manchester and other regional airports. T6. [907231] Chi Onwurah (Newcastle upon Tyne Central) (Lab): This Government are demonising those on Greg Mulholland (Leeds North West) (LD): This benefits, while doing little about tax evasion and Treasury team abolished Labour’s unjustifiable and unfair avoidance, which, as we have heard, have risen beer duty escalator and delivered two historic successive significantly on their watch. Today sees the launch of cuts in beer duty. We still pay more tax on our beer, the Tax Dodging Bill campaign, as 85% of British however, so our British brewers are not getting a fair adults say that tax avoidance by large companies is deal in comparison with their European counterparts. morally wrong, even when it is legal. Why will the Will the Treasury make it a hat trick? Chancellor not impose penalties for breaches of the The Chief Secretary to the Treasury (Danny Alexander): general anti-avoidance rule, as we have called for? During his time in Parliament, my hon. Friend has been a champion of the beer industry, small pubs and small The Financial Secretary to the Treasury (Mr David brewers across the country—and a very effective champion Gauke): First, it was this Government who got the base he has been, too. Of course I cannot make any commitments erosion and profit shifting process running with the about the Budget at this stage, but I welcome his recognition OECD, looking to deal with the international rules. It of the progress made on this subject during the course was this Government who announced at the autumn of this Parliament, and I will certainly take his statement that we are bringing in a diverted profits tax recommendations for the Budget very seriously. to deal with some of the contrived and artificial behaviours that people are worried about. It was also this Government Kelvin Hopkins (Luton North) (Lab): Britain has an who introduced the general anti-abuse rule and it is this enormous and persistent trade deficit with the European Government who are consulting on bringing in penalties Union—clear evidence of a misaligned exchange rate. for it. I have to say, it is not a bad record. The significant weakening of the euro in recent days will make the position even worse and cause damage T5. [907230] Mr David Ruffley (Bury St Edmunds) to British industry. When are the Government and (Con): I commend the Chancellor’s aim of running an the Bank of England going to take seriously the need overall budget surplus in 2019-20 and cutting the to achieve and sustain an appropriate sterling-euro national debt so that the next generation are not exchange rate? saddled with punitive taxes. Does he agree that this is a case of simple fairness, not ideology? Mr Osborne: This Government do not target a particular exchange rate. Successive previous Governments found Mr Osborne: My hon. Friend is absolutely right. to their cost that doing so was difficult and damaging. Countries such as Canada and Sweden, both of which What we do is ensure that Britain is competitive. I think have quite strong social democratic traditions, have the best thing to do to support exports is to make sure forms of balanced budget rules, or rules where surpluses that our British businesses are taxed in a competitive are run in good times. That has enabled them to bring way; they have great skilled work forces working for their public finances under control and their debt down. them—[Interruption.] They are chuntering away on the They did not endure the hardship we saw as a result of Opposition Front Bench. I seem to remember that when the financial crisis here in the UK. We propose that the Labour leader was asked recently when Britain countries should run a surplus in good times. That is the would join the euro, he said it depended on how long he only sustainable way to get our national debt down. If was the Labour leader. It is still official policy to join we do not do that, we leave Britain exposed to whatever the euro and tie the currency up to the eurozone—with economic shocks the world throws at us. all the ensuing chaos that would follow. 727 Oral Answers27 JANUARY 2015 Oral Answers 728

Mr Henry Bellingham (North West Norfolk) (Con): of other household budgets throughout my constituency. Is the Chancellor aware that since 2010 unemployment In the next Budget, will the Chancellor please keep calm in my constituency is down by a staggering 1,000? What and carry on cutting taxes? assessment has he made of the role of small business start-ups in reducing unemployment? Mr Osborne: I will not make any commitments in relation to the Budget, but my hon. Friend is right to Mr Osborne: Small business start-ups have been central point out that our support for the pub industry and for to job creation. We have helped them with the employment motorists has provided huge boosts for industries and allowance and the enterprise investment scheme, and families in Lancashire and throughout the country. Of we have given the new enterprise allowance to young course, we do not encourage people to mix the two. unemployed people to help them to start businesses—and that has been a great success. We have in place many Mr Speaker: Last but not least, and very pithily, initiatives to back our brilliant small businesses in Norfolk Alison McGovern. and across the country. Alison McGovern (Wirral South) (Lab): Will the Chancellor confirm that he has ruled out a further VAT Ms Margaret Ritchie (South Down) (SDLP): increase in the next Parliament? Considering the economic modelling carried out by one of the Treasury’s own economists, Professor Blake, Mr Osborne: Our plans do not involve a VAT increase, what further progress has been made on reducing VAT because we are prepared to make difficult decisions on on tourism, which would benefit all regions and particularly public expenditure, including decisions on the welfare coastal regions in the UK? budget. The hon. Lady and her colleagues voted for £30 billion of consolidation. If they are not prepared to Mr Gauke: We have looked at that, but there is a do that by achieving expenditure savings, they must be significant cost involved in making the changes. On the contemplating big tax rises. With 100 days to the election, point of helping tourism, the hon. Lady will be aware of we know the choice: it is between a competent Conservative the substantial increase in Northern Ireland and other plan that is delivering growth, and a return to economic places over recent years and, secondly, the coastal chaos under the Labour party. communities fund provides a lot of support to many of the areas that benefit from tourism. Several hon. Members rose—

Mr Nigel Evans (Ribble Valley) (Con): Cutting beer Mr Speaker: Order. I apologise to colleagues whom I taxes, raising income tax thresholds and stopping the was not able to accommodate, but, as usual in the case petrol tax increases proposed by the Labour Government of Treasury questions, demand massively outstripped have helped the Evans household and, probably, a number supply. 729 27 JANUARY 2015 On-the-Runs Scheme 730

On-the-Runs Scheme relates to a post-1998 murder that occurred in 2003. We have been consistently told that the names of the OTRs Mr Speaker: Before I call the hon. Member for North were critical to securing a 1998 peace agreement, yet Antrim (Ian Paisley) to ask his urgent question, I must this murder post-dates that. Will the Secretary of State remind the House that the inquest into the death of now agree to publish all the names with all the letters? Mr Gareth O’Connor, although stayed, is still sub judice. Will she publish correspondence between Baroness Scotland I have agreed to waive the sub judice resolution in order and the right hon. Member for St Helens South and to allow an issue of national importance to be raised, Whiston (Mr Woodward), whom I informed earlier I but I ask Members in all parts of the House to be very would be mentioning in the House, in terms of the careful in making any reference to the inquest. Members relationship between that correspondence and the murderer should also take care to ensure that their comments do of Mr O’Connor? Will the Secretary of State estimate not impede any future prosecution. Questions about the how many other errors there are in this catalogue of on-the-run scheme and the dates of the crimes concerned errors and accept that the Government and the Hallett would be in order. review conclusion that there is a single error is now without foundation? Will the Secretary of State now consider legislation 12.37 pm formally to annul the value of all these letters, to put Ian Paisley (North Antrim) (DUP) (Urgent Question): meat on the bones of what she has said: that these To ask the Secretary of State for Northern Ireland to letters are without value? Does she agree that Gerry make a statement about recent developments relating Kelly must be formally investigated for how these letters to the on-the-run letters which have permitted a second have been distributed and for whom these letters have fugitive to evade justice. been requested? What compensation is now being considered for the families of those who have suffered The Secretary of State for Northern Ireland (Mrs Theresa as a result of Mr Downey’s activities and as a result of Villiers): On Monday 26 January, the coroner conducting the actions by the murderer of Mr O’Connor, because the inquest into the death of Mr Gareth O’Connor, who these people cannot get justice by any other means and disappeared in May 2003, directed that the inquest must now be entitled to some form of compensation? should be stayed pending an investigation by the Police Service of Northern Ireland into one of the suspects in Mrs Villiers: As is clear from the conclusions of the Mr O’Connor’s murder. The suspect was part of the Hallett report, this letter should not have been issued; it administrative scheme dealing with so-called on-the-runs, was issued in error. For a number of reasons I do not and was in receipt of a letter from the Northern Ireland think it would be appropriate to make public the names Office informing him that he was not wanted for arrest of the individuals who received letters under the scheme, by police forces in the United Kingdom. This case is not the least of which is that doing so could potentially specifically covered on pages 107 and 108 of the Hallett prejudice a future prosecution and make it more difficult report on the on-the-runs scheme, where it is described to secure a conviction. as “error 2”. The fact of the error has therefore been in In relation to the number of errors, Lady Justice the public domain for some time, and the case is not a Hallett identified in her report two errors in addition to new development. the one made in the case of Mr John Downey. She also The Police Service of Northern Ireland is investigating identified a further 36 cases considered by Operation the suspect’s case, and will be considering whether Rapid where she believed there was a risk that the charges can be brought against the individual concerned. wrong test had been applied. She did not conclude that I spoke to the Chief Constable of the PSNI yesterday, there were actually errors in these cases, but she proposed and I understand from him that this is a live police that they should be a priority for further investigation investigation. I also briefed the Justice Minister—in because the risk of error in those cases was higher than brief—on the case. The police will investigate where the in others. evidence leads them. In the circumstances, it would not In relation to legislation, as I briefed the House in be appropriate for me to comment further on the specifics September, it is clear to me that the most effective of the case. means to guard against future collapses of trials and As for the OTR administrative scheme, I set out the future abuse of processes defence is to issue a clear Government’s position fully in my statement to the statement indicating to anyone who received a letter House on 9 September. That followed detailed consideration under the scheme that it is not safe to rely on those of the report by Lady Justice Hallett, which was published letters—that they should not be relied on—and that is in July. I made clear in my statement that the scheme what I did. The option of legislating on these matters was at an end, and that there was no basis for any was carefully considered, but the conclusion is that reliance on letters received by so-called OTRs under the legislation would not be as effective as a clear statement scheme. There is no amnesty, immunity or exemption at the Dispatch Box that the scheme is at an end and from prosecution. Those who received letters under the these letters should not be relied on, not least because of scheme should be in no doubt: if there is considered to a risk that errors have been made in other cases. be evidence or intelligence of their involvement in crime, they will be investigated by the police, and if the evidence Mr Laurence Robertson (Tewkesbury) (Con): I thank is sufficient to warrant prosecution, they will be prosecuted. the Secretary of State for the response to the urgent question. She will be aware that as well as the 36 cases Ian Paisley: I thank the Secretary of State for her identified by Hallett as being perhaps the most worrying, answer. The most disturbing aspect of what she has told we were told by the then assistant chief constable, now the House today is the fact that the O’Connor murder the deputy chief constable, of the PSNI that 95 people 731 On-the-Runs Scheme27 JANUARY 2015 On-the-Runs Scheme 732 who received letters are connected through intelligence scheme? I do not believe she has clarified that in her to almost 300 murders. That is a very serious situation answer to the House today. Finally, on a related matter indeed. Will the Government ensure that the PSNI has that has caused similar concerns, can the Secretary of the full resources to look into all those cases not in the State update the House on investigations into the missing period of as long as nine years that the PSNI estimates information regarding royal prerogatives issued before it may take it, but very quickly so that the Government 1997? can decide whether there is a need for legislation to make it absolutely clear that nobody can rely on these Mrs Villiers: I thank the shadow Secretary of State letters to protect them from prosecution? for his questions. It is useful to remind the House that this scheme never offered an amnesty, and that it was Mrs Villiers: I am grateful to the Chairman of the designed to give individuals who were not wanted an Select Committee on Northern Ireland Affairs for his indication that they were not wanted by police, so the question. It is of course important that the PSNI has letters issued in relation to the Downey case and this appropriate resources for its investigations under Operation one were clearly issued in error. Red Field relating to OTRs, as is the case for all other On the Chairman of the Select Committee’s question matters for which it has responsibility. I welcome the about the connection between the 95 individuals and fact that the agreement on a final budget for the Northern intelligence or indications relating to 300 crimes, these Ireland Executive for 2015-16 allocated an additional are of course matters for the police to investigate, but I £20 million to the PSNI. There is also the Stormont would emphasise that a connection to intelligence or House agreement, which commits the Government to evidence is not necessarily sufficient to justify arrest or contributing £150 million to aid Northern Ireland in its prosecution. treatment of legacy cases. I will look carefully at how that money should be appropriately deployed in the I welcome the shadow Secretary of State’s repetition coming weeks. of the apology he gave on behalf of the previous Government for the errors made in these cases, and I, of On the question of legislation, I do not think I can course, am happy to reiterate the apology I made on really add to my previous answer. Having considered behalf of this Government for the pain and hurt caused this carefully, the most effective means to ensure that we to all families affected by the OTR scheme. I think there do everything we can to remove barriers to justice is a is consensus that the scheme should, at the very least, clear statement indicating that this scheme is at an end have been handled in a much more transparent way. and these letters should not be relied on. That is what I have done. Legislation would not take us further and, I acknowledge that the way the family in this case found I believe, would not be the right option in this instance. out about the connection to the OTR scheme was very problematic. My understanding is that the PSNI has issued an apology for that, and I join in confirming that Mr Ivan Lewis (Bury South) (Lab): As the hon. apology. It is, of course, as I said in response to the Member for North Antrim (Ian Paisley) suggested, the previous question, important that the PSNI is properly revelation yesterday regarding the collapse of the inquest resourced for all its functions, which is why the Government into the murder of Gareth O’Connor has caused further have provided extra security funding of £230 million concern and anxiety in Northern Ireland. Our thoughts and one reason why we have provided funding for help today should be with the O’Connor family. Like so in investigating the past. Even with those additional many of those left behind, they sought justice and truth resources, it is clear that Operation Red Field, the about what happened to Gareth in 2003. They have investigation into all the OTR cases, will take some waited 12 long years for an inquest into the death of years. their son, and the thought of preparing for a week-long inquest would have been harrowing for the family. This Mr Andrew Robathan (South Leicestershire) (Con): development made a highly stressful situation even The Secretary of State is to be congratulated on bringing worse. some transparency to this scheme, via the Hallett inquiry. News of another error from the administrative scheme Such transparency was needed, because the previous for the on-the-runs is devastating, following the catastrophic Government set up the scheme and kept it under the error in the Downey case last year. We have apologised carpet, if not secret from the nation. Does she agree for the Downey error, and do so again for the error in that it was one of the shabbiest deals they did, the O’Connor case. In the same way as this scheme notwithstanding the shadow Secretary of State’s apology? never offered amnesty, it was also never intended to Will she further reassure me, the House, the country cover alleged offences committed after the signing of and the courts that she has taken legal advice on her the Good Friday agreement. Doubly troubling is the statement that nobody can rely on one of these letters delay in the coroner and the family being made aware of any more? the error. The Northern Ireland Office and the police knew about the case—indeed, it was referred to in the Mrs Villiers: I have taken into account a number of Hallett report. factors in deciding how to respond to the Hallett report, I have several questions for the Secretary of State. and they of course include legal advice on the best way Why did the Northern Ireland Office not ensure this to guard against further trial collapses as a result of family were told of the error in the immediate aftermath abuse of process. My right hon. Friend has referred in of the publication of the Hallett report? Secondly, clear terms to his view of the scheme. As I said, I think further to the question from the Chairman of the Select there is agreement that it was deeply unfortunate that Committee, in view of the financial pressures facing the the scheme was not handled in a more transparent way. PSNI, how long does the Secretary of State estimate it That is something for which I have apologised, but I will take to review all the cases covered by the OTR emphasise once again to the House that it was never an 733 On-the-Runs Scheme27 JANUARY 2015 On-the-Runs Scheme 734

[Mrs Villiers] and these 200 letters were a shabby effort to sign up to the peace deal. Will the Secretary of State tell me how amnesty and it was never a scheme to let people wanted long it will take to investigate these 95 people who have for arrest get off without arrest or prosecution; it was, received letters? As we understand it, through intelligence, from the start, intended to be a scheme that merely they are connected to 300 murders, so how long will it indicated to those who were not wanted by the police take to pursue this and ensure that proper justice is that that was the factual position at the time in question. done?

Mr Gregory Campbell (East Londonderry) (DUP): Mrs Villiers: As I have said to the House, it will, The Secretary of State has repeatedly said that individuals unfortunately, take some years to go through all the should not rely on the OTR letters as the police carry OTR cases. That is why we will need to give serious out their duties. Does she agree that the law-abiding consideration as to whether some of the extra funding community in Northern Ireland would see much greater provided as a result of the Stormont House agreement strength in that reassurance whenever they saw people to deal with matters relating to the past can be used in with an OTR letter in their possession standing in the some way to assist the PSNI in this important work. dock and the judge carrying out his duty, despite their having possession of a letter? Mr David Anderson (Blaydon) (Lab): In response to the question that my hon. Friend the Member for Bury Mrs Villiers: It is, of course, important for all crime South (Mr Lewis) asked about why the family and the to be properly investigated in Northern Ireland and for coroner were not involved in July when Hallett produced those guilty of offences to be brought to justice, regardless the report, the Secretary of State said that it was of whether or not they have an OTR letter. “problematic”. That is not good enough. We want to know what has been going on since July. We have been Nigel Mills (Amber Valley) (Con): We all want to see told earlier that the police are now investigating this people with a strong case against them standing trial to case, but what have they been doing since July? And see whether a jury will convict them. Will the Secretary what has the NIO been doing since July? of State revisit her legal advice on her statement that these letters should not have any great effect on a trial, Mrs Villiers: The NIO has been involved in a number to make sure that, in the light of this new decision, it of matters implementing the conclusions of the Hallett remains correct and there is no need for further action report. They include consideration of this case by the by this place? policy board set up as a result of Lady Justice Hallett’s Mrs Villiers: I am certainly happy to do that, and I conclusions. We also implemented a number of her discussed the matter with the Chief Constable yesterday. conclusions through my statement to the House to Just to reiterate, the Northern Ireland Office stands provide clarification of the status of the scheme. That ready to take any further steps that might assist in also covers the recommendations that she made in removing barriers to prosecution. My current view is relation to removing barriers to prosecution. The PSNI that the best way to guard against future problems in has also made progress on the matters in Lady Justice relation to abuse of process is a clear statement that Hallett’s recommendations on how it deals with police these letters should not be relied on, and that is what I databases and the PSNI’s liaison with other police have made and issued to this House in September. services in the United Kingdom.

Naomi Long (Belfast East) (Alliance): The PSNI has Mr Anderson: What about this family? already confirmed that Operation Red Field will take at least three years, so I am glad the Secretary of State is Mrs Villiers: We have to bear in mind that deployment looking directly at how she can assist with the funding. and disclosure of information in relation to these individual This was a Northern Ireland Office scheme, not a cases needs to be handled with the greatest care, because devolved scheme, and so the review should not come any disclosure presents risks in relation to future from the Northern Ireland budget. Is she in a position prosecutions. That is probably one of the reasons why to shed any light on the allegations that have been made the information came out at the time that it did. So we in the media that this individual was issued with a letter need to reflect carefully on these matters. It did come in respect of crimes that predated 1998 but which out in an unfortunate way; I reiterate the apology I included a crime for which they were wanted in 2003, made earlier to the family for how they learned of this and that the tag of “wanted” on their file was then matter, but we all need to take care on the disclosure of changed subsequent to the issue of that letter to “not information about this scheme, because none of us wanted”, which would have made this incredibly difficult would want to be responsible for the collapse of a to detect? future trial.

Mrs Villiers: For the reasons I have given, I am Ms Margaret Ritchie (South Down) (SDLP): I am reluctant to get into the specifics of this case. As I have reflecting and thinking of the O’Connor family from mentioned, the hon. Lady will find some further detail Newry today. Will the Secretary of State confirm, on these matters on page 108 of the Hallett report. In notwithstanding the content of the Hallett report, that particular, there is a real concern that the offence in no further errors will be revealed? question was a post-1998 offence. Mrs Villiers: No, I am afraid that I cannot give that Richard Drax (South Dorset) (Con): Having done confirmation. The Hallett report was clear in its conclusions three operational tours in Northern Ireland, I fully about the management of the scheme: it was not properly appreciate that some areas are murky and remain so, managed and the risk was not properly managed. Anyone 735 On-the-Runs Scheme27 JANUARY 2015 On-the-Runs Scheme 736 reading the Hallett report must expect that further for a shoot-out with terrorists which led to the much- errors will come to light. As I told the House earlier, deserved deaths of those terrorists. Does the Secretary Lady Justice Hallett highlighted 36 further cases as of State not accept that the legal system and the rule of ones where the risk of error is higher than in others. law are being undermined by the fact that while some That is one reason why nobody should be relying on individuals are not being charged for their terrorist these letters; because of the errors in the way the activities, British soldiers are being investigated? scheme was managed, it is likely that other errors will come to light. Mrs Villiers: For some, confidence in the legal system has been shaken by the OTR scheme. But that is a David Simpson (Upper Bann) (DUP): The Secretary reason to be very clear that it was not an amnesty; it of State will know that I have raised the position of the never was. It was a scheme designed to ensure that victims on a number of occasions, and they are at the individuals who were not wanted by the police were told core of the whole issue. Many victims will never see that that was the case as a matter of fact at a particular justice because of these OTR letters. My hon. Friend point in time. It is important that the scheme is described the Member for North Antrim (Ian Paisley) made a in such a way to provide as much reassurance as possible point about printing the names. Is one reason why the to the people who have been understandably distressed Government will not print the names of those with by what has happened. OTR letters and the royal pardons because they were received by some people who have been elected to this Mark Durkan (Foyle) (SDLP): The Secretary of State House and are currently elected to the Assembly? will recall that much of the negotiations in relation to the Stormont House agreement revolved around concerns Mrs Villiers: Let me emphasise that the issue of an to protect the option of the inquest process into the OTR letter does not necessarily lead to the result that it future. Does it not strike her as somewhat disappointing did in the John Downey case. The judgment is clear: the that after parties such as the SDLP and Sinn Fein reason why the trial collapsed was that the letter was argued to defend that very process, an inquest has been incorrect. Mr Downey was wanted, but he was sent a compromised by what has happened in relation to this letter indicating that he was not. The issue of an OTR discredited OTR scheme? Although we will not join the letter does not give immunity from prosecution; it never call for the publication of the names of everyone who did and it will not do so in the future. On the disclosure received letters, we ask the Secretary of State to assure of names, I have said to the Northern Ireland Affairs us that those letters and the details around them will be Committee on many occasions that, by disclosing names, shared with the new bodies that will be dealing with the there is a risk that I would jeopardise future prosecutions, past, which were set up as a result of the Stormont make them more difficult and increase the risk of an House agreement. In that way, no one else can be abuse of process. That is why I will not disclose names surprised by events in the way that they were with this in relation to this scheme or be drawn on categories of twisted and terrible case. individuals who might have been part of it. Mrs Villiers: I agree with the hon. Gentleman that Mr Stephen Hepburn (Jarrow) (Lab): Does the Secretary inquests were a key matter that were considered at great of State agree that we should not have short memories length in the Stormont House agreement talks. Although when it comes to Northern Ireland? The fact is that we could not build a consensus on the way to reform 3,600 people were killed during the civil war. Rather inquests, we did reach a consensus on the fact that the than condemn the previous Government, we should inquest system needs to be reformed because, at the acknowledge the risks that they took to make Northern moment, it is not working effectively enough to give Ireland the fantastic place that it is today. proper answers to families. I am working with the Justice Minister and others in the devolved Executive to Mrs Villiers: I have certainly always tried to be objective do everything we can to take that reform process forward; and measured in how I view the actions of the previous it is vital that we do that. Disclosure was also debated at Government on these matters. In relation to OTRs length, and I can assure the House that the Government generally, there certainly are some differences between are committed to the fullest disclosure in relation to the the parties, not least of which is the opposition of the new bodies to be set up under the Stormont House Conservatives and the Liberal Democrats to the Northern agreement. But when it comes to onward disclosure, we Ireland (Offences) Bill. In relation to this scheme and will of course need to put in place national security the way in which Northern Ireland matters were handled measures, which are broadly equivalent to those that generally by the previous Government, I do not doubt apply in respect of current institutions. In conclusion, I their sincerity. They were motivated, I am sure, by a wish to pass on my condolences to the O’Connor family, wish to see the process move forward and to secure who must have been distressed and upset by recent peace and stability for Northern Ireland. The key problem events. that was revealed by the Hallett report was that, unfortunately, the scheme was not managed in the way Sammy Wilson (East Antrim) (DUP): I am sure that that it should have been, and that gave rise to risks. the Secretary of State will understand why the people of Errors were made, which, unfortunately, could jeopardise Northern Ireland are cynical about her oft-repeated future prosecutions. mantra that no one can rely on these letters, when we have already had two people relying on them, and she Jim Shannon (Strangford) (DUP): At a time when yet has indicated today that there could possibly be another another OTR is issued a covert letter to escape jail, 36. Will she tell the House who was responsible for the British soldiers—funded by legal aid—are being investigated error, and what the nature of the error was? In that way, 737 On-the-Runs Scheme 27 JANUARY 2015 738

[Sammy Wilson] Voter Registration we can at least determine whether this was a deliberate Motion for leave to bring in a Bill (Standing Order action to ensure that a killer was not brought to justice No. 23) or a genuine mistake. 1.7 pm Mrs Villiers: The Hallett report indicates that the error may well have originated within the PSNI, but we Chris Ruane (Vale of Clwyd) (Lab): I beg to move, should not rush to judgment on that. As I have said in That leave be given to bring in a Bill to make provision for the relation to the John Downey case, wherever the error registration of voters by registration officers; and for connected arose, the problem was that the scheme was not designed purposes. to guard against errors or to pick up on them when they Mr Speaker, as you and many Members of this were made. The overall responsibility for the errors still House may know, I have been raising the issue of voter rests at ministerial level. There is a consensus on both registration since 2001. In that time, we have seen massive sides of the House that the Ministers in power at the and far-reaching changes to the way in which we register time need to take responsibility for what happened, to vote in order to empower citizens with the ability and even if, at the end of the process, the error may have confidence to cast their vote come election time. What I been made by the PSNI. It is a matter on which we propose in this Bill will work towards increasing the should not rush to judgment. The hon. Gentleman may number of people registered to vote, particularly those wish to look at page 108 of the Hallett report to assess who are least likely to be registered to vote, which how the error occurred. includes young people. Since 2001, we have seen the number of non-registered voters increase. I do not wish to shy away from the arguments about why people are not registered to vote, but first let me say that, according to revised figures from the Electoral Commission last year, some 7.5 million people were missing off the electoral register in 2010. But even in the past 18 months, England, Wales and Scotland have collectively gone through the biggest change in the way people register to vote since the Great Reform Act 1832. The move to individual electoral registration has seen 5 million people fail to transfer over from the household register to the new individual electoral registers, and 1 million people have fallen off the electoral register completely. I have been working with the fantastic group, Bite The Ballot, which is a neutral cross-party youth democracy group, to bring forward this Bill to tackle the under- registration of young people in England Wales and Scotland, and to make registration easier with an “opt-in” option on Government forms. The first part of this Bill seeks to emulate what is now practice in Northern Ireland. Following the transition to individual voter registration in Northern Ireland in 2002, there was a marked decrease in the number of people registered to vote. In 2008, to tackle that problem, the chief electoral officer for Northern Ireland was given the power to request information from post-primary schools to pre-populate electoral registration forms for those eligible attainers. The schools initiative, according to the chief electoral officer for Northern Ireland, is the most productive part of his community engagement programme. His office visits 182 schools between mid-September and early November each and every year, and has successfully registered 50% of the total eligible youth population via the scheme alone. Bite The Ballot, which has five years’ experience in inspiring attainers and young people to register, tells us that face-to-face engagement is the best way of ensuring that young people register, so I say, why not follow best practice in Northern Ireland, and follow suit in the rest of the United Kingdom? By visiting schools and colleges, and running voter engagement sessions, our youngest citizens can be inspired to begin their lifelong democratic journeys as active, engaged citizens. 739 Voter Registration 27 JANUARY 2015 740

The Bill also seeks to open up the avenues to registration Corporation Tax (Northern Ireland) Bill with a simple opt-in tick box on all Government forms. [Relevant documents: First Report from the Northern The measure is similar to the USA’s “Motor Voter” Act Ireland Affairs Committee, Session 2010-12, Corporation of 1993, which has enabled a massive 32% of American Tax in Northern Ireland, HC 558, and the Government voters to register through interactions with the state. It response, HC 1767.] would empower citizens to register to vote when filling in, for example, applications for a renewed driver’s Second Reading licence, a passport and benefits, or when enrolling with a GP. The system I am advocating would only ever 1.14 pm operate on an opt-in basis to protect the individual’s private data and identity. Having moved to a system of The Secretary of State for Northern Ireland (Mrs Theresa online registration, that type of data sharing is surely Villiers): I beg to move, That the Bill be now read a not beyond the skill of the Government Digital Service. Second time. The Government have just announced £10 million to The Bill provides for the devolution of a rate-setting aid local authorities and national organisations in the tax power to the Northern Ireland Assembly and would task of registering people to vote. That is welcome, and allow Northern Ireland to set its own rates of corporation must be spent on activities that work and are known to tax. Just under five years ago, the Conservative party work. School and college visits, as Bite The Ballot went into the general election with a commitment in proves, work. Enabling people to register when they our Northern Ireland manifesto to produce a Government interact with Government services, as the Americans paper examining the mechanism for changing the have proved, works. My Bill seeks to make the UK’s corporation tax rate in Northern Ireland. The pledge system of voter registration as easy, engaging and accessible subsequently formed part of the coalition’s programme as possible. I believe that the two proposals I make in for government. It was part of our strategy for rebalancing the Bill go some way towards achieving that. the Northern Ireland economy from over-dependence In conclusion, may I pay tribute to you, Mr Speaker, on the public sector by revitalising private enterprise for your support for the issue of registration and turnout, and attracting new investment. including your support for lighting up the Victoria The commitments in the Conservative manifesto and tower with a big X on voter registration day next week, the programme for government were fulfilled a little and your support for online voting by 2020? under four years ago, when the Government launched a Question put and agreed to. consultation on rebalancing the Northern Ireland economy and on the potential for devolving corporation tax Ordered, powers to the Executive and the Assembly. The response That Chris Ruane, Mr Russell Brown, Nic Dakin, to that consultation was near-unanimous support from Mr Clive Betts, Mr Kevan Jones, Mr George Howarth, Northern Ireland’s political leaders and the business Mr Mark Williams, Mr Elfyn Llwyd, Jim Shannon, community for the devolution of corporation tax. We Jessica Morden and Mark Durkan present the Bill. have worked tirelessly since then on the technical details Chris Ruane accordingly presented the Bill. needed to make devolution possible. Bill read the First time; to be read a Second time on My predecessor, my right hon. Friend the Member Friday 6 March 2015 and to be printed (Bill 163). for North Shropshire (Mr Paterson), whom I welcome to the Chamber today, established a joint ministerial working group with the Treasury and Executive Ministers in late 2011 to work through the main questions of contention. In the economic pact that we signed with the Northern Ireland Executive in June 2013 on the eve of the G8 summit, we committed to further progress and a final decision in principle on devolution no later than the autumn statement of 2014. In that autumn statement my right hon. Friend the Chancellor said that “we recognise the strongly held arguments for devolving corporation tax-setting powers to Northern Ireland. The Treasury believes it can be implemented provided that the Northern Ireland Executive can show that they are able to manage the financial implications. The current talks will see whether that is the case. If it is, the Government will introduce legislation in this Parliament.”—[Official Report, 3 December 2014; Vol. 589, c. 314.] As I informed the House on 7 January, following extensive negotiations, those cross-party talks reached a successful conclusion on 23 December with the Stormont House agreement. That agreement, which also covered crucial legacy issues such as flags, parading and the past, sets a path for the Executive to put their finances on a sustainable footing for the future. That has paved the way for us to go beyond the commitments we made in our manifesto in 2010 and to introduce the Bill to devolve corporation tax rate- setting powers to Northern Ireland. Unlike the Opposition, the Government believe in lower taxes for business because we understand that businesses thrive 741 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 742 Ireland) Bill Ireland) Bill [Mrs Theresa Villiers] As I was saying in response to the intervention, Northern Ireland has a unique position within our when they are free to get on with what they do best, United Kingdom. The land border that it shares with a unencumbered by burdensome regulations and excessive very low corporation tax environment in the Republic taxes. of Ireland puts it at a significant competitive disadvantage That is why since 2010, the Government have cut the when competing for inward investment into the island main rate of corporation tax from the 28% we inherited of Ireland. Northern Ireland is also more dependent on from Labour to 21% today. It will fall still further to the public sector than most other parts of the UK. 20% in April, giving the UK the joint lowest rate of Estimates vary as to the extent of this dependence, but corporation tax in the G20—a competitive edge that it is generally accepted that around 30% work in the Labour wants to deny British business, as the Shadow public sector, compared with about 20% in the rest of Chancellor is committed to reversing that reduction. the UK. Some surveys put the dependence on the public The small profits rate has also been cut to 20%. Those sector at even higher levels. tax cuts are a central part of the Government’s successful Economic prosperity as measured by gross value long-term economic plan to make the UK as a whole added per capita is still some 20% below the UK average more competitive, supporting business investment and and has been so for a number of decades. Of course, job creation— something that would be jeopardised by Northern Ireland faces a range of difficult issues flowing a return to the high-tax, high-spending, high- borrowing from the legacy of the troubles. All these challenges policies of the previous Government. need to be overcome if Northern Ireland is to compete successfully on the national and global stage for jobs Jonathan Edwards (Carmarthen East and Dinefwr) and for investment. None of this is to say that Northern (PC): The Secretary of State will be aware that the UK Ireland does not have some amazing entrepreneurs and Government-sponsored Silk commission, which was set some hugely successful businesses that are truly world- up in Wales a number of years ago, reported that if beating. Under this Government unemployment in corporation tax were devolved to Northern Ireland, Northern Ireland has fallen in every month for the past consideration should be given to devolving it to Wales two years and the record of foreign direct investment is and the other devolved Parliaments. Can she enlighten strong, not least because of the efforts of the Northern the House on the Treasury’s thinking, now that a decision Ireland Executive. has been made for Northern Ireland, on the other devolved Parliaments? But for all the great businesses we have in Northern Ireland, the blunt truth is that there are just not enough Mrs Villiers: Careful consideration has been given to of them, so the Government are convinced that to the devolution settlements across the United Kingdom. boost the private sector and enable Northern Ireland to The Government have made it clear that the fact that perform even more strongly in attracting inward investment, Northern Ireland shares a land border with a low we need to go further. We need to provide stronger corporation-tax jurisdiction means that the case for incentives for Northern Ireland firms to invest in growth. reform is strong for Northern Ireland, but it is not made The Bill before the House today will give the Assembly out in relation to the rest of the United Kingdom. a powerful tool to help them do this, enabling Northern Northern Ireland is different from the rest of the country, Ireland to take a decisive step forward towards rebalancing because the history of the troubles has left its economy its economy. with a high dependence on the public sector. That is The Bill provides a further demonstration of this another reason why Northern Ireland is different, and Government’s general commitment to devolution, which corporation tax devolution could provide a boost to we have shown in many ways, including with the Scotland growing the private sector in Northern Ireland. While Act 2012. We are making progress on implementing the there is a clear case for doing this in Northern Ireland it Smith commission proposals for further powers for would not be the right move for other parts of the Scotland over tax and welfare to be transferred to the United Kingdom. Scottish Parliament. Draft legislative clauses were published on 22 January. Ian Paisley (North Antrim) (DUP): Has any assessment been carried out about the level at which Northern Ireland should set its new rate of corporation tax, given Nigel Mills (Amber Valley) (Con): Is my right hon. what the Minister has just alluded to—our competitiveness Friend aware of the data which suggest that almost with the Republic of Ireland, which has a rate of twice as much will be raised from companies moving 12.5%? Has any research been carried out by the Treasury from Great Britain to Northern Ireland than from on that? those moving into Northern Ireland from overseas? If that is the case, does she think it fair that Members from Mrs Villiers: The principle of the Bill is that that Northern Ireland may vote on the UK-wide corporation becomes a matter for the Northern Ireland Assembly tax rate as well as their own, when they are effectively and the Executive. It is for them to make the choice and competing with our constituents? decide whether to go ahead with implementation of a reduced rate. Obviously, there is a great deal of support Mrs Villiers: I emphasise that the new system is for bringing down the rate of corporation tax in Northern designed to deal with artificial avoidance. A number of Ireland to the same level as in the Republic of Ireland. I measures are in place to prevent abuse of the new know that the hon. Gentleman’s party colleague, Minister system; I will come to those in a moment. In relation to Foster, would like to see it reduced still further. Those voting on taxation matters, my hon. Friend will be matters are not provided for in the Bill because the Bill aware that ensuring that the devolution settlement is vests that choice with the Northern Ireland Executive fair to the English as well as to the rest of the United once commencement has taken place. Kingdom is an important matter under consideration 743 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 744 Ireland) Bill Ireland) Bill by the House and by the political parties. I am sure it Efforts are made to minimise the scope for artificial will be extremely important that we get the right outcome tax avoidance, as I said in response to interventions. to ensure that the devolution settlement is fair across Existing anti-avoidance measures will continue to apply, the board, but it is also crucial that we have a coherent including the UK targeted anti-avoidance rules and the and unified tax system. general anti-abuse rule, and further protections may be introduced before implementation. The overall structure of the devolved regime has been designed to limit the Naomi Long (Belfast East) (Alliance): I take on board opportunities for avoidance, as I told the House in the issue raised by the hon. Member for Amber Valley response to interventions. (Nigel Mills). Does the right hon. Lady agree with me, though, that Northern Ireland would want to avoid A new Northern Ireland rate would cover trading corporation tax devolution and any subsequent reduction profits, such as those associated with manufacturing by the Assembly leading merely to brass-plating of and providing services. Other profits—non-trading profits, companies in Northern Ireland? For us to benefit from such as those associated with property income—that do the economic out-turn of investment, we need people not generate jobs or economic growth in the same way who are involved in creating employment and raising will continue to be subject to the UK-wide rate. Similarly, skills levels as well. activities such as lending, leasing, and reinsurance offer significant scope for profit shifting without the benefits Mrs Villiers: As the hon. Lady will hear when I get of bringing substantial new jobs, so these, too, will be further into my remarks, the approach in the Bill is to excluded from the Northern Ireland provisions. focus on genuine economic activity which generates To promote continued success in Northern Ireland in jobs. We want to minimise the risks of matters such as attracting back-office functions, companies with excluded brass-plating and artificial avoidance schemes, so the trades and activities may make a one-off election for the Bill maintains the coherence of the corporation tax back-office functions of those excluded trades or activities system as a whole and also provides an incentive to to qualify for the Northern Ireland Office regime. This bring genuine economic activity to Northern Ireland is an example of the UK Government’s responding and assists in that rebalancing process. specifically to areas of activity where Northern Ireland The Wales Act 2014 came into effect on 6 January, has demonstrated its great strength in attracting inward providing the legislative framework to support the investment. It will not apply to the oil and gas or implementation of recommendations made in the first long-term insurance sectors, which have their own separate report of the Silk commission. As my right hon. Friend regimes and will not be included in the new devolved the Secretary of State for Wales has told the House, he arrangements. Allowances and credits remain reserved continues to take forward discussions on the next steps to Westminster to help to maintain a common tax base for devolution in Wales. The debate continues on the across the United Kingdom and to prevent unnecessary most effective way to ensure that devolution operates new complexity from being added to the tax system. in a fair way with regard to England, as one of the component nations of the United Kingdom. However, a number of rules will be amended to reflect the new circumstances. For example, if there is a Turning back to Northern Ireland matters, the devolved lower rate of tax in Northern Ireland, then research and system for corporation tax rates set out in the Bill development tax credits, capital allowances and creative reflects the following overarching Government goals: reliefs for the film, TV and computer game industries we want to attract genuine economic activity to Northern will be adjusted to ensure that they continue to be Ireland, minimise additional administrative costs for broadly equivalent in value to those in Great Britain. business, keep the costs of a reduced rate for the Executive That means that Northern Ireland can continue to be at a proportionate level, and ensure as much consistency just as attractive a location for successful projects such as possible between the new NI provisions and the main as “Game of Thrones” and other film and television UK corporation tax regime—and of course we need to productions. comply with legal requirements. The legislation does not cut off Northern Ireland The devolved tax regime will also operate differently from the rest of the UK tax system or establish a for larger and small businesses. Larger businesses will separate and distinct corporation tax regime for Northern need to divide their profits between Northern Ireland Ireland. Control over what is taxed remains a matter for and Great Britain, as they do now between the UK and the UK Government and this House. The Bill devolves other countries. This effectively means that they will only the power to vary the rate, so Northern Ireland’s treat their Northern Ireland trading activity as a separate trading regime remains firmly and clearly within the business from their activity in the rest of the UK and overall UK corporation tax system. The Bill will insert allocate the appropriate amount of profit to Northern new part 8B into the Corporation Tax Act 2010 and Ireland. We recognise, however, that this would be amend the Capital Allowances Act 2001. These changes burdensome for smaller businesses. Indeed, the issue of would give the Assembly the power to set a rate of potential administrative burdens on small business was corporation tax for certain trading profits, based on a one of the key concerns brought out by the 2011 proposal from the Northern Ireland Executive. That consultation, and the matter was raised by Northern would be a decision for Northern Ireland, independent Ireland Executive Ministers on a number of occasions of the UK Government or this House. It will give the at the ministerial working group. Therefore, if at least Assembly and the Executive a powerful economic lever 75% of such a business’s staff time and staff costs relate to drive potential growth and enable it to be exercised to work in Northern Ireland, then all their trading on the basis of the wishes of Northern Ireland voters, profits will be chargeable at the Northern Ireland rate. taxpayers and businesses. If not, they will be chargeable at the UK corporation 745 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 746 Ireland) Bill Ireland) Bill [Mrs Villiers] Members of the business community have told me on very many occasions that they are convinced that this is tax main rate. This simple in/out test will mean that the the right measure for Northern Ireland. They believe majority of small and medium-sized enterprises are that it will boost the indigenous private sector, both spared the burden and cost of apportioning profits. large and small, as well as attract foreign direct investment, As I made clear in my previous statement to the and will provide an effective means of rebalancing an House, the Bill’s progress through Parliament is dependent economy which for decades has been over-dependent on the Executive parties delivering on their commitments on the public sector. They have therefore strongly welcomed in the Stormont House agreement. Those include agreeing the Government’s introduction of this Bill. I am very and delivering a 2015-16 budget that works, legislating grateful for the support for this measure shown within for changes to the welfare system, and taking the steps the Northern Ireland business community. required to put the Executive’s finances on a stable The Government will use our very best endeavours to footing for the long term. I warmly welcome the progress get the Bill on to the statute book before the Dissolution that is under way on those three crucially important of Parliament. This legislation has strong support in matters, with, for example, the recent agreement on Northern Ireland. Moreover, the whole of the UK will a budget for 2015-16. Given the practicalities of benefit if corporation tax devolution can help to drive implementation, the earliest point at which reduced economic growth and rebalancing, and help to deliver a rates could come into effect is April 2017. The Bill prosperous and stable Northern Ireland. contains a commencement clause meaning that these devolved powers will be switched on for the planned start date in 2017 only if the Executive can demonstrate Mr Gregory Campbell (East Londonderry) (DUP): that they have succeeded in the third goal of achieving The Secretary of State alludes to the need to get the sustainable public finances. This is in line with the legislation on to the statute book, and I hope that approach used for other tax devolution measures in progress is now being made towards that. Does she other parts of the UK. agree that beyond that stage, the next Government, and The Government have been very clear that devolving the next Prime Minister and Secretary of State, will corporation tax rates is not an end in itself. Certainly, have a central role in helping the Northern Ireland on its own, it is clearly not the answer to all the Executive in terms of overseas trips and inward investment economic challenges facing Northern Ireland. If the to ensure that maximum advantage is taken of the full potential benefit of corporation tax devolution is to opportunity to get the most benefit out of corporation be realised, then a number of areas of economic reform tax reduction? need to be addressed, such as planning, skills and infrastructure. However, given the land border that Northern Ireland shares with a lower-tax jurisdiction, it Mrs Villiers: I agree that if the benefits of a reduced is difficult to think of any one policy which, on its own, corporation tax rate for Northern Ireland are to be may potentially have such a transformational impact on realised, that needs to be accompanied by a determined the Northern Ireland economy— effort to sell the benefits of Northern Ireland to the world. I am absolutely 100% certain that if my right Ms Margaret Ritchie (South Down) (SDLP) rose— hon. Friend the Member for Witney (Mr Cameron) is Prime Minister in the next Parliament, that is exactly Mrs Villiers: And, I believe, on the hon. Lady’s what the UK Government will be doing, because he is constituency. completely committed to Northern Ireland and believes that it is a wonderful place. That is why he takes every Ms Ritchie: Does the Secretary of State agree that, as opportunity to tell the rest of the world what a fabulous regards potential visits and potential locations for foreign place it is, and why he brought the G8 summit to direct investment, there is a need to address the historical County Fermanagh. legacy of under-investment and regional imbalance if the issue of corporation tax is to have any meaningful Turning to the mechanics of passing the Bill, any benefit in pump-priming the local economy? delay would be a great mistake. I therefore very much welcome the support that the Bill has received from Mrs Villiers: I know that the Northern Ireland Executive hon. Members from Northern Ireland, who have rightly are committed to doing all they can to ensure that the highlighted the importance of corporation tax devolution effects of boosting the private sector and enhancing to their constituents and the potential benefits it could prosperity are felt throughout Northern Ireland. All deliver. I welcome, too, the recent U-turn by the Leader Administrations grapple with the difficult problem of of the Opposition, who last week confirmed that Labour how to ensure that economic prosperity is appropriately will facilitate the passage of the Bill. I am most grateful spread. I believe that corporation tax devolution—coupled for that. That recognises the firm and consistent support with a focus on other areas of economic reform such as for the change from the five parties in the Northern skills, planning reform and investment in infrastructure—is Ireland Executive, as well as the fact that this new piece a crucial way to enhance the private sector and boost of devolution has a key part to play in the Stormont prosperity throughout Northern Ireland. I am sure that House agreement. the hon. Lady will be aware of some of the many difficulties that have been experienced in border areas over the years. People living in border areas stand to Mr Ivan Lewis (Bury South) (Lab): Will the Secretary benefit as much as everyone else in Northern Ireland of State explain at what point the Opposition ever said from a potentially significant and welcome impact in they would oppose the devolution of corporation tax to achieving the rebalancing of the Northern Ireland economy Northern Ireland in this Parliament? Can she give a that we all want to see. date and a time when the Opposition said that? 747 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 748 Ireland) Bill Ireland) Bill Mrs Villiers: I seem to remember that when I reported In the past few months, there have been major job to the House on the Stormont House agreement just a investments supported by Invest Northern Ireland, including few weeks ago, the shadow Secretary of State was in more than 800 posts at PricewaterhouseCoopers in distinctly lukewarm in his approach to corporation tax Belfast, and in almost 500 posts at First Derivatives in change, and called for more consultation despite the Newry. The services sector has recouped almost all of fact that we had a very extensive consultation back in the jobs lost during the recession. In recent years, there 2011. If he is now an enthusiast for corporation tax has been a significant increase in direct foreign investment devolution, I welcome that and thank him for coming to Northern Ireland. UK Trade & Investment figures on board for a project which, of course, the Conservatives for 2013-14 showed an increase of 32% in inward investment have been championing for many years. It is great that projects compared with the previous year. Northern Labour has seen the light at last. Ireland outperformed all other nations in that regard: In closing, I want to pay the fullest possible tribute to England, including London, achieved 11% growth; Scotland my right hon. Friend the Member for North Shropshire, achieved 10% growth; and Wales achieved 18% growth. who picked this issue up off the floor where it had been In 2014 alone, 50 new foreign direct investment projects left by the right hon. Member for Kirkcaldy and were secured in Northern Ireland. That significant progress Cowdenbeath (Mr Brown), championed it, and put it and international interest have been possible because of firmly back on the political agenda here in Westminster the leadership of the First Minister and Deputy First and in Northern Ireland. It is in no small part due to his Minister, supported by the Northern Ireland Executive. determined and dogged support that this ground-breaking It must be said, however, that that investment is from Bill for Northern Ireland is before the House today. a low base, and has inevitably been constrained by the Taking the Bill through Parliament shows that the consequences of the global banking crisis. We must UK Government are delivering on the commitments acknowledge that the Northern Ireland economy still in the Conservative party made to Northern Ireland at the fact faces real difficulties in relation to its economy last general election, and it demonstrates real progress overall, which is not working for the many or reaching on implementing our side of the Stormont House kitchen tables in Northern Ireland. agreement. The agreement addresses issues that threatened Northern Ireland’s recovery continues to lag behind the credibility, the stability and even the continued that in the rest of the UK. Last week’s labour market existence of devolution, and if it is fully and faithfully statistics show that unemployment is still gradually implemented, it will help us to build a Northern Ireland falling—we welcome the fact that it currently stands at where politics works, the economy grows and society is 5.8%, a six-year low—but youth unemployment in Northern stronger and more united. The agreement enables Northern Ireland is stubbornly high at 19.2%, which is above the Ireland to take a further step along the road towards a UK average of 15.4%, and over half of unemployed more stable, prosperous and confident future, and I people have been out of work for a year or more. warmly commend the Bill to the House. Northern Ireland has the highest inactivity rate of all UK regions. The earnings of a typical full-time employee in Northern Ireland fell by 1.4% in 2014, according to 1.40 pm the official annual survey of hours and earnings. There has been a very disappointing loss of momentum in the Mr Ivan Lewis (Bury South) (Lab): On his visit to private sector. For example, Ulster Bank’s purchasing Belfast last week, my right hon. Friend the Leader of managers index for January shows that business recovery the Opposition spoke of the inextricable link between in Northern Ireland has slowed, and output has dropped peace and stability and economic and social progress in in the main sectors of manufacturing, construction, Northern Ireland. He was right to do so: without stability, retail and services. the business confidence necessary for investment and growth will inevitably be undermined; without economic The Bill recognises many of the unique challenges and social progress, stability will be fragile as people that Northern Ireland faces. It shares a land border see little or no evidence of a peace dividend. The with the Republic of Ireland, where corporation tax is interdependency between the economy and the peace 8.5 percentage points lower than in the UK, and its process should be at the forefront of all our minds as we society is emerging from conflict, with all the challenges debate the Bill. that that presents. The public sector employs nearly one in three workers in Northern Ireland compared with For Northern Ireland to move forward there is an fewer than one in five in the UK as a whole. It is urgent need for private sector jobs and growth as part of therefore right that rebalancing the economy is a priority a long-term rebalancing of the economy. Both further for the Northern Ireland Executive. increases in global inward investment and support for new local start-up businesses and small businesses with It is clear from the Stormont House agreement and the potential to scale up will be crucial to progress in the commencement clause in the Bill that the final Northern Ireland in the coming years. transfer of the powers will not take place until April 2017 at the earliest. That ensures that there is adequate We should use every opportunity to celebrate the time for the proper impact assessment and consultation remarkable progress that Northern Ireland has made that the Opposition feel is essential in the interests not since the end of the troubles. There are no greater only of Northern Ireland, but of the rest of the United reminders of that than recent achievements such as Kingdom. Derry/Londonderry’s success as the city of culture, and Belfast’s holding the world police and fire games and For all those reasons, as well as out of respect for the turning pink for the Giro d’Italia last year. Those existing political consensus in Northern Ireland on this amazing events boosted the economy and brought issue, we will not seek to divide the House. Moreover, communities together. I want to make it very clear that, assuming we have 749 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 750 Ireland) Bill Ireland) Bill [Mr Ivan Lewis] changer or game over?” found that the devolution of corporation tax would be “no magic bullet” for Northern reasonable time for an acceptable level of scrutiny, we Ireland. It concluded that there was will work with the Government to facilitate the passage “no evidence that the Republic of Ireland’s low Corporation Tax, of the Bill in this Parliament. by itself, attracted the high levels of foreign direct investment…that As the Secretary of State has set out, the Bill will give fuelled the Celtic Tiger economy.” the Northern Ireland Assembly the power to set the When the Secretary of State did a lap of honour and main rate of corporation tax in respect of certain a hastily arranged photo opportunity in Lisburn earlier profits, while control over the corporation tax base, this month, she failed to address a number of issues—she including reliefs and allowances, will remain with the has repeated that failure today—that her successor and UK Parliament. The devolved rate will apply to all the those on the Treasury Bench will not be able to duck. trading profits of micro and small and medium-sized Any responsible Westminster Government and Northern enterprises if the majority of employee time and costs Ireland Executive will have to address these issues before fall in Northern Ireland. The devolved rate will apply to 2017. all the profits of large companies attributable to a First, the current Government’s commitment to the Northern Ireland trading presence. Certain trades and final transfer of powers is highly conditional. The agreement activities will be excluded from the scope of the rate, states: including lending and investment activities. Her Majesty’s “The powers will only be commenced from April 2017, subject Revenue and Customs estimates that the changes will to the Executive demonstrating that its finances are on a sustainable affect 34,000 companies of all sizes in Northern Ireland, footing for the long term including successfully implementing including more than 26,000 SMEs, with the exact impact measures in this agreement and subsequent reform measures.” depending on the conditions. Sometimes, the Secretary of State does not emphasis The Opposition accept that the devolution of corporation that high level of conditionality. tax and its subsequent reduction could play an important Secondly, should Northern Ireland reduce its corporation part in boosting private sector investment in Northern tax rate to that of the Republic of Ireland, it would lose Ireland, alongside a range of other measures. at least £300 million from its block grant. Budgets would have to be cut. In the awful event of the Tories Jonathan Edwards: I am happy that the Labour party being re-elected, that £300 million cut would increase is supporting the UK Government’s proposal to devolve substantially as a result of the promised return to 1930s corporation taxes to Northern Ireland. The Labour levels of public expenditure. party is also in favour of fully devolving income tax to Thirdly, slashing and burning the state, rather than Scotland, yet it opposes the devolution of any major having a long-term plan to rebalance the economy, is taxation powers to Wales. Why is Wales being offered opposed by all Northern Ireland’s parties. Fourthly, an inferior deal? severe cuts to school, further education, higher education and adult skills budgets, as well as reduced funding for Mr Lewis: We believe that Northern Ireland has infrastructure, would moderate the potential benefits of special circumstances—a land border with the Republic reduced corporation tax. It is investment in skills and of Ireland, and a society emerging from conflict—that infrastructure that will make the biggest difference to are incredibly important in this context. private sector jobs and growth, alongside corporation tax devolution. Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) Fifthly, the Secretary of State has failed to acknowledge (SNP): I welcome this measure for Northern Ireland, the plain truth that significant reductions in corporation and I think that it will inevitably come to Scotland when tax must be used to stimulate investment, not to inflate we have a large Scottish National party group in excess profits or pay at the top. As my right hon. Friend Westminster. The argument about the land border is a the Leader of the Opposition said on his visit last week, strange one, because there are many places on land Northern Ireland faces no greater challenge than inequality. borders that have different rates of corporation tax. My party is seeking to address that through the independent Logically, that could lead to a situation in which corporation Heenan-Anderson commission, which is attracting much tax was set island-wide in Dublin. I would not like to see support and interest in Northern Ireland. such a situation, but that is the logic of the argument The cost of living crisis has hit Northern Ireland’s about the land border. families hard. Northern Ireland consistently records the lowest rates of private sector pay in the UK. One in six Mr Lewis: The hon. Gentleman’s party has long workers are classed as low paid and a quarter earn less advocated the devolution of corporation taxes in Scotland, than the living wage. Wages have fallen by £1,683 a year but the fact is that it did not push very assertively for since 2010. One in five children in Northern Ireland live that during the Smith commission negotiations. Equally, in poverty. Northern Ireland continues to have the Scotland has enough to do getting on with the very highest claimant count of any region in the UK—at considerable devolution package on which there is 5.7%, it is double the UK rate. tremendous consensus. Unless this legislation is carefully managed to ensure The point I want to make to both hon. Gentlemen is that it does not benefit only those at the top, it will not that the idea that the devolution of corporation tax only fail to enhance growth, but perpetuate the horrendous is a panacea is a fundamental mistake. I will develop inequality that is leaving too many people in Northern that argument further; astonishingly, it was noticeably Ireland at the margins of the economy and of their absent from the Secretary of State’s speech. The communities. It will also be important, as the hon. PricewaterhouseCoopers report “Corporation Tax—Game Member for South Down (Ms Ritchie) said, to ensure 751 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 752 Ireland) Bill Ireland) Bill that the whole of Northern Ireland benefits from the was dependent on public spending for 77.6% of its legislation—not just Belfast, but Derry/Londonderry, GDP. We all know the horrible historical reasons for Strabane, Portadown and Newry. that, but it was clearly unsustainable. Finally, it would be the ultimate folly if in 2017, as On my weekly visits, I found world-class businesses Northern Ireland was preparing to align its levels and very skilled people. There were businesses that had of corporation tax with the Republic of Ireland, the come in, often tempted by the generous grant regimes, UK was exiting the European Union. No part of that were very pleased with the quality of the work the UK would suffer more than Northern Ireland force and the education of the staff. However, time and from the inevitable impact on economic co-operation again, we found cases of large investment opportunities between the north and the south. being missed because of corporation tax. The hon. We will enable the passage of the Bill in a spirit of Member for East Londonderry (Mr Campbell) is not transparency about the potential gains, but with an here, but I remember a very clear case where a big awareness of the risks. Not only is that the responsible investment could have gone to East Londonderry, but it stance for a party that seeks to govern the country in went to Letterkenny. With the deepest respect for four months’ time; it is right because we have a duty to Letterkenny, it is quite a small provincial town. be honest with the people of Northern Ireland about David Simpson (Upper Bann) (DUP): I pay tribute to the difficult choices that lie ahead. The Executive are the right hon. Gentleman for all the work he did in right to make private sector jobs and growth top priorities Northern Ireland as Secretary of State and before that. as they strive to build a better shared future, but they He had several meetings in my constituency with companies. are also right to reject the slash-and-burn approach to I want to put it on the record that he was a great the state that is being pursued with such relish by this enthusiast for this proposal, which has eventually arrived. unfair and incompetent Tory-led Government. An incoming Labour Government will not only balance Mr Paterson: I thank the hon. Gentleman for his the books in a responsible way, but work with the kind comments. Northern Ireland Executive to pursue an active industrial I would like to stress that this has ultimately been a strategy that will boost private sector jobs and growth, team effort. I will list the people who have been involved. while tackling the chronic worklessness and poverty of This proposal came from a black moment. I have cited those at the margins of the economy and society in the examples that I saw on the ground in Northern Northern Ireland. We will transform the economic pact Ireland. At the time, a parallel process was going on. between Westminster and the Executive by setting goals The last Government had asked Sir David Varney to to expand the creative industries and other sectors that conduct a report on the benefits of introducing a lower build on Northern Ireland’s strengths. A shared aim rate of corporation tax for Northern Ireland. In parallel, should be to encourage young people who go away to significant major figures in the business community study and travel to return home to Northern Ireland were involved. The sadly late Sir George Quigley, to when they are ready to settle down. That will be possible whom we should all pay tribute, had made significant only through the creation of well-paid, high-skilled representations. The Northern Ireland Affairs Committee jobs. had been involved, as had the Institute of Chartered The Bill opens up new opportunities for Northern Accountants in Ireland, led by Eamonn Donaghy. Ireland, but it will require political leaders to make Varney came up with a lukewarm response. He said, difficult choices and to ensure that the potential gains quite rightly, that corporation tax was not the only benefit the many and not the few. As I have said, the answer and that a skilled work force was also needed, as devolution of corporation tax is not a panacea, but if had been successful in the Republic. However, he missed handled properly, it could be part of a new economy the big picture that, time and again, major investment that works for working people and leaves far fewer projects went to the Republic because of a lower rate of people behind. Ultimately, that is how the Bill will be tax. The late Brian Lenihan, who was the Irish Finance judged. Minister when I was shadow Secretary of State, said that the corporation tax rate was the “cornerstone” of the Republic of Ireland’s “industrial policy”. It therefore 1.54 pm seemed bizarre that Varney looked not at the real advantages, but at the disadvantages. Mr Owen Paterson (North Shropshire) (Con): I was never quite sure that we would see this day. I heartily I remember the crushing disappointment when the congratulate my successor as Secretary of State and the then Chancellor, the right hon. Member for Kirkcaldy Financial Secretary on following this proposal through and Cowdenbeath (Mr Brown), knocked the proposal from the dark days when it was knocked on the head. on the head. There was a conference at Stormont and then a bigger conference at Hillsborough. I remember For the benefit of the shadow Secretary of State, I Sir Tony O’Reilly waving his arms around and making a will go over the history of the proposal, because he does great burlesque speech about the advantages of lower not realise the enormous benefit that it could bring to corporation tax. Sir George Quigley was also there. Northern Ireland. I see it as the coalition Government’s Then the Chancellor knocked it on the head and came opportunity to deliver a long-term benefit to Northern up with a number of palliative measures that were Ireland as big as that brought by the Belfast agreement. typical of him. I remember writing letters in subsequent When I was appointed shadow Secretary of State for weeks to try to get to the detail. He had stood up in Northern Ireland, most of the major negotiations had public and said, “These measures will bring the same gone through, although we had not quite got policing advantages as lower corporation tax,” but frankly, there and justice through. I made it my business to go to were a lot of fiddly little deals that did not deliver. That Northern Ireland every week. I found an economy that was a black moment. 753 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 754 Ireland) Bill Ireland) Bill [Mr Paterson] employs about 2,000 people. The chief executive said, “If you can get this through and get corporation tax I remember sitting next to the late Sir George Quigley, rates down to the level of the Republic, we’ll double the by complete chance, and going over the matter. He was business and we’ll double the work force.” My direct bitterly disappointed because the whole business community response to the shadow Secretary of State and doubters had been looking to the proposal. One reason why it in the Labour party—I am delighted that they have had been knocked on the head was that the British state come on board today and said that they will support the could not afford the forgone tax. At about the same Bill—is that they should think of the benefits to Northern time, we had the Azores judgment by the European Ireland, not just economically and socially but politically, Commission, which we could pray in aid. It said clearly— of a further 2,000 people being on pharmaceutical-level Varney took this conclusion—that corporation tax could wages and injecting money into their communities. The be devolved. Lisbon had tried to reduce a tax arbitrarily Labour party should get its head around that long-term in the Azores region and was told firmly that there were benefit. three conditions. On that basis, and with strong support from the First, there had to be a democratically elected assembly Prime Minister, I committed in March 2010, on behalf with a clear jurisdiction over a defined geographical of the Conservative party, to devolve corporation tax. area. Northern Ireland qualified. Secondly, that assembly That became a manifesto pledge in our Conservative had to have complete decision-making powers, which and Unionist manifesto. Although we did not quite win could not be interfered with by central Government. the election, that pledge was continued as part of the Thirdly—it is a pity that the Scottish nationalists are coalition programme. At the same time, there was real not here to listen—there could be no compensation enthusiasm for the idea across the business community. from central Government for the forgone tax, which In October of that year, Grow NI was formed, involving had to be borne by the local assembly. For the record, pretty well every business organisation—the CBI, the Scotland pays about £2.5 billion in corporation tax, so Institute of Directors, the Federation of Small Businesses, if it dropped to the rates we are talking about it would the chambers of commerce, the Northern Ireland have to find £1 billion. Perhaps the Scottish nationalists Independent Retail Trade Association, Manufacturing might consider that when they come back into the Northern Ireland and about a dozen others. They lobbied Chamber. Sadly, the figure is much lower for Northern people not just in Westminster but in Stormont, and Ireland because there are no FTSE 100 companies. importantly they got support from all five political Corporation tax is currently about £500 million. parties in Northern Ireland. I pay tribute today to all We therefore came up with the idea, in accordance those parties—I had endless discussions with them at with the Azores judgment, of knocking the forgone tax that time, and they all came together. I think it was a off the block grant. Government spending in Northern unique event—I am not sure whether we had ever got Ireland is £23 billion—£13 billion raised locally and all parties allied on a single policy before. £10 billion from the block grant. If tax went down to Key to that process was the Financial Secretary to the Republic of Ireland levels, there would be a reduction Treasury, who was then the Exchequer Secretary—I am of £200 million in the block grant. That is a very small pleased that he is in his place. He completely got on investment to bring to Northern Ireland the sort of board with the long-term benefits not just for the Northern businesses that would come in. Ireland economy but for the UK economy. To pick up That idea began to take shape. Following the dark on the comments of my hon. Friend the Member for days after it had been knocked on the head at the Amber Valley (Nigel Mills), if we can make Northern conference that I mentioned, two things happened. Ireland more economically viable, it will be of real First, we set up a report by the TaxPayers Alliance, the benefit to our constituents in Shropshire and the east investigation group, on corporation tax. Secondly, and I midlands. It will reduce the need for the block grant if think more importantly, Sir George Quigley got together the economy prospers and grows well. There is a massive with others and pulled together a key group of people, UK-wide reason for supporting the devolution of to whom I pay tribute. There was Sir George, who at the corporation tax, and the then Exchequer Secretary really time was chairman of Bombardier; Victor Hewitt, the got that point. head of the Economic Research Institute of Northern My hon. Friend the then Exchequer Secretary and I Ireland; Eamonn Donaghy, the head of tax at KPMG, went to Kelvatek, a splendid example of a Northern who has been tireless throughout; Graham Gudgin and Ireland business, led by John Cunningham. All five Neil Gibson, economists at Oxford Economics; Professor political parties came along and we launched the Mike Smyth, professor of economics at the university consultation. It is important that the shadow Secretary of Ulster; and finally Mike Hall, a tax partner at Ernst of State understands that there was a lengthy consultation and Young. They formed the key Northern Ireland throughout 2011, and there were further launches for Economic Reform Group, and their report, which came Grow NI, including the big launch at the Lyric theatre. out in February 2010, said categorically that if corporation There were about 750 responses to the consultation, tax in Northern Ireland changed from 28% to 12.5%, it and they were overwhelmingly in favour of the idea of would result in the creation of 80,000 new jobs over a devolving corporation tax. 20-year period. That autumn, with the help of the then Exchequer The previous year, there had been the terrible murder Secretary, we began joint meetings involving the Northern of Police Constable Stephen Carroll in Craigavon, which Ireland Office, the Treasury and the Northern Ireland was an appalling event. We all know how divided the Executive. The first was in December 2011, and the last communities in Craigavon, Portadown and Lurgan have one in which I was involved was in June 2012. After been. I remember clearly during one of my visits going that, I was delighted that my successor took up the to the great pharmaceutical company Almac, which baton. She has manoeuvred around Whitehall with 755 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 756 Ireland) Bill Ireland) Bill great skill, because there was considerable hostility to This is a great day for Northern Ireland, and I the idea and real nervousness about it among significant congratulate everybody involved, including all the political elements of the establishment here. It is a tribute to her parties. I am delighted that the Labour party has come skills that we have the Bill today. onside, and I congratulate the people in the Northern The Bill is quite something. This is a day that we will Ireland Office and the Treasury who have come up with remember—as I said, in the long term, the benefits will a fiendishly complicated-looking Bill. I wish it well. be equivalent to what the last Government did in the Belfast agreement. It could help to create long-term prosperity and bring to disadvantaged communities the 2.9 pm wealth that the shadow Secretary of State mentioned. Sammy Wilson (East Antrim) (DUP): I trust that I The key thing is to get the message across. I would like will do what the shadow Secretary of State did and give members of the local parties to go back to Northern a balanced view, from a Northern Ireland perspective, Ireland tonight with a clear message. The start date in of where we see the Bill taking the Northern Ireland the Bill is April 2017, and it is incredibly important that economy and the impact that it will have on the economy. not only local businesses but UK and foreign businesses have a clear signal of what will happen on that date. It would be churlish if we did not acknowledge that considerable work has gone into the proposal. It has taken many years, and as the right hon. Member for Mr Ivan Lewis: I pay tribute to the right hon. Gentleman North Shropshire (Mr Paterson) indicated, a large number for the work that he did in Northern Ireland. People of people have been involved in making the case for the have a great deal of respect for the contribution that he devolution and then doing what was necessary to bring made. it about. May I ask the right hon. Gentleman a specific question? I pay tribute to the right hon. Gentleman for the role If, at the same time as corporation tax is devolved, the that he has played in this change, although I would skills budget is slashed and there is inadequate investment point out that the cudgels were first taken up by the in Northern Ireland’s infrastructure, what will the leader of my party, who was then Finance Minister in consequences be for the foreign direct investment that Northern Ireland and was convinced that the decision he keeps going on about? made after the Varney report was published was incorrect. He started the ball rolling on this issue in Northern Mr Paterson: I have cited the figure that state Ireland. Many businesses also supported the campaign. spending in Northern Ireland is £23 billion, which is a I also pay tribute to the work done by the Financial significant amount from public funds. With his obsession Secretary and his officials during the time that I was the with public expenditure, the hon. Gentleman does not Finance Minister in Northern Ireland. I know that understand the concept of growing the cake. The reduction sometimes we made progress and then were knocked in corporation tax will lead to an increase in private back a bit, and it was frustrating at times. But many of activity. I have mentioned the figure of a £200 million the issues addressed during those discussions were essential reduction in the block grant, but the hon. Gentleman if the issue was not to fall foul of European legislation assumes that the size of the cake will be static, which it or decisions by the European Court. Much of that will not. groundwork was very necessary. The local parties must grab this opportunity and One of the things that drives this change is the desire make a clear statement that there will be a dramatic in Northern Ireland to transform our economy. Our reduction in corporation tax from April 2017. I would region has not always been in the economic doldrums. happily go below 12.5%, but it must be that at most, to In fact, for a long time during the 20th century, Northern answer the question that the hon. Member for North Ireland was a driver in the UK economy. We had Antrim (Ian Paisley) asked. The bigger the drop, the world-leading, world-renowned industries that drove a bigger the message that will be sent out around the healthy economy. Many of those industries declined world. My message was that I wanted to turn the whole because of changes in world demand, distribution patterns of Northern Ireland into an enterprise zone. If we do and global trends, which also coincided with the start of that, the cake will grow, so the figure of £200 million is the troubles. As a result, major industries declined and for the birds. There will be significant internal investment Northern Ireland was an unattractive place for new from companies such as Kelvatek, significant investment private sector companies, resulting in an unhealthy from the rest of the UK, and foreign direct investment. increasing dependence on the public sector. There will be more economic activity, which will rapidly One of the aims of the Northern Ireland Executive is make up for that modest reduction of £200 million. to rebalance the economy as well as to grow it. To do That money will stay in Northern Ireland hands, but it that we need the right economic levers, but—as the will be in business and private hands rather than state Secretary of State said and the shadow Secretary of hands. State alluded to—there is no point having those levers I therefore hope that the local politicians will go back in our hands if the right conditions do not exist. I agree to Northern Ireland with a clear determination to build with the Government—although some frustration is on today. Although this is a dramatic day, all that the felt back home on this point—that it was right for them Bill does is provide the powers. The real trick in the long to insist that the Executive have a budget that showed term is to make a clear statement that, as in the Republic the tax change was sustainable and that we could absorb of Ireland, there will be absolute determination to keep its impact. It was right that we should not pay money corporation tax low. That was what the Republic did annually to the Treasury because we had not concluded through its most difficult time, and we can see the the welfare reforms, because that was of course a drain benefits there. on the resources that were available to the Executive. 757 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 758 Ireland) Bill Ireland) Bill [Sammy Wilson] The only other party that opposes the measure is the traditional Unionist voice, but I think that is because we The conditions that were laid down were correct and support it. That seems to be the rationale for anything it the Executive has now proposed a budget, although it does. has not been supported by all the parties. Some parties, All parties in this House are agreed that tax incentives even though they are in government and their Departments can be beneficial in stimulating business growth. Some would benefit from the savings in the budget, have taken may disagree about the actual form the tax incentive an irresponsible attitude. They think they can benefit should take or the degree to which it should be used, from the budget and at the same time distance themselves but there is an undeniable correlation between such from the more difficult aspects of it— incentives—be they small business rates relief, corporation tax reductions or oil industry taxes—and growth. Naomi Long: And you would never have done that. Shareholders are attracted to putting money into businesses, which in turn have more profits to plough back into investment. Tax incentives can also give businesses a Sammy Wilson: I seem to have hit a sore spot or at competitive edge over those in other countries. That is least the tender parts of the body politic among those the rationale behind the Bill and no one can deny that it parties that have engaged in such activity. will have an effect. We have to get the welfare reform proposals through In Northern Ireland there is an additional reason to the Executive, but agreement has been reached and I make the change in that we share a land boundary with hope that, as this Bill makes progress, we will also see a country that has had a lower corporation tax rate. the passage of the welfare reforms in Northern Ireland, Some people say that this will not have a beneficial albeit with changes—mostly secured by my party—to effect, but it is significant that, even when the Government the Welfare Reform Bill that will make it less draconian. of the Irish Republic were having to slash public expenditure Indeed, I think that some of the changes in the Welfare and incur the wrath of the population by reducing Reform Bill will have to be revisited by this Parliament wages in the public sector, putting up taxes, introducing at some stage. new charges for water and so on, the one area for which they were fiscally responsible and did not make any Ms Ritchie: Will the hon. Gentleman give way? changes was corporation tax. They had obviously judged that when it came to fighting for business, corporation tax—albeit along with other measures—was a shock Sammy Wilson: I will, because I know that the hon. and awe tactic they could use to try to attract businesses Lady is feeling sore from some of my remarks. to the Irish Republic. That is a significant argument. I have a degree of scepticism about economic modelling. Ms Ritchie: I assure the hon. Gentleman that I am As I am sure the Financial Secretary would tell us, we not feeling sore in any way. He is avoiding the reality to can put whatever finely tuned assumptions we want suit a certain political situation. He used to be a sceptic into economic models, but they can be upset fairly about corporation tax, but he has had a damascene quickly. In the next 15 years, it is estimated that output conversion. Notwithstanding that, can he tell us what in the Northern Ireland economy will grow by 11%, measures will be introduced to achieve the benefits of creating about 37,500 jobs. Any economic model must welfare reform for the people of Northern Ireland? come with a warning that the assumptions on which it is based can change fairly rapidly. However, the estimate has been made using the economic data we have at Sammy Wilson: If the hon. Lady is not feeling sore present: assumptions, past trends, information from from some of my remarks, she is more brazen than I other economies and so on. In Northern Ireland, we thought she was—[Laughter.] As she has not yet heard cannot afford to ignore that estimate, even if it is not the rest of my speech, she does not know what I am totally correct, especially if it will grow the private going to say or the balanced arguments that I am going sector and bring in well-paid, above-average jobs. to make about corporation tax. We had concerns about a number of issues. We did Everyone who has spoken so far has suggested that not want a Bill for people who simply moved their there is widespread support for the Bill in Northern profits to Northern Ireland and did not create jobs. Ireland. That is, of course, not true. The Green party There is no benefit to us in having companies with just a opposes it, but then that party opposes economic growth brass plate outside the door, but no substance. I believe apparently, according to its latest manifesto. I can the Bill addresses that issue, as much as it can, by understand, therefore, why it would not want to see any indicating that it will benefit trading profits only. In measures that would encourage economic growth in addition, there will be strict investigation by the Treasury Northern Ireland. I do not know how the Green party of companies who try to move profits. As I understand expects us to tackle our unemployment or standard of it, there will be a charge for ensuring that compliance living problems with no economic growth, but in any measures are put in place to avoid such scenarios. event it opposes the Bill. If we do that, what about small businesses? Many The other opponents of the Bill are the trade unions, small businesses, especially in the construction industry, which are organising a one-day strike against it and have a substantial amount of work in Great Britain other measures some time in March. At the same time because of the decline in the construction industry. We as they complain about youth unemployment and the did not want small businesses to have huge administrative low-wage economy, they oppose a measure that has the costs imposed on them for differentiating where they potential to address all of those issues and want to made their profits. I welcome the proposal in the Bill strike against it. I do not understand their logic. that businesses based in Northern Ireland with 75% of 759 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 760 Ireland) Bill Ireland) Bill their activity and employment there, will be exempt on maximum, it could be about 3% of the current revenue all their profits. That should cover 99% of small businesses budget available to Northern Ireland. In the current in Northern Ireland so there should not be administrative circumstances, to try to find that immediately would be costs for small businesses. very difficult, which is one reason why the decision to Oil and gas is excluded from the legislation. I hope introduce this will not be implemented until at least that very shortly, despite the endeavours of the Social 2016-17. That will give the Executive time to plan. and Democratic and Labour party Environment Minister, We must remember, however, that the reduction in we will have a substantial oil and gas industry that can the block grant and money available for public expenditure exploit the shale gas resources that we believe are buried in Northern Ireland will be offset by the expansion in under the ground in Northern Ireland. There may be other parts of the economy. Yes, that is a gamble, but some who play the populist line and say, “Let’s just keep can we politicians in Northern Ireland sit on our hands those resources there. After all, they’re nasty CO2-producing and do nothing, knowing that public expenditure is fossil fuels.” I want them to be exploited for the benefit going to tighten, regardless of whether there is a Labour of the people of Northern Ireland and the United or Conservative Administration, given how heavily reliant Kingdom. The profits from those companies would not we are on public expenditure? That would be wrong. currently be subject to the corporation tax arrangement, The shadow spokesman wants to know the reason for but I hope that if and when we develop such an industry, my alleged conversion. This is one of the issues to weigh Northern Ireland will benefit from the kinds of promises in the balance. Can we just drift along, knowing that that have been made to the north-east of England, regardless of which party is in government at Westminster including a sovereign wealth fund to take in part of the the public sector is going to contract, and make no profits from those businesses and plough them back provision for expanding the private sector? into public expenditure projects. I understand, however, why that has not been included at present. Mr Laurence Robertson (Tewkesbury) (Con): I agree On financial sector profits, there were two issues. I entirely with the hon. Gentleman. On the reduction in was not all that supportive of the argument about why the block grant, however, we do not know what the those nasty banks, who nearly destroyed our economy, block grant will be in 2017. It might be higher than should benefit from reductions in corporation tax, paid expected, in which case perhaps the consequential drop for by reductions in the block grant. I understand the would not be felt. It could also be argued that the recent emotional rhetoric in that argument, but I am more agreement at Stormont House already mitigates any concerned that the profits of banks and other financial reduction. institutions are much more volatile and more easily Sammy Wilson: Given the comments from the hon. moved without detection than the profits of manufacturing Gentleman’s party and the Labour party, I suspect the or other companies. One has only to look at the difference grant will not be higher. Furthermore, we still have to between 2007-08 and 2008-09, when banks’ profits changed deal with our dependence on public sector expenditure. from £255 million to £45 million. That kind of volatility It is being squeezed all the time, and therefore we need in tax revenue was a compelling reason why we should to look at rebalancing the economy. not include the profits of financial institutions in the Bill. I am glad that the Government have responded to Naomi Long: I agree that public finances will continue that. to be under pressure and that therefore we need to grow the private sector to counterbalance that. Does the hon. Mrs Villiers: I very much welcome the hon. Gentleman’s Gentleman agree, however, that Northern Ireland’s reliance remarks. It is important to bear in mind that certain on the public sector is even worse than the Secretary of activities relating to banks and financial services can State mentioned, because many of the privately owned potentially fall within the scope of a new Northern companies are almost entirely reliant on Government Ireland rate, in no small part because of the election contracts? It is not just about those directly employed in provisions in relation to back-office functions. For example, the public sector; it is about the number of private the kind of work that is currently done in Northern businesses that rely on the public sector for their Ireland by Citigroup could potentially fall within a new employment. reduced Northern Ireland rate. Sammy Wilson: That is one of the reasons, of course, Sammy Wilson: That was exactly the point I was that some people say the public sector accounts for as going to make. Having said that there are exceptions to much as 62% of employment in Northern Ireland. this, the exemptions are important because one of the Some of it is disguised in the way the hon. Lady fastest-growing sectors in the higher wage end of the suggests. Northern Ireland economy has been those back-office We have to consider whether we can simply sit on our financial services jobs. We would not want to lose the hands. However, there is a second consideration for the ability to attract them. There is provision in the Bill to Northern Ireland Executive. Yes, there is some risk allow for that. Whether they are brought as separate or attached to the policy; all economic policies carry some spur companies to the main company, they will nevertheless risk, but in measuring and trying to balance that risk, be subject to the new regime. we have to consider the impact of the policy elsewhere, There are some dangers. One danger we have heard especially in areas similar to Northern Ireland. I have about time and again—it was alluded to by the shadow already mentioned the approach of the Republic of Secretary of State—is the potential loss of public sector Ireland Government. expenditure. Under the Azores ruling, we will have to As the changes to the rules on accounting and disclosure pay for whatever the forgone revenue happens to be. come forward, I know that some of the financial services That will depend on the rate we eventually set. At issues might be addressed, but we have not touched on 761 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 762 Ireland) Bill Ireland) Bill [Sammy Wilson] discussed in this place. At the time, there was opposition, as there always is when somebody comes up with a the ongoing cost of the devolution of corporation tax, radical new idea, but he had the foresight, determination which is currently reckoned to be about £300 million. and courage to press ahead, and when he became However, as the economy grows, a formula will be Secretary of State, he made it clear that it was one of imposed in respect of the loss of revenue, and given that the most useful things we could do for Northern Ireland. there could be a substantial reduction in corporation We are now seeing the benefit of his work. tax in Northern Ireland, the formula must not be draconian. A few years ago, this proposal was the first thing the For example, if it was set at an unrealistic rate, based on Select Committee looked at when we wanted to find the performance of better performing regions or of the something that moved us away from the orange and UK economy as a whole, the burden could become green issues and the security situation—serious though substantially higher as time goes on. We need clarity on it was—to look at different ways of helping the people that issue. of Northern Ireland. We thought that the economy was The right hon. Member for North Shropshire one way we could do that. We took evidence from a (Mr Paterson) said that from this day on the Executive great many witnesses—businesses, trade unions and should be proceeding with this matter, but we cannot do very many other people—and eventually came up with so because the Bill has not yet been passed. I know he is a report that recommended the devolution of corporation enthusiastic, but I think his enthusiasm has run away tax to the Assembly. I should point out that it was not a from the reality: the Bill has to pass its stages as normal. unanimous decision. Several Committee members had concerns or reservations, a number of which have been Mr Paterson: I said that the Northern Ireland parties addressed by the hon. Member for East Antrim. However, should make an announcement now about what they we felt that the benefits would be overwhelming and intend to do with the powers once the Bill has passed. If that we could address the problems that the decision such an announcement were made, in the two years might throw up. between now and April 2017, local businesses, UK As has been said, Northern Ireland is the only part of businesses and, above all, foreign business could begin the United Kingdom that shares a land border with to plan in the knowledge that they would benefit from a another country, and that country happens to have much lower rate of tax. The hon. Gentleman is right—we corporation tax at a much lower rate. As has been have to pass the Bill, and I am delighted it has the pointed out, southern Ireland—the Republic of Ireland— support of the Opposition—but it is vital that, from stuck to that policy through thick and thin. I remember today, the local parties say what they would do with going to see the EU Commissioner when the Select these powers, on the basis that the Bill will pass before Committee was looking at the issue. He was rather Dissolution. dubious about the Republic of Ireland’s low level of corporation tax and expected that it would have to roll Sammy Wilson: On the last point, given that the over, give way and increase the rate. However, as I said ongoing cost is not known yet, there remain some issues to him, that might have been okay in the short term, but to resolve. what would it have done for the Republic of Ireland’s There is a challenge, not for politicians, but for the longer term prospects? I am glad that that country won businesses that have campaigned for the devolution of the day. corporation tax. As the shadow Secretary of State said, those businesses have a responsibility not to use their I recognise—I say this as a Unionist—that there was profits simply to pay higher salaries for managers, for some concern about setting the rate of corporation tax shareholders or for vanity projects. Having campaigned in Northern Ireland to match that in the Republic, as for this change, and given its implications for expenditure though that was somehow giving up or compromising in Northern Ireland, they have a responsibility to ensure on Britishness. It is nothing of the sort. We have a single that the additional money that results from forgoing tax electricity market across Ireland. Ireland is promoted as revenue is invested in their companies to increase one for tourism—I think we could do more on that—and productivity, make them more competitive and create there are experiments with common visa arrangements. better-paid jobs. Only then will this campaign have been All that is sensible. To me, that is not about green or a success. orange; it is not about Britain or a united Ireland. These are sensible measures. Giving the Assembly the ability to cut the rate of corporation tax in Northern Ireland to 2.36 pm compete with the south would be a simple and sensible Mr Laurence Robertson (Tewkesbury) (Con): It is a arrangement, and there is a need to do it. pleasure to follow the hon. Member for East Antrim As we have seen from the economic statistics, which (Sammy Wilson), who drew on his experience in the have been discussed in the House and repeated many Northern Ireland Assembly to make a very useful speech. times, Northern Ireland lags behind on many measures I also congratulate the Secretary of State on introducing when compared with the rest of the United Kingdom. the Bill, which has taken a good deal of skilful negotiation, It is doing okay—it is improving and getting there—but and on doing so before the election. It would have been it really needs a boost to move it along rather more easy to push it back. I think the whole House is grateful rapidly. That is why, interestingly, as well as most members to her. of the Committee and most witnesses agreeing with the I also pay tribute to my right hon. Friend the Member proposal to devolve responsibility for corporation tax for North Shropshire (Mr Paterson). I had the pleasure to the Assembly—along with every political party in of working with him in opposition when he thought Northern Ireland, which is rather unusual—the Irish outside the box and came up with this idea. Yes, it had Government agree with it too. I have heard the Taoiseach been discussed to some extent, but it had not been fully on more than one occasion say that he thinks it would 763 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 764 Ireland) Bill Ireland) Bill be a good idea for Northern Ireland to be able to have during its Committee stage. As I understand it, it will be the same level of corporation tax. He does not see it considered in Committee upstairs. However, there are a particularly as a threat; he sees it as a sensible move. number of issues that still need discussion, so it might The Committee also found that corporation tax in be an idea to consider holding the Committee stage on itself is not necessarily the silver bullet. It is not going to the Floor of the House. As we move towards the transform the whole economy—other measures are needed, election, sometimes the Chamber is not as heavily used such as improvements in the planning regime and many as it might be at other times. Maybe we could consider other areas—but it is a good headline grabber. It will discussing these issues in a way that allowed all Members grab the attention of the business world, and that can to take part, rather than just a few Members upstairs. only be a good thing. For example, just a few weeks ago I understand the reason why this change cannot be the Committee travelled to Belfast and had a meeting introduced absolutely straight away, but I am a little with Senator Gary Hart, who was over to help with the concerned that it is being pushed back two years. A lot discussions. We put the point to him, and he said the can happen in two years. However, while we have the change would remove one of the reasons for not investing full agreement of people in all the political parties in in Northern Ireland, because when people look from Northern Ireland—on this issue at least, if not on any afar and see the island of Ireland, where are they going other—let us take advantage of that. Let us drive this to go? Of course, other factors come into play too, but forward as quickly as we can. if corporation tax is 12.5% in the Republic and 20% in Northern Ireland, surely that is a draw towards the Sammy Wilson: Does the hon. Gentleman not accept Republic of Ireland. He said he would be willing to try that, first, budgetary planning must be put in place to to set up a trade delegation from the United States to deal with the payment that will come off the block come to Northern Ireland with a view to exploring the grant? Secondly, as many firms make investment decisions investment opportunities. That has to be a very positive over a long period, it makes sense to announce the move indeed. change soon, but for payment to be in two years’ time, because that will reduce the cost to the Northern Ireland Again looking from afar, it is not just that Northern Executive, while at the same time attract firms that are Ireland shares a land border with the Republic of thinking about investment now, but which will perhaps Ireland that is a compelling reason for making this not implement it for a couple of years. move. Northern Ireland is also part of an island off an island. If it is exactly the same as the rest of the United Mr Robertson: The hon. Gentleman makes a very Kingdom, what is the benefit of investing in Northern reasonable point, which I suppose goes back to the Ireland? We have to ask ourselves that question. What point made by my right hon. Friend the Member for will draw companies to Northern Ireland rather than North Shropshire, who said we should get on at least investing on the mainland? If everything is the same, with saying what we are likely to do, as that will start the perhaps they will not do that, but if things are more ball rolling. attractive in Northern Ireland, surely companies and investors will consider their options in the Province. To We also have to be careful not to expect too much of an extent, it is the same with the United Kingdom, the Assembly when it comes to looking like an efficient which is one of the very many reasons why I am not for decision making machine and getting this matter devolved. making ourselves exactly the same as the European As everyone in this House knows, it was not designed Union. If we are exactly the same as mainland European for the purpose of being an efficient decision making countries such as Germany or France, what is the machine; it was designed to bring people together to attraction of coming to the United Kingdom and investing bring about peace, and there can be no greater cause here? There has to be a reason for people to come here, than that. That issue has already started to be addressed and it is up to us to give them that reason. through the Stormont House agreement; nevertheless, the Assembly is not the most effective machine. It has I want to touch on another point, which is slightly off its problems—there is of course the need for votes on the issue, but which is important when we consider the both sides to be in a majority. All that is not how this extent of the benefit that reducing corporation tax place works; nor would we get very much passed if we might bring. When we were in the United States on a worked in that way. The Assembly was set up in that Select Committee visit about 18 months ago, we discussed way for a different purpose, so I do not think too much this issue—very positively—and a number of others, store should be set by that. We should get on with this but one thing that came up time and again was the proposal in any case. violent scenes that we see on our television screens and There are other important matters, including planning. which are flashed across the world. No matter what this Skills and education are important, too. We must ensure place or the Assembly does on tax or any other incentives, that we have a skilful and well educated work force in it is destroyed in a single night, with a single vision of Northern Ireland, and then it becomes important for any violent scenes or paramilitary activity that is flashed Northern Ireland to retain the people it educates. So across the world. Nothing could drive people away from many times we see a number of countries training and Northern Ireland in a worse way or more quickly than educating their people well, only to see them attracted that. Anybody in a republican organisation or a so-called to work abroad rather than bring the benefits of their loyalist organisation who engages in such activity is skills and education to their own country. We need a betraying the people they purport to represent. They peaceful society in Northern Ireland for that to happen— really ought to bear that in mind. otherwise we will continue to lose people—and we need There are a number of issues that perhaps need to be to create the sort of prosperity that people want to enjoy. looked at in greater detail. I am not making a criticism, If we can do all that, I think we will ensure that future but I would ask the Secretary of State whether she has generations are able to enjoy greater prosperity and given any thought to how the Bill might be considered greater peace than was available to past generations. 765 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 766 Ireland) Bill Ireland) Bill 2.50 pm Ireland parties for it at that time. Perhaps people did not believe that we would get an agreement at that stage. Mark Durkan (Foyle) (SDLP): I join fellow Northern There were certainly not many takers. With the exception Ireland Members in acknowledging not just the enthusiastic of the SDLP, which put forward arguments about contribution from the right hon. Member for North corporation tax and other matters, and the Alliance Shropshire (Mr Paterson), but his long-standing role on party, which favoured the Scottish-style proposal of this issue. I know that when he was Opposition 3% on income tax, there were no other takers for spokesperson on Northern Ireland, he took a deep according fiscal discretion to the Assembly. The argument interest in the issues facing the community in different and the case were made, but for whatever political parts of the country, and he was particularly interested reasons, people did not embrace them. in helping those who were trying to develop the economy. I recognise that he had a particular sympathy with the So the argument was put back on the table by the case that was being made, but giving Northern Ireland Business Alliance between late 2002 and early 2003, but the capacity to differentiate itself in respect of corporation it particularly came back into play with the restoration tax was not getting much of a hearing from the then of devolution in 2007. To be honest, the question arises Government. as to why more of a case for it was not made when the I recall chairing the Enterprise, Trade and Investment terms for restoring devolution were discussed. Some of Committee in the Assembly during some of those years, us raised the issue again during all those negotiations in and in that capacity I had meetings with David Varney 2005, 2006 and 2007, but there were no takers or who had been asked to produce a report by the British backers for it. Perhaps people needed the confidence of Government. It was quite clear from my conversations seeing a more settled phase of devolution before they with David Varney and when we collectively as an could fully turn their minds to the issue. all-party Committee met him that he was picking up Perhaps if we had achieved the devolution of corporation different sentiments from across the political parties, tax much earlier, we would have been much further and certainly from the permanent Government. A down the road when it came to all the benefits it can particularly sceptical attitude was notable on the part of offer. We are told that all this opportunity and prosperity certain quarters in the civil service, who may or may not can come on the back of this corporation tax differential, have been speaking for their Ministers. The strong so would it not have been much better if we had done suggestion was made that the case noisily being put this years ago—at a time when we had a much healthier collectively by the Northern Ireland parties via the budget management situation for the devolved Executive? business groups—I recall the late Sir George Quigley doing great work on this—was not being matched by Mrs Villiers: Given that the hon. Gentleman’s party what was being said in private. That is what the Government holds the environment portfolio in the Executive, does were saying. he agree that one way to get the full benefit of corporation That might have reflected some trepidation about the tax devolution is by making Northern Ireland more possible impacts of the change or the price that would competitive by reforming the planning system? It would have to be paid for making it, but it was always the case be good to see back on the agenda in the Assembly the that a price would have to be paid when it came to amendments that were debated on the reform of judicial corporation tax. I remember when the Business Alliance review and planning, because it seems that the system is had its first meeting about corporation tax. I recently getting in the way of some important and worthwhile heard that that ball was thrown in by Peter Robinson infrastructure projects in Northern Ireland. when he was Finance Minister. This was back in late 2002, after the Assembly had been suspended, and it Mark Durkan: I think that is a very unfair criticism of went into 2003. Some of us said then that the issue previous Ministers of the Environment who presided would come down to whether we were prepared not just over that very system for many years and who are here. to seek the devolution of corporation tax, but to pay Yes, we hold that portfolio at the moment and, yes, we the price for such devolution, and that we needed to have made significant moves and improvements. What prepare for that conversation. At that stage, some of the we did not agree with was the attempt to abandon parties said no, as they did not think that was needed, planning criteria on the basis of the say-so of the First so the issue was ducked. Minister and the deputy First Minister by designating a To be honest, I do not think we shaped up enough to particular area. We thought that would lead to controversy, make the case as well as we might have done. That was and the resistance to it came not only from the SDLP not the first time that the issue of capacity in relation to Minister but from many stakeholders, including many corporation tax was raised because it came up in the economic representatives, who were very sceptical about negotiations leading to the Good Friday agreement. this strange approach. There are straighter and better Some of us said that we wanted to build in capacity for ways of improving the planning system in Northern fiscal discretion, particularly in relation to corporation Ireland and of making it more efficient and more tax and some other taxes that had an economic impact. effective. That was certainly the SDLP’s position. Many people have raised the issue of Northern Ireland’s The right hon. Member for Torfaen (Paul Murphy) competitive position compared with the south of Ireland. was chairing the detailed negotiations on strand 1, and We need to remember that the sort of factors at play in that is often forgotten, when everybody else claims all the south of Ireland’s very successful drive for inward sorts of credit for the peace process. He honestly reflected investment and its successful growing of its indigenous that he was under strictures from the Treasury not to companies to become increasingly global players—to encourage too much discussion on the issue, but he be acquired and, indeed, to conduct acquisitions nevertheless facilitated and allowed it. It just so happened themselves—go beyond just the corporation tax regime. that there were not too many takers among the Northern They include the very significant long-term investment 767 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 768 Ireland) Bill Ireland) Bill in further and higher education—not just at university activity. All that will clearly provide a field day for the level, but at the level of the institutes of technology. accountants and others who will have to work their way Many people are going to graduate from the technical through it and take companies through it, but we, as universities as well, and this has happened alongside legislators, will have to be careful when dealing with heavy investment in infrastructure and a very responsive those terms. We shall need to understand how they will and better managed planning system to deal with the operate in practice, and how they will be interpreted. needs of companies. The planning system in the south We shall need to know how the relevant profits will be might have been long and delayed for some infrastructure measured, not least the relevant intellectual property projects, but when it comes to industrial projects, it has profits. moved with a fleet of foot, and Northern Ireland does The Bill states that the Government—the Westminster not compare well with that. Government—will retain full control of allowances and Like others, I believe that corporation tax on its own credits, and I can see the case for avoiding an arrangement is not a silver bullet, a magic bullet or any other type of whereby the regional Government would be responsible bullet. We in Northern Ireland are not meant to like for both the headline rate and for allowances. The bullets nowadays, but we sometimes find ourselves talking devolved Government might well be susceptible to particular about them in contexts such as this. The fact is that we pressures from particular sectors for specialised allowances. need to consider other policy measures as well. The That could create more difficulties and confusion, and Executive will be put under some strain by the budget it could also create a risk of some regional disrepute. scenario that they will face over the next few years when There is, rightly, an increasingly worldwide movement it comes to the other drivers that will be needed to in favour of more transparency in respect of tax matters maximise the benefits of corporation tax in a way that and the conduct of taxation. We in Northern Ireland would compare favourably with the success of the south. are not in the business of trying to create twilight zones Mine is a border constituency. The Foyle constituency in relation to tax adherence, and we recognise the need contains the city of Derry, or Londonderry as some for a proper balance. Members would be quicker to call it, and many people Today a tax dodging Bill campaign is being launched in the constituency work in businesses across the border. by a very active alliance that includes Action Aid, The right hon. Member for North Shropshire referred Christian Aid and Oxfam. The aim is to broaden efforts to investments in Letterkenny. Many of my constituents to create greater transparency in respect of corporate work there, and there is strong cross-border co-operation. taxation, to establish new standards, and to bring about Something that is good in Letterkenny is good for the introduction of a Bill in the next Parliament. I Derry, and something good in Derry is good for support the campaign, and was involved in many of the Letterkenny. preliminaries. I must make clear that there is no tension There are firms that are paying 12.5% in corporation or contradiction between supporting the principles of tax, but that does not mean that we have full employment that campaign and supporting Northern Ireland’s capacity in Derry. Some Derry firms are in nearby Donegal, and to set its own differential rate of corporation tax. firms there that are Derry-based and originated in Other Members have talked of the need to balance Derry employ many Derry people. A peripheral border the economy, Growing our indigenous private sector region will face other infrastructure challenges, and the while also attracting more inward investment and investment corporation rate on its own will not deliver high from industries that can partner our local companies is employment. hugely important, and the corporation tax measures We must ensure that the Bill does not create unnecessary can open some windows for us in that regard. However, complications or confusions for the firms that would it is not just a question of rebalancing the economy; we benefit from it, or create reputational problems for the must rebalance the region. The west of Northern Ireland— region and its governance. The Chairman of the not least my own constituency—is clearly lagging behind Select Committee, the hon. Member for Tewkesbury in terms of both infrastructure and employment. We (Mr Robertson), wanted to know whether some clauses must ensure that, we well as the corporation tax rate, we would be taken on the Floor of the House during the have other instruments that have been properly developed. Committee stage or whether the entire Bill would be We need infrastructure investment to underpin shared dealt with upstairs, but, in any event, we shall need to growth across the region, and we also need significant go through all the detail. I agree with the hon. Member advances into tertiary education. for Bury South (Mr Lewis) that the Bill requires the People refer to corporation tax as a game-changer, fullest and best possible scrutiny, so that we do not find but most people and businesses in my constituency are ourselves surprised or confused by what may emerge clear about the fact that the single biggest game-changer later, whether it is the behaviour of businesses or the for us would be an expansion in higher education. That response from the Treasury or Her Majesty’s Revenue is not just needed to enhance the university status of the and Customs. We may be confronted by patterns and city of Derry; it is needed in Northern Ireland, which is, practices that we did not anticipate, or that we assumed in effect, exporting a university campus every year. would be dealt with by measures in the Bill. Given what is happening in the south of Ireland, the The Bill introduces not just the capacity to devolve north will lose out very badly if it decides that corporation corporation tax in the sense of allowing the Assembly tax is the only thing on which it wishes to compete with to set a different headline rate, but a whole calculus in the south. We are not competing with the south, or relation to the effects on the block grant. There is what indeed this country, on further and higher education. could almost be called a new ecosystem of company However, we also need to recognise this is not just definitions: for instance, the Bill defines Northern Ireland about competing with the south. There has been almost regional establishments, Northern Ireland small and an obsession with Northern Ireland’s competition with medium-sized enterprises, and Northern Ireland rate the south in relation to corporation tax. We need to 769 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 770 Ireland) Bill Ireland) Bill [Mark Durkan] is, will adjustments be made year on year to the block grant, so that if less is forgone in one year than was recognise that the game is changing when it comes to anticipated, that will be made up in next year’s block competition in cities and city regions. Important things grant? Similarly, will more come out of the block grant are happening on this island. For instance, enterprise if there is deemed to have been more uptake in relation zones have developed and taken on a different life. As to the corporation tax differential? We need to tease out we have heard from the Opposition, it is not a question more detail. of “Life on Mars”, or a return to the 1980s. Enterprise The credit union movement is very dear to many zones have had different effects in different areas, and people in my constituency. The credit unions are strong some have been more vibrant than others. More and in my constituency. They pay corporation tax and they more Opposition Members want them in their would like to think that they will not be counted as constituencies, along with city deals and growth deals. benefiting from the lower rate, because they are rooted Cities and other locations in Northern Ireland are in the community and exist totally for, and are dedicated not just competing in economic terms with parts of the to, the community, so they will not be salting away south, but with places on this island as well. Alongside profits in an egregious way. They will not be abusing the the latitude on corporation tax, I should like the Executive system, and they want assurances that they can be to pursue the idea of creating their own version of city protected and that they will not be treated in the same deals, and recruiting support from the Treasury and any way as the banks in terms of the protection against any other support that is needed from Whitehall. That is possible undue benefits going to the financial sector. what happened in Scotland in connection with the city On procedure, the hon. Member for Tewkesbury deal for Glasgow. Therefore we could, and should, be (Mr Robertson) has made the point that he would like developing more tools, rather than leaving everything this Bill to be taken on the Floor of the House. I believe down to corporation tax alone. it could be, and certainly significant clauses could be taken on the Floor of the House, so that if and when The hon. Member for East Antrim (Sammy Wilson) issues arise in a few years’ time, none of us has the and others raised issues to do with the financial sector, excuse of saying that we did not know and we were not and I think it is right that there are limitations and in on that. I am not afraid of the questions that arise qualifications there. People would have been very sceptical from the Scottish position, the Welsh position or anything if a corporation tax measure for Northern Ireland had else, so I do not agree with those who say we should just meant that the banks were freely able to move their take this away in secret Upstairs, and that we cannot brass plates or some of their offices purely to avail afford to answer any questions that might arise. I think themselves of lower corporation tax. I do not think we can address those questions. people in Northern Ireland would want that, and certainly It is my belief that, as this plays out, Northern people elsewhere would not want it. Would it happen? Ireland will end up with lower rates of corporation tax Well, we suddenly saw at one point during the Scottish but probably not for long, because I think a deal will be referendum campaign that banks were saying they might done in future that sees corporation tax devolved in move, depending on the result. That would have been some form or other to Scotland, and I think that on the the first bank run in history in which the banks were back of that there will be strong pressure to say that the going to move yet the money was going to stay, but that corporation tax rate in England must come down further. was what was being talked about, so there is reason to The Government who have produced this Bill are a believe that might happen. Government who have reduced corporation tax throughout We will have to tease out in Committee or at another this Parliament, as the Secretary of State said in her time some of the questions around the financial sector opening remarks, and I cannot believe that they will not and other sectors in terms of the interpretations and be committed to trying to reduce corporation tax if implications of what does or does not count as a back they are in government in any future Parliament—and office. Similarly, questions have been raised around of course they would use the lower rate of corporation what we have been told about the calibration that will tax in Northern Ireland and Scotland to drive that be done in relation to allowances and credits, so that, measure and catch the Opposition in the same way as for instance, the film industry and other creative industries they think they caught the Opposition today. may be told that there will be a clawback of some of their other allowances and credits if they are in Northern 3.15 pm Ireland, to take account of the benefit they are getting Ian Swales (Redcar) (LD): I congratulate the right in terms of corporation tax. We need to tease out hon. Member for North Shropshire (Mr Paterson) and whether people actually have to have those benefits and the Secretary of State on getting this proposal into the receive them before the clawback will take place, or starting gate and add the support of the Liberal Democrats whether they will be told that on paper they could to getting it to the finishing post. benefit from that as they are in a different corporation I recognise that I am no expert on Northern Ireland. tax environment and that therefore they are in a different In fact, I think this is the first time that I have stood up environment as far as the allowances and credits are in the House to speak on Northern Ireland issues, and I concerned. So the question of when some of these ought therefore to pay tribute to one of my illustrious things are triggered or kick in is important. predecessors as Member for Redcar, Mo Mowlam, who There are similar issues in relation to the impact on of course played an important role in the progress the block grant. If we are going to start with assumptions towards peace in Northern Ireland. being made as to the opportunity cost in revenue terms The hon. Member for Foyle (Mark Durkan) in his of the lower rate of corporation tax for Northern extensive speech talked a lot about the detail that needs Ireland, this issue arises: once we know what it actually to be worked out. We recognise that that is the case, and 771 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 772 Ireland) Bill Ireland) Bill there may be some devils in that detail. This could turn tax rate on this large island that we inhabit. It would be out to be quite complex when we come to look at the argued in this place that we need to align the English interactions of this proposal with all the various existing rate with the Scottish and Welsh rate. I very much proposals. We all know that tax competition works support what the hon. Member for Foyle said—that between countries, and it is particularly evident where that may be a path we want to go down, but let us do so there is a hard border. I vividly remember the Belgium- knowingly, at least. A different rate in Scotland could Luxembourg border when I lived over there, where be very damaging to the north-east, which, I repeat, is there were about 20 garages all on one side of the road England’s poorest region. due to the difference in petrol taxes. The hon. Member It has rightly been pointed out that corporation tax for South Down (Ms Ritchie) again raised today the rates are not the only consideration. According to an question of VAT tourism, and I pay tribute to her for Ernst and Young study, corporation tax comes only her campaign, particularly as I also represent a coastal sixth on the list of things that foreign direct investors community and would very much like to see the same look for. However, it is very important to half of them move. and has some importance to most of the rest, so it is not The Republic of Ireland has a headline corporation unimportant—it is just not the most important thing. tax rate of 12.5% and that is what we are mainly I am sure the Minister is expecting me to talk about addressing here today. However, it is not the 12.5% that avoidance possibilities, given that I often do in such gets all the US technical companies to register in Dublin debates. I note that the Government have included and that gets Marks and Spencer doing its mail order various measures in the Bill to exclude activities such as through Dublin; instead, it is some very special investing, and trades such as lending and property, and arrangements in Ireland, and I certainly would not the Bill does not give the Northern Ireland Executive want to see future pressure to align Northern Ireland power over reliefs and allowances. However, once we get with those arrangements. I believe the Ministers should into the detail, we may find that if the rate goes down to be addressing some of those arrangements in Dublin 12.5%, the way some of the reliefs and allowances in the rather than opening any doors towards further alignment UK are drawn means that they will interact strangely. with what happens in Ireland, because I think we all HMRC needs to check all that out as part of the recognise that some of those arrangements are deeply process. damaging to the UK as a whole. It is always worth applying a bit of game theory when I noted that Northern Ireland Members rightly referred looking at new taxes, tax reliefs or changes in taxes, in their speeches to the unemployment rate and the because if it is possible to imagine a tax avoidance economic situation in Northern Ireland and the reliance scenario, it will probably happen. Does the Minister on foreign direct investment. I very much identify with recognise that the Bill puts a new transfer pricing interface that as an MP from the north-east of England. In in place? At the moment, when corporations transfer unemployment and other such criteria, in all the tables goods backwards and forwards to Northern Ireland, where Northern Ireland is top—or bottom, if we want there is no corporation tax difference, so there is no to look at it that way—the north-east of England tends incentive to do anything strange with transfer prices. to be the next region. My constituency is 31st out of This arrangement will give an incentive to shade transfer 650 for unemployment and my biggest private sector prices in a particular direction. Does the Minister agree, employers are Saudi Arabian, Korean, Thai, Indian and what resource will he put in place to deal with that? and Singaporean, so I know what foreign direct investment According to a Public Accounts Committee hearing means and how important it is to areas like mine. that I participated in, HMRC has less resource on Therefore, I have a question for Ministers. I recognise transfer pricing than each of the big four accountancy that foreign direct investment is not a zero-sum game companies, so it is not an area in which we are currently but there is an element of that. If a company is choosing heavily staffed. where to go, it only makes one decision. What assessment Of course, transfer pricing is not just about products; have Ministers made of the effect on the rest of the UK it is also about royalties and management fees, and I of encouraging more foreign direct investment into imagine that if a bank has a back office in Northern Northern Ireland? I am not saying I disagree with this Ireland, it will become a highly profitable operation measure, but I think it is important to note that in some under these new arrangements, because there will be an cases it will switch investment from other parts of the incentive for the management fees to be as high as UK. Indeed, as the hon. Member for Foyle said, because possible. of the different corporation tax rate the rest of the UK Can the Minister confirm that corporate financing will, in effect, become a foreign country and Northern operations will not qualify for the lower rate, which Ireland may attract investment from UK companies might allow profit shifting of the sort we see to Luxembourg that otherwise would have gone elsewhere in the UK. and other countries? Will he confirm that such operations That is an important thing to remember and to consider. cannot be concealed within a genuine trading operation? I am also concerned about potential further devolution Here I am thinking of the regular movements of capital of corporation tax and, ultimately, a race to the bottom, and interest within a manufacturing company, for example. as the hon. Member for Foyle said. I am particularly Can he confirm that there will be no hidden financing concerned about the situation in respect of Scotland and profit-shifting operations through interest payments and the north-east of England, which of course borders and similar means? Scotland. The logic of this measure—that we have to The Bill is designed to encourage foreign direct move towards aligning corporation tax rates in Northern investment, but in effect, the rest of the UK also becomes Ireland with those in southern Ireland because those foreign from a corporation tax point of view. What countries share a border—suggests that we should not assessment has the Minister made of the moves that allow Scotland or Wales to deviate from the corporation might happen from the rest of the UK and the loss of 773 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 774 Ireland) Bill Ireland) Bill [Ian Swales] have other advantages that it may not. So we should not always seek simply to balance our taxes against its tax that they might incur? The expression “brass plate” taxes; we should look to be competitive on a range of has been used many times today. I believe that the Bill is fronts. When companies are coming to make their written in such a way that that will not happen, but I investment, they will look at not only tax regimes, but a hope the Minister will confirm that. host of other issues that will influence their decision. I The legislation will be tightly drawn, but I ask that want to focus briefly on some of those towards the end the Minister resist any further calls from the Northern of my remarks. Ireland Executive to compete with Dublin on special Devolving corporation tax rate-setting powers to the arrangements or to get power over reliefs, which would Northern Ireland Executive, when complemented by create new complexity within the UK tax system. other measures, has the potential to help transform our I do not think it right to say that the cost of these economy, increasing growth, productivity and exports. measures will be the entire difference in the tax rate on So the Bill is a timely move to facilitate that growth. the tax base of Northern Ireland. If that were true, When the Northern Affairs Committee dealt with the there would be no point in doing this. The whole point issue, we found strongly that not only business, but local is that these measures will encourage economic activity politicians, particularly those represented in the Executive in Northern Ireland, so there should be quite a payback but also some outside the Executive, were in favour of of tax; otherwise, why do it? What assessment has been this measure. I must pay tribute to the hon. Member for made of that? East Antrim (Sammy Wilson), in that, although he has Can the Minister say a bit more about the constraints been sceptical about the issue, he has today given reasons that the UK Government are putting in place on the why there needs to be caution about the fiscal modelling overall cost of these measures? What constraints, if any, on which people have based their projections for the are there on the rate that the Northern Ireland Executive future. Although we may be able to address corporation could choose? Would zero be allowable? I should be tax, we cannot control the global economic picture, interested to hear the Minister’s answer. which will also dictate the amount of foreign direct investment we can achieve. So we should not set our I am conscious that other Members, particularly sights too high in terms of the number of jobs that that from Northern Ireland, wish to speak. I look forward to may create. We have projections we can use as a basis hearing the Minister’s response. and we can look at the evidence from other regions, but we have to accept that other factors will influence how 3.26 pm big an impact this measure will have. Naomi Long (Belfast East) (Alliance): I am pleased to It is important that we weigh those factors carefully be able to speak in support of the Bill. Much has when setting the rate—that will be a matter for the already been said and I do not want to repeat the points Assembly, which will need to give them due consideration. that have been made; rather, I want to set out the I agree with other Members who have said that we reasons why I believe the Bill will be good for Northern would want to do that quickly, I also think we need to Ireland. I also want to sound a note of caution on those carry out due diligence in setting the rate, to ensure that issues to which we will need to give some thought here we know exactly what it will cost the Northern Ireland in Westminster and in the Assembly, in order to ensure Assembly in block grant and exactly how we will manage that we maximise the Bill’s impact on economic growth. the bridging period between making the cut to the We are all aware of the need to rebalance the Northern block grant and seeing some reward from the economic Ireland economy. At the moment, we are more reliant investment that will follow. We will also need carefully than any other part of the United Kingdom on the to examine the long-term impact this measure will have public sector, and our private sector often struggles to on the wider economy. So although it is good that we be competitive because of particular disadvantages. For are making these moves today—I commend the Secretary example, the private sector companies that compete of State and her team for upholding their part of the internationally are often at a significant disadvantage Stormont House agreement at this stage, while, almost because of energy costs. So there are a number of issues simultaneously, the Assembly is today upholding one of that put us at a competitive disadvantage compared its parts of the agreement on the budget issues—I hope with our nearest neighbours, but despite that, we are we will see an opportunity for the Assembly to take one of the best-performing regions in attracting foreign more responsibility over its financial measures. direct investment, and we do an excellent job of getting I also wish to commend the Secretary of State for her those companies to come to Northern Ireland. work on the Bill, which will ensure that if the Assembly One of the issues that corporation tax might assist us does not show a responsible way forward on the budget with is ensuring that with those companies come not and if we are not able to get our finances in order in the just back-office jobs but jobs with good salaries, and next few years, this move will not go ahead. It is quite good profits that will then be out-turned and benefit the simple: we cannot continue with a situation where we wider economy. So there are real opportunities to change make promises beyond the money we have to fulfil them the kind of foreign direct investment we can attract and and where we make commitments on public sector to build on the reputation we have been able to grow expenditure that are not covered by the block grant or overseas for being a good destination for investment. by revenue raising that is available to us already. We As others have said, Northern Ireland is unique in need to get our financial house in order, so that we are having a land border with another country, the Republic able not only to make the corporation tax reduction, of Ireland, which has a much lower rate of corporation but convince the people of Northern Ireland that we tax. It is right that we should seek to be competitive have the capability to manage our finances in a way that with that country, but we should also not forget that we is for their benefit. There is a gap between what the 775 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 776 Ireland) Bill Ireland) Bill politicians would like to be able to do and what the into compulsory redundancy. That agreement was good Northern Ireland public trust them to do, particularly for Northern Ireland, but we still have to find other on financial matters. That gap needs to be closed quickly employment for people, which is where corporation tax over the next few years, by dealing with the budgetary could play an important role. matters before the Assembly both today and over the There are other issues to consider. Members have next few weeks. mentioned infrastructure and planning, and, as a civil It is important that after the Stormont House agreement engineer, it would be wrong of me not to address that we have bought some more time in which to be able to matter. We need not just significant investment in make those transformations to the economy, but all that area, but reform, because we cannot deliver the parties will have difficult decisions to make. Where the infrastructure investments that are needed in Northern money comes from to pay for the corporation tax Ireland with the current amount of money that we devolution will be one of a number of difficult decisions receive from the block grant and the emphasis that the that will have to be taken. Whatever the colour of the Assembly gives to the matter. Some restructuring will Westminster Government after the next election, it is be required if we are to ensure that our infrastructure is clear that nobody is arriving with a pot of gold and not an impediment to further economic growth. none of us can expect that huge amounts of money will We also need to consider issues of connectivity. The be available that are not available now for public sector challenge rests not just with the Northern Ireland Assembly, investment. I accept that some in this House wish it but with the Treasury and other Departments here at were otherwise. Westminster. The hon. Member for East Antrim mentioned It is hugely important for us to be realistic in our the fact that, for a long time, Northern Ireland was a projections and in the promises we make to the public driver for the UK economy. In my constituency, we had we represent, and to recognise that corporation tax is the largest shipyard anywhere in these islands and the only one of a number of avenues we can pursue to grow world’s largest roadworks. We were not in any way our private sector. A low rate of corporation tax alone regarded as peripheral because, at that time, connectivity will not attract all the investment needed to grow Northern was largely through ports, and we had an excellent port Ireland’s economy. Other corresponding measures will in Belfast. The situation has now changed and most of need to be taken in order to make Northern Ireland an our exports go by plane. We are reliant on air transport. attractive place in which to base a business or company, Heathrow is the main cargo hub for the UK and the so let me briefly discuss some of them. Some are relevant main cargo export point for goods and services going to Westminster, whereas others will ultimately be dealt from Northern Ireland. Unless we resolve the situation with by the Assembly. It is important for us to consider at Heathrow, no amount of reduction in corporation them, because that mix will allow companies to have the tax will encourage people to invest in Northern Ireland. confidence to come to Northern Ireland. We need to retain our connectivity to London, and The first and foremost issue is stability and good also through London and beyond to other business governance. The Stormont House agreement offered us destinations so that we are not remote for those who an opportunity to deal with some of the issues associated wish to come and invest and do business in Northern with political stability, but, as hon. Members know Ireland. It is crucial that decisions about airport and from my response, I believe many of those were, runway capacity in the south-east are resolved, because unfortunately, parked and could still be the undoing of it is a matter of importance for the country as a whole the good progress made thus far. I want local parties to and for Northern Ireland in particular. Being on an commit to dealing maturely with those issues, which are island and off an island, we are absolutely reliant on air politically sensitive, so that we do not have the kind of transport for our connectivity. situation we have had recently, where lots of years of It would be remiss of me not to mention air passenger talking to companies and encouraging them to come to duty since I have repeatedly complained about it. We Northern Ireland and consider us as an inward investment are double taxed with air passenger duty, which has an opportunity are written off on the basis of a few nights impact on our connectivity and on the cost of doing of rioting, which is projected worldwide and damages business. Although the problem needs to be addressed our reputation irrevocably. UK wide, it has a much greater impact on Northern We need to have stability and maturity around political Ireland than on any other region. We have no alternative decision-making. The opportunity is there for that to way to make our way to London, to the main hub, other happen, and I hope that all parties will grasp it. They than to use air transport, and we are penalised for that should stop the petty arguments over peripheral issues because of the lack of through carriers. We have to pay and try to pull together to create the sort of stability air passenger duty twice: once to get to London and that is beneficial for business, public sector growth, and then onwards to whatever destination we take. small and medium-sized enterprises. Those SMEs suffer Another area of concern is brass plating, which the greatly when we have traffic disruptions as a result of Bill tries to address. Northern Ireland does not want to bomb alerts and bomb hoaxes. Such an incident happened become simply a front for companies that are doing in my constituency just this week. The whole city, business elsewhere and creating economic growth and including the train service and local roads, was brought employment elsewhere but benefiting from the low tax to a standstill. We cannot afford for that to continue, so regime in Northern Ireland. There is no benefit to us or we must deal with the politics to bring about that to the UK from that. We want to encourage companies stability. that will set up their main operations in Northern We also need to ensure that there is good governance. Ireland and create employment and real economic growth. As I have said, the Stormont House agreement has Those companies will not be the only ones to benefit; all given us an opportunity to look at right-sizing our civil of the firms that service those companies that pay the service and to do so in a way that will not force people corporation tax will also potentially benefit from being 777 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 778 Ireland) Bill Ireland) Bill [Naomi Long] will not be an attractive place for large businesses. When the due diligence is done, one of the most important able to attract those larger companies in. It is important considerations is stability. We need to create that stability that we deal with actual economic activity, and I welcome as a starting point, and from there this measure will give the fact that work has been done on that. us an opportunity to make prosperity part of the package Another brass-plating issue of interest to me and to that the peace process can deliver. the hon. Member for Foyle (Mark Durkan) is international tax transparency. I do not want to stand over any 3.43 pm system that would allow people from other regions to create a false front in Northern Ireland that would Nigel Mills (Amber Valley) (Con): It is a pleasure to result in money being taken out of other economies in follow the hon. Member for Belfast East (Naomi Long). need of funds, whether they are in the third world or I should like to begin by saying that this measure is other parts of our own country. That is not good for entirely the right thing for Northern Ireland. Those of international development, and it is important that us who serve on the Select Committee have all seen how there is tax transparency at the heart of the measure. hard it is to compete when a neighbour a short distance We want real investment and real economic growth, and away can offer a much lower rate of corporation tax. I we want real jobs to be created as a result. I am glad wholeheartedly support the notion that we should allow that that has been acknowledged and considered in the Northern Ireland to choose its own corporation tax Bill. rate, especially on trading profits. In fact, I would even support the principle that lower business taxes drive Something else that is required is skills. If we do not growth. Over the past five years in the UK, we have have the right skill set we will not be able to attract the reduced our corporation tax rate from 28% to—in a quality jobs that we seek to attract, and it is hugely couple of months’ time—20%, which is important in important that we do that. My colleague, Dr Stephen helping to drive growth in the whole country. Farry, is doing that very effectively through the Department for Employment and Learning, and there is a mechanism That leads me to my first concern. Part of the argument that would allow a small levy—about 0.6%—to be for making that reduction is that we recover money that placed on those companies that benefit from the corporation we lose in corporation tax by attracting more investment: tax reduction. The levy could be ring-fenced to pay for more companies make more money and pay more skills investment. Companies could draw down some of corporation tax as there are more profits. Even though that money for in-house training and partnership training corporation tax is set at a lower rate we begin to recoup with universities, and the remainder could be used for some of the costs. Also, with more employment, we other skills investment. That should be a consideration would expect increases in income tax and PAYE. Greater in the way in which the Bill is structured. No one will economic activity will result in more VAT, and more want to benefit from our tax laws if they have to pay property transactions will give rise to more stamp duty. something towards investment in skills unless they intend Those are the key ways of recovering what is lost to have employment and training as part of the work through lower corporation tax. they do when they come to Northern Ireland. Those are It is not entirely clear how much of those increased the kind of added-value jobs that we need and want, tax takes will go to Northern Ireland and how much and some form of skills levy would be helpful to avoid will be kept by the UK as a whole. When the final deal is brass-plating and to support the Executive’s emphasis done and a calculation is made of by how much budgets on skills investment and development. are reduced, that net cost needs to be worked out to Finally, the Chairman of the Select Committee on ensure that it is fair to Northern Ireland and fair to the Northern Ireland Affairs, the hon. Member for Tewkesbury rest of the UK. There will need to be a breakdown of (Mr Robertson), discussed the importance of differentiation the overall impact of behavioural change as a result of a in Europe as a way of attracting new business to Northern lower tax rate in Northern Ireland, if that is what Ireland. People come to Northern Ireland because they results. I assume we expect to see a rate of 12.5%, or see it as a good stop-off point between, for example, the perhaps a little lower to make it competitive. US, the south American countries and the European We seem to be devolving taxes haphazardly, creating Union. They see us as a gateway to European markets. a mishmash. We ought to look forward a few years and When we debate the European Union in Parliament let ask, for all our taxes, “What should our tax system look us not forget that many of those who locate their like? What taxes will we devolve and to where? How can businesses in Belfast, Derry and other places do so we best achieve a sustainable, sensible tax system as a because they see Northern Ireland as part of the EU result of that?” One way of doing that would be to set a and a good way to make those connections. We need to federal income tax rate and a federal corporation tax be careful when we talk about withdrawing from the rate that apply throughout the UK. Once those were EU—I have no problem with differentiation within the set, each area could choose its own rate as well, so there EU—as we need to be conscious of the impact that that could be a federal corporation tax rate of, say, 10% and would have, despite what we may do on tax regimes. Northern Ireland could choose 0% as its local rate, and All those things are important. Some of them are in England could choose a rate as well. the gift of Westminster; some are in the gift of the What we have in this Bill is a complex way of doing Assembly. However, we have taken an important first that for one area of the country. I accept the reason for step with this Second Reading. As we proceed with a doing that just for Northern Ireland initially, but if detailed consideration of the Bill I trust that we can there is pressure from Scotland and Wales, this mishmash look at how we ensure that we experience the maximum of a system will be hard to act on and it will be very benefit in Northern Ireland. I stress again that unless we unfair on England. How will we work out the rate that have a stable, integrated future in Northern Ireland it we want? With the devolution of corporation tax, I 779 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 780 Ireland) Bill Ireland) Bill suspect that the easiest competition will be between Ireland will have to work its way through some fairly Northern Ireland and the rest of the UK, because we complex situations. There were simpler options. We have the same currency, much the same legal system, the could have just had an allocation key that worked out same VAT system and the same income tax system. In one profit and then how much of it would be taxed in fact, for almost any sensible business, the east midlands Northern Ireland and how much in the rest of the UK, is a far more attractive place to do business than Northern based on employees and sales. It could have ended up a Ireland. I would say that, because my constituency is bit like the awful EU tax base that was thought up. there, but we have the right skills, the right location and However, within the UK, that might have worked, being all manner of advantages. easier to understand and removing some of the distortions of attempts at tax avoidance. Taxation based on sales is much harder to fix. Ian Swales: Does the hon. Gentleman agree that the sort of business decisions we are talking about are There are still some gaps in these proposals. It is long-term decisions, and if the tax system appears to be absolutely right that we have stopped allowing finance moving around wildly among countries year by year, companies to get the lower tax rate. Otherwise every companies will not use it because they will not be able large corporate would have had a finance company to rely on a long-term future? based in Belfast doing its finance for the rest of the UK and moving profit over there artificially. That would have been unacceptable. Nigel Mills: The hon. Gentleman is right. That is why we should look ahead and see what our tax system How do we stop other things happening that we should look like. Nobody in the UK wants a business might not like? What about intellectual property planning? man with a business based in Amber Valley or Redcar If I move all my brand names over to Northern Ireland, to think, “I could save half my corporation tax by can I charge large royalties in the rest of the UK and moving to Northern Ireland.” That may help Northern artificially move profit in that way? That is not caught Ireland, but it will not help the mainland. It will not by the restrictions in the Bill. It is not moving jobs or help UK plc to attract more inward investment. We creating real value; it is just moving assets around a want fair competition. I accept that competition is good regime and trying to get a tax advantage. and that if we get investment somewhere in the UK, On the flipside, there are some wrinkles in how we that is better overall, but we want investment coming in have tackled the finance company exemption. Under from outside, not moving around within the UK. the definitions in clause 17, I am not sure what happens As a matter of fairness, if parts of the UK are to in the case of a company trading in Northern Ireland compete on corporation tax, those parts should not that makes a lot of profit, ends up with some cash at the vote on the rate elsewhere in the UK. If Northern end of the year, and thinks, “Okay, I’ve got another Ireland wants to set its own corporation tax, let us let important investment project in 18 months’ time, so England, Wales and Scotland set ours. If we devolve it perhaps I’ll lend this cash around to somewhere else in further, the same fairness should apply. People in my my group of companies and make a bit of interest constituency should be able to say, “Yes, we are competing, income.” It is then engaging in a lending activity. Has but we can choose whether to compete or not.” I hope that blown it out of the whole lower rate because it now that before April 2017 some sort of mechanism is in has an excluded activity, or is only the interest taxed at place to ensure fairness. Devolving taxes without first the higher rate, and because it is a very small part of its settling that is dangerous in constitutional terms. I am activity, that is okay? I am not quite clear about how we not sure it would be tolerable for Scottish MPs, for tackle real, practical situations such as that. example, to set their own income tax and then to set I am not convinced that the situation for small and ours as well. I accept that that is probably more of a medium-sized companies is entirely fair. The hon. Member problem than corporation tax, but it is an example of for East Antrim (Sammy Wilson), who is no longer the unfair tax system that we could end up with. here, said that some construction companies in Northern An excellent Library paper which runs through the Ireland end up with lots of building work on the mainland research shows on page 13 that, looking at the behavioural because that is where the work has been. If, during the response to a lower rate of corporation tax in Northern year, such a company gets a big contract on the mainland, Ireland, even by year 4 we would see that profit shifting it then has to track whether the profit from that becomes from the rest of the world into Northern Ireland would more than a quarter of its total activity. If it is 26% by have an impact of £30 million a year, but that profit the year end, it pays 20% corporation tax on the whole shifting from Great Britain to Northern Ireland would of its profits, whereas if it is 24% at the year end, it pays have an impact of £60 million a year. That is twice the 10% on the whole of its profits. impact of new foreign direct investment. Tax-motivated I accept that for the vast majority of SMEs that do incorporation would have a potential impact of £45 million not trade on the mainland and operate just in Northern —even more than foreign direct investment into Northern Ireland, that will be a very simple situation, and one Ireland. I hope that the measures in the Bill will reduce small contract will not hurt. However, I suspect that the likelihood of the latter possibility. The easiest way SMEs trading in both areas will be in a worse position of competing will be to move around within a regime than a large company, because a large company that rather than try to attract investment into the UK that had 26% of its activity on the mainland would still get would not have come here in the first place. the lower rate for most of its profits, but a small That leads me to look at how cluttered some of these company will lose it for most of its profits. Perhaps proposals will make the corporation tax system. This is there could be a way of allowing an SME to elect to be not a simple set of things to understand. A company in the large company regime if that better reflects its that has its tax base in Great Britain and Northern needs. Another option would be to have two separate 781 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 782 Ireland) Bill Ireland) Bill [Nigel Mills] in the middle. We all agree that the measure is a great move for the future of Northern Ireland, but it is not a companies and split their activities, but that does not panacea or silver bullet, and we need to bring together a strike me as a very easy situation. There are some issues lot of things to make it work. The economist reckoned that may lead to unintended complexities. that other factors need to be looked at, including fast-track We need to think through exactly which activities we planning, which has been discussed, the whole planning do not want to qualify for the lower rate. We have a new structure, research and development, and education, diverted profits tax coming, whereby if someone moves which was also raised earlier. It has just been announced an activity that ought to be somewhere else, we will try that we will get two new regional colleges—one in the to tax it at a higher rate than our UK standard rate. town of Banbridge, and one in the Craigavon area—which Under one of the provisions, someone who is being will benefit my whole constituency. The colleges recently taxed at a rate of less than 80% of the UK rate will be made a presentation about the number of courses and caught. Clearly, Northern Ireland is likely to have a tax higher level apprenticeships that will be provided. As rate of less than 80% of the main UK rate. If a Northern the hon. Member for Belfast East (Naomi Long) said, Ireland company has an internet trading business or a skills are vital for any organisation that comes to Northern mail order business in Belfast and takes careful steps to Ireland, so there needs to be a skills base. A lot of avoid having an establishment on the UK mainland, elements therefore need to be brought together for the could that company be caught by the diverted profits whole package to work. tax, triggering a higher rate than if it was in the UK? Everyone in this debate has broadly welcomed the How can we stop people artificially putting trading Bill, but it has been sensible of many of those who have activity using very few employees into Belfast, rather spoken to put in caveats and not to make promises that than doing it on the mainland, to get the lower rate? I we might not be able to keep in five or 10 years. The accept that no one wants the rate to apply to activity point was made that when companies decide to invest in involving no employees, but I sense that certain activities other regions or sit down to write business plans, they that do not require much labour might be moved, which do not plan for just six or 12 months, but for three, four is not what we intend. or five years. We do not want to make rash promises, I welcome the principle of the Bill. I have some only for companies that plan to come into Northern concerns about rushing it through now without thinking Ireland to find, all of a sudden, that it does not work. about how it affects the UK as a whole—we need to do Today we have the coalition Government, but things that if we are to get a tax system that is sustainable in could change on 7 May. We might have another the long term—about how cluttered we are making our Government. Will they have the same principles and corporation tax system and about whether things in the ideologies as this Government? It is therefore important Bill’s details might make the system work in a way that that we do not make rash promises. we do not want, but I suggest that we think through My constituency of Upper Bann is the second largest such issues in Committee. manufacturing base in the Province outside Belfast, with companies such as Moy Park, Almac and Thompson 3.55 pm Aero Seating. It has a lot of good companies, such as David Simpson (Upper Bann) (DUP): I thank the bakeries and agri-food businesses. Many of those companies Government for keeping their part of the bargain in would benefit from the lowering of corporation tax. I trying to push the Bill through the House before declare an interest in the agri-food sector and refer to Dissolution. the Register of Members’ Financial Interests, because I again pay tribute to the right hon. Member for my family business would also benefit. The benefit will North Shropshire (Mr Paterson), as I did in an intervention. be felt across the constituency. At the worst economic He was very modest in what he said about his role. I times, unemployment in Upper Bann rose to 8.5% or understand that it was a team effort within the Government, 8.6%. As of last week, it was down to 5.2%. Even at the but I must say that he was outstanding in the number of best of times, it never fell below 4% or 4.5%, so we are meetings he held with business organisations in my heading back to where we were in the good old days. constituency, such as the manufacturing focus group We need to encourage our young people to stay in the and the chamber of commerce. He put across the case United Kingdom. The hon. Member for Foyle (Mark for devolving corporation tax very well, and all credit to Durkan) made the point that every year we lose a him for his enthusiasm. He was also very enthusiastic campus to other countries. I still help young people on a about enterprise zones, as has been mentioned, and regular basis to fill in forms and visas to go to Australia, other parts of the different regions of the United Kingdom New Zealand or China. We need to encourage young are starting to raise that whole issue. people to stay and protection needs to be put in place. The Chairman of the Northern Ireland Affairs We have heard about issues such as brass-plating. That Committee pointed out that we debated this matter and needs to be definitive and there are a lot of issues that produced a report some time ago, and I remember what need to be teased out. That can be done as we go one of the economists said. People say that if someone through the Bill over the next few weeks. brings 20 economists into one room and tries to get I broadly welcome the Bill. It will bring great benefits them to agree, they will find it very hard. My hon. to Northern Ireland. It is important that every part of Friend the Member for East Antrim (Sammy Wilson), the United Kingdom and every country looks to its who is an economist, is not in the Chamber, or I would advantages over other countries. We have to look for the certainly get a very smart response from him. competitive edge. If this brings the competitive edge for I asked one economist at what point between one and Northern Ireland, that is good news, because we have 10—given a clean sheet—he would put corporation tax, sat alongside the Republic of Ireland, with its 12.5% rate, and he was quick to say that he would put it somewhere for many years. As was said earlier, throughout all the 783 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 784 Ireland) Bill Ireland) Bill difficult economic times, with the Celtic tiger losing its precursor to such investment. We wanted to see a balanced buzz and all the rest of it, it still held on to the approach to regional development in the location of corporation tax rate. Even when the European Union manufacturing, business, the financial sector and new threatened to take it away, the Republic of Ireland types of infrastructure, so that we could underpin and stood its ground and won the day. We need to continue grow our economy. Those factors remain the same and with this proposal. I think there are good days ahead are still important to growing our economy. for Northern Ireland. As the shadow Secretary of State indicated, we still have a youth unemployment level of about 19%, and we Ian Paisley: We were promised an economic bonanza still have a high level of economic inactivity. Our education after 1998. Whatever people’s interpretation of the Belfast and further education sectors are therefore important in agreement, there was no economic follow-through. It making a contribution to growing our economy. Above was like the ghost of Banquo—it was there, but it did all that, as my hon. Friend the Member for Foyle and not turn up. The ghost of economic benefit did not end the hon. Member for Upper Bann (David Simpson) up being delivered. This is the opportunity to deliver said, is the need to ensure that our young people stay in the economic benefit for Northern Ireland that has Northern Ireland, are educated there, gain their vocational been absent for the past 15 years. training and academic qualifications there, and invest David Simpson: My hon. Friend is correct. This is an that training, knowledge and know-how in developing opportunity for Northern Ireland to deliver that economic our economy. Nobody would disagree with that. benefit. We need to encourage not only businesses Other measures are required because while we are a throughout the Province, but the next generation. I do public sector economy, tourism is also a principal economic not know about other MPs, but when I go to universities driver in my constituency. I have talked to the Minister and schools in my area, people say, “What’s the point of about this on several occasions, but I repeat my request staying in Northern Ireland? There’s nothing here for for a reduction in VAT on tourism and tourism products, us. There’s no jobs; there’s no nothing.” We have to give which I see as a UK measure. Such a reduction would them a reason to stay. pump-prime the sector and create the necessary jobs. It is the role of Governments to create the environment The economic modelling for such a change was carried and circumstances in which business can thrive and out by the Treasury, so the research is available. move forward. My hon. Friend is right that there is an We also have the evidence of the south of Ireland, opportunity to do that, and we need to grasp it, but we which—notwithstanding its economic difficulties—has must do so in a balanced and measured way. We must been able to keep its rate of VAT on tourism at 9%, not make false promises that may come back to bite us compared with ours of 20%. Representing a border in the coming years. constituency in the north of Ireland, I have many constituents who are involved in tourism and other 4.5 pm businesses and have to compete with that VAT rate. That is extremely difficult with mobile investment and Ms Margaret Ritchie (South Down) (SDLP): Like people who live in the north but work in the south, and other right hon. and hon. Members, I broadly welcome vice versa. Those issues must be addressed. the devolution of the power to vary the Northern Ireland rate of corporation tax. I cast my mind back to Another issue within the remit of the Department of 2006, when I was a Member of the Northern Ireland Enterprise, Trade and Investment and BT is proper and Assembly while it was a shadow Assembly. My hon. adequate access to broadband. Preference should be Friend the Member for Foyle (Mark Durkan), who was given to business centres so that they have immediate my party leader at the time, appointed me to an all-party access to superhighway broadband, which they need to committee dealing with building and growing the economy help build small to medium-sized businesses. That should in Northern Ireland. We took evidence, in sessions be a priority. spanning a six-month period, from a range of people, I have several questions about the Bill. No doubt the some of whom were pivotal in raising the issue of the details will be teased out in amendments to the legislation, Northern Ireland Executive and Assembly having the but I also wish to raise them now. The Bill is 87 pages ability to set our own rate of corporation tax. Central long and I have no doubt that it was drafted well in among them were the late Sir George Quigley, and advance of the outcome of the Stormont House agreement. Mr Hewitt from the Economic Research Institute of Is the engagement on the details between the Northern Northern Ireland. From the research that we carried Ireland Executive, especially the Finance Minister, and out, we found that one of the impediments to a prospective Treasury Ministers still ongoing, or was the examination Northern Ireland Executive setting corporation tax was of the detail of the legislation carried out by the cross- the Azores judgment. We had to consider how the ministerial working party on corporation tax? Or was principle that it established could be circumvented so the work solely done by the Treasury? I would also like that we could achieve that power. to know what discussions were held with Northern It was agreed in the committee’s report that other Ireland authorities about applying the EU definition of incentives were required to pump-prime the local economy. small and medium-sized enterprises. We need clarity Chief among them were incentives in how small and about the discussions and the agreement that was reached large-scale developments were dealt with in the planning about the 75% threshold to be applied to determine process. We said that we needed to equip our young what constitutes a Northern Ireland regional enterprise. people with skills and expertise, and that we needed We need that clarified in case any traps or restrictions manufacturing and industry to locate in Northern Ireland. are buried in the detail of the legislation. I represent a constituency that was outside the area At the moment, our principal economic lever is public where foreign direct investment was located, and we expenditure and we all know that we face budgetary said that we needed the visits that are normally the challenges, whether in the broader UK or in the Northern 785 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 786 Ireland) Bill Ireland) Bill [Ms Margaret Ritchie] “to comply with EU law, a substantial and irrevocable cut in the block grant will have to be made, based on present tax receipts.” Ireland context. We all need to be aware of what will Has that perspective been considered and is it reflected confront us down the road. My questions also concern in the proposed legislation? implementation and the cost to the block grant. While The hon. Member for Belfast East (Naomi Long) the rate will be set by the Northern Ireland Executive and the hon. Member for East Antrim referred to the and Assembly, what modelling and analysis did the issue of brass plating, which has been factored into the Treasury do on the impact on jobs and the cost to the Bill. I would hope that whatever is factored in is vigorous block grant of differential potential rates? I find it hard and robust. Chapter 17 relates to businesses excluded to believe that such work has not been carried out: if it from claiming the new tax rate, including those lending has, when was it carried out and can that analysis be and making investments, those undertaking investment made available in the Library and that information be management and those engaged in reinsurance. In addition, communicated to Members? any back-office activity is excluded. What is meant by As a result of undertaking research for this debate, I back office? The Bill does not say and just gives the know that way back in February or March 2011 the Treasury the power to define it. It is a pretty fair bet, Minister came to Lisburn and presented a Government however, that some of the most mobile activities in the consultation paper, which stated: UK, such as accounting, data processing and even many call centres, will be back-office activities and so “In order to meet the fiscal autonomy condition, the NIE would need to bear the full fiscal consequences of changes in tax excluded. Further clarification is needed in that area. revenues resulting from a new Northern Ireland corporation tax In welcoming the Bill, I must add that we intend to rate. This means that Northern Ireland’s block grant would be table amendments in Committee to reflect our various adjusted to reflect the fiscal costs of a reduction in the rate of concerns. We want a Northern Ireland economy that corporation tax.” continues to grow and which ensures that young people Has any modelling been done in that respect? What who have emigrated can come back and invest in the specific work has been done? local economy, and that those with academic, degree-level educations or vocational training can deploy their skills The Treasury paper suggests that critics of corporate and expertise in our economy for the betterment of the tax devolution have pointed out that receipts from people. The litmus test for the Bill will be whether it corporation tax are one of the most volatile categories brings continual benefit to the local population. of tax revenue. As the Institute for Fiscal Studies has observed, over time they vary substantially more than In conclusion, I welcome the devolution of corporation total receipts or national income, and replacing an tax. I hope that, along with other incentives, it brings element of the block grant with these revenues carries a significant benefit to the people of Northern Ireland; considerable risk to the devolved Administration. Has that our local economy grows; that our people stay; and modelling been done in that respect? that business is underpinned and promoted. I can think of two areas in my constituency, Kilkeel and Warrenpoint, About four months ago, in October 2014, Her Majesty’s with significant entrepreneurial skill and activity. One is Revenue and Customs published more detailed estimates a harbour importing and exporting and the other is a for the shares of UK taxes arising in England, Wales, fishing port seeking proper port status, because it is Scotland and Northern Ireland. Those estimates suggested now involved in an initiative to utilise its marine and that Northern Ireland’s share of corporation tax revenues engineering skills. I hope that the Bill, along with other had declined in the past few years and is now at about incentives from other Departments here at Westminster 1.2% of UK onshore corporation tax receipts. To increase and in the Northern Ireland Executive, will achieve that those receipts and ensure they are invested in our local better deal for the people I represent. economy and in the businesses the hon. Member for East Antrim (Sammy Wilson) talked about, does the Minister not agree that there is a need to ensure not 4.21 pm only that there is a greater regionally balanced location of foreign and direct investment, but that existing businesses Jim Shannon (Strangford) (DUP): It is a pleasure to are sustained in the local economy? speak in this debate, and I thank the Government for bringing the Bill before the House under the Stormont The Treasury paper also looked at the potential long-term House agreement. Obviously, the DUP is in favour of impact of a cut in corporation tax boosting profits and the Bill. We have concerns about its delivery, but we are consumption, thus increasing receipts based on committed to the devolution of corporation tax. I thank consumption, and indicated that risks would be attached. the right hon. Member for North Shropshire (Mr Paterson) It stated that if the tax cut failed to attract as much for his contribution. I understood it was his baby back investment as expected, the Northern Ireland Executive when I entered the House. He always says it was a team would need to make up the difference. I am conscious of effort, but certainly every conversation we ever had the challenging budgetary difficulties. Similarly, the risk when he was Secretary of State was about corporation associated with profit shifting from the rest of the UK tax. It is good to see it being delivered; I am sure he is would lie with the Northern Ireland Executive. Has that especially pleased. possibility been investigated fully and what is the current The power to set our own rate of corporation tax prevailing view of the Treasury and the Northern Ireland could be a game changer for the economy, if done right, Office? Have fluctuations in tax revenues for a small and could help to create thousands of jobs. My hon. corporate base been factored in? Friend the Member for East Antrim (Sammy Wilson) Professor Trench, professor of politics at Ulster university, said that 37,500 jobs could come out of it. I am not sure gave evidence to the Northern Ireland Affairs Committee how accurate that figure is, but if that is the potential in 2011. He stated then that, figure, there is clearly an opportunity here to do something 787 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 788 Ireland) Bill Ireland) Bill significant, diminishing our reliance on the public sector the news back home was about the new rail links and generating wealth for our citizens. For years now, between Belfast and Dublin—to increase their connectivity we have faced difficult economic circumstances, with and, I would suggest, take it away from Northern people forced to tighten their spending and unemployment Ireland. I am concerned that we need to match our rising, and this has the potential to deliver what we neighbour when it comes to those things. need. There is no doubt about the benefits that devolving I made it my business to speak to business men—mostly corporation tax will bring, but there are several things in my constituency—and gauge their opinion about the we need to consider before its implementation. Fortunately, devolution of corporation tax, and there was a general we have until 2017 to make this a reality. That gives us feeling in favour. They were keen because they could see the time to ensure that when corporation tax is devolved, the benefits coming through to them, but they saw that we have the necessary resources in place to take best it was a 10-year plan and that it might take some time to advantage of it. My main aim is to see unemployment get to where we wanted to be, and they had concerns fall. I believe that the best way forward, coupled with about how it would be delivered over that period. They lower corporation tax rates, is for the Department of also had concerns about the planning system in Northern Employment and Learning to develop a way for students Ireland—the hon. Member for South Down (Ms Ritchie) to get real jobs. That might mean creating more mentioned fast-track planning. We have to do something apprenticeships, promoting particular skills and helping because the planning system is so slow and cumbersome young people to get experience in the workplace through it defies belief. courses in schools and techs. Although unemployment rates are better in Northern Our colleges are working to try to ensure that people Ireland than in the Republic, we have always struggled are qualified, experienced and able to take up employment to compete with the latter’s attractive corporation tax opportunities, but I sometimes think that the further level, as the shadow Secretary of State pointed out education colleges and businesses—with the opportunities earlier, and it is little wonder, given that its tax rate is that will come off the back of this—need to work more 12.5%, compared to our 21%. The ability to set our own closely together. I understand that we have a dearth of tax rate will make that a thing of the past and put us in engineers in Northern Ireland. Again, something needs a better place to compete with the Republic of Ireland, to be done about that. So many young constituents as well as with our Scottish, Welsh and English counterparts. come to me with concerns about getting jobs or houses, Competition is vital for any economy and ours is no because although they have hard-won degrees, diplomas different, so naturally anything that will assist us is most and certificates, they cannot get the necessary experience. welcome. Devolving corporation tax has the potential I have no doubt that if further education colleges and to do that. schools create policies to march alongside tax policies, Allowing us to set our own rate of corporation tax is including on corporation tax, we will see much lower supported by all five parties in Northern Ireland, as unemployment rates among our young people. That has well as the parties in this place. Clearly the benefits are to be a priority. recognised by all. As the Secretary of State has said, it I also want to see real reductions for businesses. The would provide a major incentive for domestic businesses week before last, I was talking to a business man who to invest further in Northern Ireland and significantly runs a very successful company in my constituency, increase foreign direct investment. That is what we Mash Direct, which employs 170 people—I understand want: real jobs for our people. Given that we share a that the Secretary of State took the opportunity to visit land border with a jurisdiction with significantly lower the factory. The company produces simple but attractive corporation tax, this measure has the potential to create foodstuffs and has increased its work force. However, he thousands of new jobs and stimulate growth in Northern told me that it was cheaper for him to import vegetables Ireland’s private sector, leading to a stronger, more rather than grow his own—he has his own fields round stable and more lucrative economy. there and is also co-operative with the farmers in trying We have already witnessed change in the last five to ensure that the products he uses for his factory are years in Northern Ireland. In fact, we have already seen grown locally. However, he can buy vegetables from a large number of foreign and domestic businesses south America for less than it costs to grow them in a opening and expanding into our Province. That is great, field in Newtownards. That is ludicrous. Devolving but we need more opportunities and better employment. corporation tax will help him to compete better, and We want to encourage more businesses to open up and that is an advantage. While being ever mindful of better enjoy the benefits and fantastic work opportunities that rates for businesses, we need to ensure that there is Northern Ireland has to offer. Belfast has been described something in place to protect those who have these as a small city with a big heart, and it certainly is the up issues. and coming place to invest. That said, however, sometimes The agri-food business is important in my constituency. big businesses need that little bit of extra motivation. If Pritchitts, Willowbrook Foods and Rich Sauces are all a low corporation tax rate does not help them to make companies that have thrived over the last few years, their minds up, I do not know what will. It would employing almost 1,000 people between them. We also certainly put us on a much more even playing field with have the Akin pharmaceutical industry.These are businesses the Republic of Ireland, with which we share a land that have grown over the last few years, and the change border. in corporation tax will help that growth to continue, I want to make a quick comment about connectivity which is their ambition, and to employ more people. and the importance of the air corridor between Heathrow I have been approached by many business owners in and Belfast City and Belfast Aldergrove. We want to my constituency, some of whom use their buildings and ensure that it is put in place in such a way that we can be are delighted at the announcement on devolved tax part of growing the economy. Just last night, the talk on power, while others are extremely concerned because 789 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 790 Ireland) Bill Ireland) Bill [Jim Shannon] part of my hon. Friend’s remarks. We say simply that the devolution of corporation tax will require some they do not use their premises. There needs to be some difficult choices to be made to fulfil the conditionality sort of protection or exemption clause for such people. envisaged in the Stormont House agreement and the That needs to be considered in the next two years, Azores judgment. There is a trade-off. We acknowledge because we cannot expect business owners to pay that the economic benefits of the change cannot be fully corporation tax on vacant properties; that would be realised without additional changes, particularly investment unfair. Instead of promoting the economy and creating in skills and infrastructure, to which I shall return a more jobs, it could have the reverse effect, particularly little later. We certainly acknowledge the potentially when Northern Ireland is made up of so many small significant benefits for the people of Northern Ireland and medium-sized enterprises—30,000 micro-businesses through corporation tax devolution. to be precise, which is 89% of our community. Although The hon. Member for East Antrim (Sammy Wilson) we want to encourage big business, we do not want to was absolutely right to highlight the risk of brass-plating. forget about those who account for such a large part of We need to ensure that these measures have a substantive our economy. effect—and I am sure we will return to those issues in Let me express one more concern that I feel needs to Public Bill Committee. be addressed before implementation in 2017. This is not The hon. Member for Tewkesbury (Mr Robertson), something that will be unique to Northern Ireland, as it the Chair of the Select Committee on Northern Ireland has been raised across the United Kingdom, but I am Affairs spoke, and his Select Committee has done a referring to the issue of holding companies. The hon. huge amount of work on this agenda. I pay tribute to it Member for Amber Valley (Nigel Mills),who spoke in for that. the diverted profits tax debate in Westminster Hall, The hon. Member for Foyle (Mark Durkan) was asked me about this matter. The issue is clear: we do not right to say that the devolution of corporation tax was want to see a brass plate on an office that is lying not a magic bullet, and to point out that the successes vacant; we want to see jobs. It is the jobs that grow the achieved by the Republic of Ireland—particularly from economy and bring in the wages, which then brings the mid-1990s onwards—had as much to do with higher money to the Treasury through tax. That is what we education funding and investment as with a lower want to see. This is an issue of great concern. corporation tax rate. A company may come into the United Kingdom and I was pleased that the hon. Member for Redcar (Ian open a holding company in Northern Ireland. This Swales) asked about transfer pricing and profit shifting, means that it could put any profits made elsewhere back and I echo his questions to the Minister. I am sure that into the Northern Ireland branch, saving on corporation we will return to them in detail in Committee, but it tax. Concern about that was expressed in the Westminster would be helpful if the Minister could set out some of Hall debate. Big US companies such as Starbucks, the Government’s early thoughts about ways of ensuring Google and Amazon have all been accused of tax that the Bill does not provide more opportunities for dodging entirely or of paying considerably less than the exploitation of transfer-pricing and profit-shifting they should. What steps will be taken to ensure that this rules. same practice does not happen with corporation tax in Northern Ireland? There was much talk of the dependence of the Northern Ireland economy on the public sector, but, as the hon. Undoubtedly, I believe that the benefits outweigh any Member for Belfast East (Naomi Long) rightly observed, drawbacks, but in order fully to profit from this proposal, the private sector in Northern Ireland is also heavily the issues I have raised need to be addressed. I am dependent on public sector contracts. That is one of the hopeful that, with this legislation, Northern Ireland can systemic issues with which we shall need to get to grips become even more successful and really begin to compete if we are to achieve a true rebalancing of Northern in the business sector on the world stage. Ireland’s economy. 4.32 pm The hon. Member for Amber Valley (Nigel Mills) Shabana Mahmood (Birmingham, Ladywood) (Lab): highlighted some technical details to which I hope the It is a pleasure to wind up this debate on behalf of the Minister will return, probably in Committee rather than Opposition. We have had an interesting and, I think, today. He spoke of the interplay between the behavioural high-quality debate. It is an important issue which has change among businesses responding to what will been the subject of many discussions over a number of potentially be a much lower corporation tax rate and years. I am particularly pleased that so many Members other changes that the Government envisage, particularly from across Northern Ireland contributed, and I am in relation to the diverted profits tax. pleased, too, that, unlike in more recent outings when The hon. Members for Upper Bann (David Simpson) the Minister and I have been opposite each other on and for South Down (Ms Ritchie) made powerful points Treasury matters, this has been a slightly longer and about the importance of encouraging more young people meatier debate, not over so quickly. It is a reminder of in Northern Ireland to stay there, because they are the the good old days when this Parliament was a little future of Northern Ireland. The hon. Member for busier. That was welcome. Strangford (Jim Shannon) rounded off the debate very We heard from the former Secretary of State, the well by pointing out that, while businesses are very right hon. Member for North Shropshire (Mr Paterson), much in favour of the measure, we must ensure that the who I thought was right to point out the potentially reform delivers for the whole of Northern Ireland and significant benefits of the Bill, which we also acknowledge. that the benefits are shared throughout the population. As my hon. Friend the Member for Bury South (Mr Lewis) As the shadow Secretary of State said, peace and the shadow Secretary of State said in his speech, perhaps stability in Northern Ireland are inextricably linked the former Secretary of State did not quite hear that with the increased economic and social progress that 791 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 792 Ireland) Bill Ireland) Bill Northern Ireland needs. There is an interdependence First, as has been said, the impact of the Azores between the economy and the peace process. I think decision is important. The devolution of corporation that there is consensus in the House that if the peace tax needs to be done in a way that ensures it is not process is to thrive, Northern Ireland will need more caught by EU rules on state aid. In order to meet the private sector growth and investment as part of a long-term third of the three conditions set out in that judgment rebalancing of its economy. It has long been argued by regarding fiscal autonomy, the Northern Ireland Executive some that devolution of corporation tax to Northern would need to bear the full fiscal consequences of Ireland so that it can ultimately set a lower rate in order changes in tax revenues resulting from a new corporation to compete with the Republic—given the sharing of a tax rate so the block grant would be adjusted to reflect land border—would enable Northern Ireland’s economy the fiscal costs of a reduction in the corporation tax to be rebalanced more quickly, and would lead to rate. That is an important issue, and we heard from the sustained economic growth. hon. Member for South Down about amendments she Labour Members are committed to supporting measures and her colleagues might want to introduce to address that increase inward investment in Northern Ireland the impact and the modelling behind how some aspects and support the rebalancing of its economy, and we of that would work in practice. There will be a trade-off acknowledge that the devolution of corporation tax with public spending cuts and some difficult choices could play an important role in the achievement of will therefore have to be made, and it is important that those objectives. However, as I said earlier, it will require those impacts are fully considered and thought through, a trade-off between corporation tax reductions and particularly because, as I said earlier, even the private spending cuts. It is important for us to give proper sector in Northern Ireland is highly dependent at this consideration to the long-term as well as the short-term stage on Government contracts. implications for Northern Ireland and for the United The £300 million adjustment that might be required Kingdom as a whole. We agree that the 2017 timetable is a burden that may well increase if Northern Ireland set out in the Stormont House agreement allows time were to have a much lower corporation tax rate which for that consideration, and we will not oppose the Bill. then increased the cost and the offsetting from the We will co-operate with the Government to ensure that block grant. The hon. Member for East Antrim asked it can be scrutinised appropriately and dealt with speedily some questions about the formula that will be imposed during the current Parliament. in order to calculate the forgone tax by the rest of the The Bill will devolve the rate-setting power for UK. It would be helpful to have some clarification from corporation tax in Northern Ireland to the Northern the Financial Secretary when he responds on how that Ireland Assembly for trading profits only, and subject formula will operate in practice. I am sure we will to a commencement order. It will devolve the power to address the detail in Committee, but we would like an set a corporation tax rate, but will not devolve control outline of his thinking now. of the base. The Northern Ireland rate would apply to all the trading profits of a company if that company Conditionality is attached to the Stormont House was a micro, small or medium-sized enterprise, and if agreement. The financial annex adds conditionality to the company’s employee time and costs fell largely in the progress of this legislation, in order to ensure that Northern Ireland. In that context, “largely” is defined any changes are fiscally sustainable, stating that there as at least 75%. In the case of large companies, the rate must be would apply only to profits that are attributable to a “a clear commitment to put the Executive’s finances on a permanently Northern Ireland trading presence. The Northern Ireland sustainable footing for the future.” Assembly will not be able to set the rate for non-trading profits, such as income from property. The Secretary of State did not in her opening speech labour too much the issue of putting the Executive’s Ian Paisley: Earlier in the debate, I asked the Secretary finances on a stable footing for the future. There is some of State if she had taken any advice or guidance about detail in the financial annex to the agreement, but that what level of corporation tax Northern Ireland should is an important condition that has not necessarily been consider. Does the Opposition spokesman have any well ventilated in the debate we have had thus far. view on that? Indeed, is the current inquiry set up by the Again, however, I am sure we will return to that issue in Labour party in Northern Ireland even considering Committee. that? Many Members highlighted the fact that the headline rate of corporation tax is not a panacea. It does not in Shabana Mahmood: I am afraid that on this occasion and of itself result automatically in economic growth, I must give the hon. Gentleman a similar answer to that and it was only one of a number of reasons, as many from the Secretary of State. This legislation is looking commentators and academics have said, why the Republic at the devolution of this power. It is not for me to say to of Ireland experienced its economic miracle from the the Northern Ireland Executive, or Northern Ireland mid-’90s onwards. None of us in this House should see politicians of any description, what that rate should be. it as a panacea. Investment in skills in particular is just Once this Bill passes and we hit the 2017 timetable, that as important, as is investment in infrastructure and, as will be a matter for the representatives in Northern Members have said, is looking at planning rules. All Ireland and nobody else. these issues will be crucial. It would be a mistake to There are a number of issues, and they have been think that Northern Ireland’s economy will automatically touched on by Members. We all need to consider them rebalance just because it has a lower rate of corporation deeply as this progresses both through the House and in tax—a rate more on a par with that in the Republic of the further discussions that will take place as a result of Ireland. That alone will not achieve what we all want, the Stormont house agreement. which is a thriving and growing Northern Ireland economy. 793 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 794 Ireland) Bill Ireland) Bill [Shabana Mahmood] this country, and five parties in Northern Ireland want to cut corporation tax there, Labour wants to increase Other changes will be needed, and it would be helpful to the rate across the UK. Whether it is comfortable hear from the Financial Secretary the Government’s positioning itself to the left of Sinn Fein on this matter thinking on some of them. I am really not sure, but that is where it is. We have talked a lot about corporation tax not being the only way to achieve economic rebalancing, but as Shabana Mahmood: I hesitate, Madam Deputy Speaker, the hon. Member for South Down pointed out, the to stray too far from the terms of the Bill, but the Institute for Fiscal Studies said in its 2013 green budget Financial Secretary is well aware that our manifesto that it is a tax which, over time, can vary substantially in commitment is to raise the headline rate of corporation revenue terms, and much more so than total receipts tax from 20% to 21% and to put every single penny of from national income. We will need to hear more about that money towards a cut and then a freeze in business how the volatility of corporation tax might impact on rates, which will primarily benefit small and medium-sized the Northern Ireland economy, and particularly about businesses. Will he at least acknowledge that that is a any modelling the Treasury has done on its impact on business-friendly measure? Northern Ireland’s finances. As I have said, we recognise that there are potential Mr Gauke: The sense of direction in increasing gains for the people of Northern Ireland from this corporation tax would be a mistake. I will not detain the measure. However, we want responsibly to consider and House for long on this matter, but I also note that ventilate the risks it also poses, which we will carefully Labour’s pledge is to have the lowest corporation tax scrutinise as we progress. We will also carefully consider rate in the G7, which would allow it to increase corporation anti-avoidance measures, to ensure that the Bill does tax to 26%. That would be a major reversal of the not simply become an opportunity for businesses to progress made by this Government. However, I am sure brass-plate and base themselves in Northern Ireland, you would like me to return to the issue of Northern with no other economic benefits for the people of Ireland, Madam Deputy Speaker. Northern Ireland. I look forward to the debate in Let me add my tribute to those that have made to my Committee. right hon. Friend the Member for North Shropshire (Mr Paterson). Having worked with him in opposition 4.46 pm and in government on this policy, I can testify to the The Financial Secretary to the Treasury (Mr David vision, tenacity and infectious enthusiasm he has shown. Gauke): We have had a helpful and wide-ranging debate He demonstrates, as does this Bill, what can be achieved on a Bill that will allow the Northern Ireland Assembly by a Minister with his determination and vision, and he to set a different rate of corporation tax from the rest of deserves much of the credit for the progress that has the United Kingdom, and enable Northern Ireland to been made. He also rightly paid tribute to the current encourage genuine investment that will create jobs and Secretary of State, who has demonstrated great skill in growth. It will help rebalance the Northern Ireland making progress on this matter. He put a lot of the economy away from dependence on the public sector, momentum into the process, but it has also required her and I welcome the support it has received from all parts talents to bring us to this point. of the House. Representatives of six different political parties have spoken in support of it. That mirrors the The hon. Member for East Antrim (Sammy Wilson) support received beyond this Chamber—from businesses made an excellent speech about the history of this in Northern Ireland that have long argued for this progress. He and I have had many conversations and reform, and we are delighted to have introduced it. meetings on this matter. He described the progress by saying that we would go forward a bit and then back a The debate has been relatively lengthy and many bit, and that at times it was frustrating. I can tell him contributions were made. I am conscious that there is a that I shared that experience, but he made a good case further debate to follow, so I am a little constrained by for the progress we have made. He also made an important time, but let me see if I can address most of the points point about the Republic of Ireland’s resistance to that were raised. raising corporation tax at times when it faced great I thank the shadow Secretary of State, the hon. financial difficulties. That point was also made by my Member for Bury South (Mr Lewis), and the hon. hon. Friend the Member for Tewkesbury (Mr Robertson), Member for Birmingham, Ladywood (Shabana Mahmood) the Chair of the Northern Ireland Affairs Committee, for their support. I think it fair to say that Labour has who described how important it was to the Republic of been somewhat sceptical about devolution of corporation Ireland to maintain low rates of corporation tax and to tax. The shadow Secretary of State challenged my right grow the private sector. hon. Friend the Secretary of State on the question of when they expressed opposition to it. I am tempted to My hon. Friend made a couple of other points that I quote the right hon. Member for St Helens South and wish to address. He mentioned timing and said it would Whiston (Mr Woodward), who said at the 2011 Labour take a couple of years before this measure comes into party conference that the proposal to cut corporation effect. As has been said by a number of hon. Members, tax was “a huge gamble” that it is important that we set a sense of direction so that businesses can see where things are going in future “risks making a bad situation worse.” years, but it takes some time to implement a change of He urged the then Secretary of State to this sort. Therefore, the 2017 timetable is as fast as is “think twice before he leaps.” realistic. He also asked whether we should have the To be fair, such scepticism is consistent with Labour’s Committee stage on the Floor of the House or upstairs. general position on corporation tax. Whereas the two That is largely a matter for the usual channels, but given parties in this Government have cut corporation tax in that we want to make progress as quickly as possible 795 Corporation Tax (Northern 27 JANUARY 2015 Corporation Tax (Northern 796 Ireland) Bill Ireland) Bill and that a limited amount of time is left in this Parliament, will ensure that HMRC has the capacity to deal with it is right that we take every opportunity to make these matters. For example, when dealing with transfer progress on this as quickly as we can. The fastest and pricing matters, HMRC will have a risk-based approach easiest way of doing that is by holding the Committee to ensure that the system works, so that we do not see stage, which will involve detailed scrutiny of some 87 pages the type of activity that so concerns Members. of legislation, upstairs. The hon. Member for Foyle (Mark Durkan) rightly Mark Durkan: On the subject of HMRC capacity, I made the point, as did a number of other hon. Members, know the Minister is talking mainly about its powers that other issues will drive growth and this measure and where it is sited, but has any thought been given to should not been seen as a silver bullet. He also said we the regional capacity that it will need in relation to these should not create a new twilight zone where businesses new discrete considerations that will apply in Northern and individuals can play the tax system to their benefit, Ireland, because that might lead to a revision of HMRC’s and I will deal with that briefly in a moment. My hon. projection for its staff needs in Northern Ireland? Friend the Member for Redcar (Ian Swales) made similar points about tax avoidance and also mentioned the Mr Gauke: The important issue here—it was also a impact of this measure on the UK more widely, and I point raised by my hon. Friend the Member for Redcar—is will deal with that in a moment also. ensuring that there is the capacity to deal with the The hon. Member for Belfast East (Naomi Long) transfer pricing issues. Transfer pricing is a highly skilled made an excellent speech. A couple of points worth and specialised discipline within HMRC. It is important highlighting are the need for Northern Ireland to get its that the transfer pricing team has the capacity to deal financial house in order and to have sustainable public with those matters. That is best done on a centralised finances, something that is well recognised, and the fact basis rather than having people dispersed around the that political stability is important for providing the United Kingdom. The hon. Gentleman and I have had environment for economic growth in Northern Ireland. many conversations over a number of years on the issue I agree with her on that. of HMRC’s presence in Northern Ireland. Let me stress My hon. Friend the Member for Amber Valley (Nigel that this is a matter of ensuring that we have the right Mills) brought his technical expertise to this debate. He skills, that the customer relationship managers work raised a number of points that are probably best addressed closely with businesses and that there is a good in Committee. I do not know whether he was making an understanding of how this differential rate will work application to serve on that Committee, but he certainly and be applied. raised a number of important points. It is worth pointing out that it will not be possible for The hon. Member for Upper Bann (David Simpson) companies to set up a brass plate to benefit from a talked about grasping the opportunity to help economic lower rate in Northern Ireland. The rules require a growth in Northern Ireland. The hon. Member for permanent physical presence in Northern Ireland and, South Down (Ms Ritchie) made a similar point. She more fundamentally, a calculation of Northern Ireland’s also highlighted other matters, and talked about how to trading profits based on the profits that the Northern help the Northern Ireland economy. She asked about Ireland activity would have made as a stand-alone our engagement with the Northern Ireland Executive. I entity. That separate enterprise approach coupled with can assure her that, over the course of many years, there the exclusion of investment profits from the Northern has been significant engagement, that the Northern Ireland regime should ensure that common international Ireland Executive have been involved in discussions on tax avoidance arrangements cannot be replicated within the joint ministerial working group and the subsequent the Northern Ireland regime. As a Government we have design process, and that we have kept the Northern a proud record of progressing the international debate Ireland Executive informed of progress in the design of on the issue, and we are not going to allow an opportunity legislation and taken their views into account when for abuse in our system. agreeing the final design. There have also been regular On the block grant adjustment, the Stormont House discussions at official level between the Executive, Her agreement sets out that the block grant will be reduced Majesty’s Revenue and Customs and the Treasury. I am to reflect the tax revenues forgone by the UK Government grateful to the Executive for their co-operative approach as a result of devolving tax powers. We will continue to at ministerial and official level, and that engagement is work with the Northern Ireland Executive on the detailed continuing. mechanics to ensure that the Northern Ireland block To conclude the debate, the hon. Member for Strangford grant is reduced appropriately. The reduction will depend (Jim Shannon) also highlighted additional challenges on the rate that is set by the Northern Ireland Executive. that Northern Ireland faces, including improving the To answer a point made by my hon. Friend the Member planning system and ensuring that the skills base and for Redcar, there are no particular restrictions on that. education system is working for Northern Ireland, and Conceivably, it could be a 0% rate, but that would have all of those were good points. to be paid for and it would be expensive. An estimate of Let me pick up on a few of the issues to emerge from the cost to the Northern Ireland Executive of a 12.5% the debate. The most significant point, which was raised rate is in the region of £300 million by 2019-20, which is on a number of occasions, was ensuring that this is when the steady state will be in place. That will depend about real economic activity. This is not about profit on a number of factors, not least the growth of the shifting or a brass plate. I can assure the House that we economy. very much share that view. This is not about finding a I am conscious of time and the fact that there is way in which companies can reduce their tax base another debate to be had, but let me conclude by saying through contrived or artificial arrangements, but about that there is a strong case for action in this area. The encouraging jobs and growth in Northern Ireland. We Northern Ireland economy is significantly more dependent 797 Corporation Tax (Northern 27 JANUARY 2015 798 Ireland) Bill [Mr Gauke] (6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading. on the public sector than the rest of the UK, with about Other proceedings 30% of workers employed there, compared with about (7) Any other proceedings on the Bill (including any proceedings 20% in the rest of the UK. The Northern Ireland on consideration of any message from the Lords) may be programmed. corporation tax rate of 21% has to compete with the —(Dr Thérèse Coffey.) rate in the Republic of Ireland of 12.5%. If corporation Question agreed to. tax is lowered in Northern Ireland, about 34,000 businesses in Northern Ireland stand to benefit, including 26,500 small and medium-sized enterprises. CORPORATION TAX (NORTHERN IRELAND) The Northern Ireland Executive will have greater BILL (WAYS AND MEANS) power to rebalance the economy towards a stronger Motion made, and Question put forthwith (Standing private sector, boosting employment and growth. Northern Order No. 52(1)(a)), Ireland will attract more investment and become more That, for the purposes of any Act resulting from the Corporation competitive, boosting the entire UK economy and the Tax (Northern Ireland) Bill, it is expedient to authorise: standard of living of people across Northern Ireland. (1) any increase in charges to corporation tax by virtue of a The Bill is conditional on the Northern Ireland Executive resolution made by the Northern Ireland Assembly setting the continuing to work to balance Northern Ireland’s budget Northern Ireland rate of corporation tax, and to ensure that people across the UK can benefit from (2) any increase in charges to corporation tax by virtue of the the stronger economy and fairer society that this Act. —(Dr Thérèse Coffey.) Government have been building. I hope that the House Question agreed to. will give the Bill a Second Reading, and that we have the support of the whole House. Business without Debate Question put and agreed to. Bill accordingly read a second time. INSURANCE BILL [LORDS] CORPORATION TAX (NORTHERN IRELAND) Motion made, and Question put forthwith (Standing BILL (PROGRAMME) Orders Nos. 59(3) and 90(5)), That the Bill be now Motion made, and Question put forthwith (Standing read a Second time.—(Dr Thérèse Coffey.) Order No. 83A(7)), Question agreed to. That the following provisions shall apply to the Corporation Bill accordingly read a Second time. Tax (Northern Ireland) Bill: Motion made, and Question put forthwith (Standing Committal Order No. 63(2)), That the Insurance Bill [Lords] be (1) The Bill shall be committed to a Public Bill Committee. committed to a Committee of the whole House.— Proceedings in Public Bill Committee (Dr Thérèse Coffey.) (2) Proceedings in the Public Bill Committee shall (so far as Question agreed to. not previously concluded) be brought to a conclusion on Thursday 12 February 2015. (3) The Public Bill Committee shall have leave to sit twice on DELEGATED LEGISLATION the first day on which it meets. Motion made, and Question put forthwith (Standing Consideration and Third Reading Order No. 118(6)), (4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings DANGEROUS DRUGS are commenced. That the draft Misuse of Drugs Act 1971 (Amendment) (5) Proceedings on Third Reading shall (so far as not previously Order 2015, which was laid before this House on 17 December concluded) be brought to a conclusion at the moment of interruption 2014, be approved. —(Dr Thérèse Coffey.) on that day. Question agreed to. 799 27 JANUARY 2015 Young People in Care 800

to see in order to deliver a vision which I know we share Backbench Business with the Government of improving care for these young people. In doing so, I stress the fact that as a Committee Young People in Care we do not doubt the Minister’s commitment to addressing the problems faced by older children in care, nor do I think that progress has not been made. It has. 5.4 pm For example, the new pupil premium plus has seen Mr Graham Stuart (Beverley and Holderness) (Con): funding to support children in care at school increase I beg to move, by £1,000 per pupil. Children are covered as soon as That this House notes the Second Report from the Education they enter care and 10,000 more children in care now Committee, Into independence, not out of care: 16 plus care benefit, bringing the total to 50,000. The care leavers options, HC 259, and the Government’s response, HC 647; welcomes strategy that the Minister launched in late 2013, which the progress made and the commitment to improve the care encompasses action across a range of Departments, provided to these vulnerable young people shown in the Government’s from the Department for Work and Pensions to housing response; regrets that the Government has not gone further by to the Department for Business, Innovation and Skills, exploring with local authorities how to ban the use of bed-and- breakfast accommodation for this age group and by moving to is giving care leavers a helping hand as they enter adult inspect and regulate all accommodation provided to children in life. The Ofsted single inspection framework is doing a care; and calls on the Government to do all it can to improve the better job of drawing together data and insight into the accommodation and care given to these young people. lives of older young people and making sure that local The motion stands in my name and those of other authorities can be held to account for the provision that members of the Education Committee, many of whom they give them. That is all good news. I see across the Chamber. Our disagreement today is over how fast we should I am pleased to lead this debate and to have the now move towards tackling what my Committee sees as opportunity to discuss our report, “Into independence, matters needing urgent attention: the regulation of not out of care: 16 plus care options”. The reason why accommodation provided to children in care, and the we are here is that the issues considered in our report use of bed-and-breakfast accommodation for that age will have far-reaching consequences for some of the group. I shall start with bed and breakfasts. The Department most vulnerable young people in our society. We were for Education guidance says that bed-and-breakfast moved to inquire into this subject by our concern, accommodation is not suitable. raised during previous work on child protection, that One young person told us of being placed inaBand the needs of older children in the care system were not B as an emergency placement—I repeat, emergency being properly met. The horror stories we heard about placement—for three weeks. She was the only young children being placed in unsuitable and unsafe person in the building and older residents would come accommodation, often far from home, made it a matter knocking on her door asking her to join them in their of crucial importance for us to explore what could be rooms, which was an incredibly frightening experience. done to improve the situation. Imagine being that child, sitting behind the door, waiting During the inquiry, we took evidence from charities for the next knock. For vulnerable young people, many and experts, from the Minister, whom it is a pleasure to of whom have self-esteem issues and who are desperate see on the Front Bench, and from those closely involved for love and attention, such an environment leaves them in providing care services to young people but, as I at the mercy of people who are keen to exploit their think my colleagues will attest when they speak during situation and weakness. the debate, the most important and powerful evidence So why, we asked, is bed and breakfast still being we heard was from young people themselves who were used? We found that it is used mainly as emergency in care or had previously been in care. We were grateful accommodation in cases where a young person needs to those who were brave enough to come and speak to a shelter urgently and nothing else is available. At least, bunch of MPs and speak about often troubling periods that is the reason we were given, although when we met of their lives and about their experiences. young people as we travelled around the country we Our inquiry looked at the kinds of accommodation heard about people being kept there for a long time, that are provided for young people aged 16 and 17 who such as the young lady I mentioned. It was argued that are looked after by local authorities—young people still if the local authority did not have the option of using in care; the suitability, safety and regulatory nature of bed and breakfasts, then young people could be even alternative accommodation; whether the Staying Put worse off. In our report, we recommended that the principle whereby young people are allowed to stay in Department consult local authorities in order to determine their accommodation for a longer period should apply a reasonable time frame to allow them to build up to those in residential children’s homes; and whether the capacity so that there could be a total ban on using B provision of alternative accommodation should be extended and Bs and they could follow the example of Wiltshire, to the age of 21. We made a series of recommendations for instance, which has built up a resource such that it in each of these areas, all of which are important and does not need to use them. We also say that there should many of which were picked up by the Government be a strengthened requirement for local authorities to response, which was published in October 2014. Others commission sufficient emergency facilities. may wish to touch on some of those issues, such as In its response, the Department accepted our Staying Put or ensuring that young people’s voices are recommendation on temporary measures and asserted heard in planning their care. that there should be a limit of two working days on the I hope the Minister will forgive me if I concentrate on time that a young person could spend in a B and B. That two areas where we think the Government should have is welcome, but it still falls short of an outright ban. gone further towards making the changes that we want Many children enter B-and-B accommodation in an 801 Young People in Care27 JANUARY 2015 Young People in Care 802

[Mr Graham Stuart] accommodation of 16 and 17-year-olds who have had an extremely tough start in life. As a society, we owe emergency on a Friday night, so the limit of two working them that. days means that they could still be there on the Tuesday I ask the Minister to think again, or at least to evening. The Government response said: explain why he believes that a new regulatory framework “We want to test further the arguments for and against the will not lead to the improvements in quality that we flexibility for local authorities to use B&B where it is the best way have seen in other settings that are individually regulated of meeting a young person’s needs. Over the coming months, the by Ofsted. I know that he cares deeply in both a Department for Education will undertake work with stakeholders personal and a professional capacity about making to better understand these issues.” improvements. I hope that I have fairly stated that I We welcome the seriousness with which the Government recognise that the Government and the Minister have have taken this, but we do not think that is good made significant strides in improving outcomes for such enough. Young people are being failed now—as we young people. He has done a lot of great work, and I speak—and no amount of stakeholder consultation sincerely hope that he will now take further steps to will disguise that reality. I urge the Minister to set out ensure that young people on the cusp of leaving the care what the DFE has learned from the consultation to date system get a fairer, safer start in life. and when we can expect further action on this issue, with a view, in the opinion of my Committee, of moving towards an outright ban. 5.15 pm The other issue I want to raise is the regulation of Bill Esterson (Sefton Central) (Lab): It is a pleasure “other arrangements”for looked-after 16 and 17-year-olds. to follow the Chairman of the Education Committee, Some Members unfamiliar with this area of policy the hon. Member for Beverley and Holderness (Mr Stuart), many wonder what “other arrangements” are. They who provided a very good summary and analysis of our include placements in a family or domestic setting where report. the adults responsible for their care are not approved as Like other Committee members, the hon. Gentleman foster carers; foyers, which are meant to offer integrated will have heard from or met those from the Alliance for housing, learning and personal development services, Children in Care and Care Leavers. They have given me and other kinds of supported accommodation; and a copy of their requests for inclusion in the manifestos placements in independent accommodation with “floating of all parties. One of their points is that the average age support” where housing support workers make regular at which young people leave home is 24; yet young visits—or are supposed to. Ofsted’s single inspection people leave care at 18 and, sadly, it is often earlier—at framework assesses the experiences and progress of 16 or 17—for the most vulnerable and disadvantaged care leavers through scrutinising a representative sample children or young people in our society. As the Chairman of 25 tracked cases. Individual properties or settings are of the Committee said very well, they are the group not inspected. That would not be an acceptable approach most in need of support, but we expect them to fend for towards other settings, and it should not be acceptable themselves and to go into independent living. for the accommodation in which some of the most The point about the difference in treatment at different vulnerable, abused young people in our society are ages and the way in which we, as supposed corporate placed. parents, allow that to happen, says everything we need We therefore recommended that the DFE consult on to know in summary, and the detail has now been a framework of individual regulatory oversight for all published in our report. The life chances of children in accommodation that falls within “other arrangements” care—whether in education, employment, relationships to ensure suitability, while allowing for diversity of or housing—are all significantly lower than for other provision. Many will ask why, as a Conservative, I am people in society. For example, many of the prison so keen on regulation. I, and my Committee, think that population were in care as children, and 60% of children children who are as vulnerable as these young people—they in care have some kind of mental health problem. may have learned to have a very tough exterior, or a The young people we met told us their stories, as do streetwise front, but are in fact deeply vulnerable—deserve those who have met other Members at other times. Our to have their accommodation individually inspected to report shows that leaving care is one of the key stages in ensure that the injustice they have suffered so far in their lives. It is very often a harsh cut-off date, whereas their lives is not compounded further by a failure of other young people usually have no arbitrary leaving oversight by those in loco parentis, namely us. date. Many young people go away and come back, so Ministers said that they wanted to maintain what they leave home over a period; some parents would say they described as the “flexibility”of current arrangements, that their young people never leave, as is sometimes emphasising that they will hold under-performing local their experience. However, that is not the case for this authorities to account when poor practice is uncovered. group of particularly vulnerable young people, so our However, that logic is not applied to the quality and recommendations are important. safety of settings for children and young people across Our chapter on “Staying Put” gives the figures for the rest of the DFE’s remit. If there were a consistent those who leave care as 16 and 17-year-olds, and for approach in saying that a sample approach delivers those who leave on their 18th birthday. A remarkably better outcomes, one would expect that to be found high number—in the thousands—leave care before they across the piece, but it is not. Childminders, foster are 18, and many more do so on their 18th birthday, carers, residential children’s homes, secure training centres, when they are no longer regarded as looked-after children. schools, sixth-form colleges and further education The questions we want to pose to Ministers and, for colleges—each of those is individually inspected. It that matter, potential Ministers are: is everything being cannot be right that we do not do the same for the done to ensure that children do not have to leave care if 803 Young People in Care27 JANUARY 2015 Young People in Care 804 they do not want to, and do local authorities and others Mr Graham Stuart: Further to the question from the apply pressure to get young people to leave? I have hon. Member for Upper Bann (David Simpson), we heard such a point more than once, and we refer to the recommended in this report that there should be greater financial pressures in our report’s conclusion, where we awareness of the right of young people who leave care recognise the resource constraints in relation to the and get into difficulty to come back into care. The difficulty of extending Staying Put arrangements in Government said that they would look into that more residential homes. closely. Perhaps the Minister will reflect on that in his One of the witnesses who gave evidence to the Committee remarks and let us all know what progress has been was Ben Ashcroft, the author of “51 Moves”. He is made. involved in a campaign to extend residential care to the age of 21, which is as it should be. If as a society we Bill Esterson: I thank the hon. Gentleman for making have accepted that it is right for young people to stay in that point. He is absolutely right. foster care until they are 21, it should be the same for We made recommendations about better preparation those in residential care. As our report says: for young people who are leaving care, including through “the young people in question have already experienced troubled the development of life skills. We highlighted a number and disrupted childhoods and are far too important for their of areas where support was crucial, based on the evidence welfare not to be prioritised.” that was presented to us. If we are serious about ensuring that support is The concept of instant adulthood has been raised available, we need to ensure that local authorities have with me. It describes the sudden change in the lives of the money. My council has lost more than 40% of its people who have been very much looked after and who funding since 2010 and many other local authorities have had everything done for them and everything find themselves in that situation. If this Government or provided for them. It describes how corporate parenting any future Government are serious about making a is not working in the way that we would expect for this difference for these vulnerable young people and children, group of young people. The concept of corporate parenting they, as well as local authorities, need to ensure that the had been used as a way of identifying how we should resources are available. If that does not happen, we will look after such young people. continue to spend far more in later years on looking A point that has been made to me is that young after the adults that the children and young people people must value the support that they receive. It is not become, whether through the high cost of prison, the good enough for the authorities to describe what type benefits system or mental health care. of support should be available and who should provide If we are talking about finding extra money to fund it. Young people often have relationships with those the long-term solutions that our report suggests, has the they do not necessarily want supporting them, whether time come to consider which Departments or budgets it a social worker or somebody else they come across will come from? The justice budget and the health while they are in care. It is really important to listen to budget are two possibilities, but the housing budget, the young people in deciding who is best placed to provide Department for Work and Pensions budget and the support for them. It is a matter of trust—I have heard education budget also spring readily to mind. that word mentioned a number of times. As we heard from the young people we met and as other young people have told me, when young people Tim Loughton (East Worthing and Shoreham) (Con): leave care, they are often leaving a situation where I refer the House to my entry in the Register of Members’ everything is done for them, with little preparation for Financial Interests. having to look after themselves. All too often, they have The hon. Gentleman is talking about the “Maintaining no concept of how to pay the rent or other bills, how to positive relationships” part of the Select Committee’s shop or cook, or how to get education or work. It is no report, which I thought was interesting. It mentions wonder that so many of them end up struggling. A third how we can do better with personal advisers, but it also of young people who leave care end up homeless between refers to sibling groups. Does he share my concern that six and 24 months afterwards. That is a staggeringly a report issued today by the Family Rights Group high proportion. shows that half of all sibling groups are split up in foster care? Does he think that more could be done, as David Simpson (Upper Bann) (DUP): Does the hon. those children leave care, to re-establish relationships Gentleman agree that a percentage of young people with other family members that have been denied them leave care homes not because they are forced to do so, in the care system? That could prove important in but because of difficulties that they experience in their anchoring them and giving them stability, so that they lives? Such young people become vulnerable and can can move into adulthood with trusted relatives. then be trafficked and cannot be found again. Bill Esterson: I am extremely grateful to the hon. Gentleman for making that point. As an adoptive parent Bill Esterson: The hon. Gentleman is absolutely right. of a sibling group, some of whom are still in care, I He is talking about people who leave residential care. know from experience that that is incredibly important The Committee came across evidence of that during to my own children. He hits the nail on the head—sibling our inquiry on residential care and I suggest that he groups should be kept together wherever possible, and reads the report. It is worrying that society loses track every effort should be made to keep siblings in touch of such a high number of young people. while they are in care and into adulthood. As he says, In this inquiry, we found a clear need for action, we touch on that in the report. Such relationships can whether by doing better with existing resources, providing really help young people as they leave care and move extra resources or both. into adulthood. What came out strongly in the evidence 805 Young People in Care27 JANUARY 2015 Young People in Care 806

[Bill Esterson] group when they leave care has been nothing short of appalling in the past. Of the 7,000 19-year-olds who that we took, and in the evidence that I got from were in care at 16, 36% were not in education, employment elsewhere, was the importance of a young person having or training and only 6% of all care leavers are in higher someone to advise and support them, whether it is a education, compared with 43% of their peers. Less than sibling group, a friend, a trusted professional adviser or 26% of children in care obtain five good grades at the parent of a friend. GCSE, compared with more than 70% of their peers, I have had some good information provided to me by and 23% of the adult population in our jails have had Barnardo’s, with examples of what goes on. It says that experience of the care system. Around a quarter of there are a number of examples of good practice around those living on the streets have a care background and the country. The Chairman of the Education Committee care leavers are four or five times more likely to commit mentioned what goes on in Wiltshire, and I am aware of suicide. About 47% of looked-after children aged between good practice by Barnardo’s in Merseyside, for example, five and 17 show signs of psychosocial adversity and where it provides support not just for care leavers but psychiatric disorders, which is higher than the most for other young people in the same age group. disadvantaged children living in private households. Physical and mental problems also increase at the time Barnardo’s also gave me examples of nightstop, crash of leaving care. pads, supported lodgings and supported housing projects. Crash pads are short-term emergency supported lodgings. As we know—the Chairman of the Committee They are temporary forms of family-based accommodation, mentioned it in his speech—and to the Government’s with placements lasting up to eight weeks. They provide huge credit, they have allowed young people who are specialist support to young people who need somewhere fostered to remain with their carers until they are 21, if to live on a short-term basis. they wish, if their carers agree and if it is considered to Supported lodgings provide family-based support to be in their best interests. That is in an attempt to vulnerable young people aged 16 to 25 who cannot live address the many serious challenges care leavers face. with their own family and are not yet ready for independent All young people in foster care are offered enhanced living. Young people are provided with places to live in support up to the age of 21. For young people in foster the homes of local people, from whom they receive care, that is one of the biggest and most fundamental varying levels of practical and emotional support, enabling changes to their support when they leave care, and it has them to develop the confidence and capability to live been widely applauded as a significant change in the independently. Youngpeople normally stay in supported right direction for that group of young people. lodgings for up to two years, but they can also be used The big scandal, however, is that the extension to to provide shorter-term emergency housing. foster placements excludes the 9% of young people in Supported housing projects offer high levels of support care who are in children’s homes. Those young people to young people for up to two years, although some have a wide range of needs and challenges. What most have a small number of emergency beds available at have in common is that they are vulnerable. That short notice for a few days at a time. They tend to house vulnerability is exacerbated by the stigma attached to a group of young people with more complex needs, and residential care among politicians, the public and, sadly, they usually have 24/7 on-site support from staff. some in the social work profession. Ministers appear to see living in a family as the best option for children in I give those examples to address the point made by care and the only setting in which children will thrive. the Chairman of the Committee about emergency That is not reflected by some social workers, who see accommodation—what is sometimes called bed and children’s homes as the last resort, as a place for children breakfast. Some of those examples are from Barnardo’s who have failed family placements and as somewhere and other providers. I hope that the Minister and shadow the more challenging young people can be placed. Many Minister will look at what is out there already, because of the public see children’s homes as places where if we are to provide the range of alternatives that our naughty children are sent. Historically that view was report calls for, we should learn from good practice and compounded by some local authorities who used children’s share and apply it, so that—in the shortest possible homes to accommodate their more challenging young time—better opportunities are available for this group people. of young people. I hope that the Minister will take my comments on board and perhaps respond when he The Education Committee’s recommendation was winds up the debate. that young people living in residential children’s homes should have the right to remain there beyond the age of 18, just as young people in foster care now have the 5.30 pm right of staying put until the age of 21. We recommend Craig Whittaker (Calder Valley) (Con): As has already that the Department for Education extends Staying Put been said, our report made recommendations on bed- to residential children’s homes. and-breakfast accommodation, on staying closer and Despite the evidence taken in our inquiry, the on the regulation of all external accommodation—to Government do not agree. They said that too many name but a few. The recommendation I wish to discuss children’s homes are not of sufficient quality and that today is on the lack of Staying Put arrangements for the the immediate priority is to improve significantly the 9% of our young people—some would argue that they quality of residential care. To be fair to the Government, are the most vulnerable 9%— in residential care homes. they are doing that. They said that the evidence for First, let me remind the House of some of statistics placing such a duty on supporting the Staying Put about these vulnerable young people, our nation’s 70,000 arrangements for young people in foster care is robust. looked-after children. Everybody will surely agree that We do not have the evidence for children’s homes, as this country’s record in helping that most vulnerable they were not covered by the plans. 807 Young People in Care27 JANUARY 2015 Young People in Care 808

The Government said that there are a number of hon. Gentleman agree that one of the very big challenges practical and legal issues we would need to consider and in foster care is to find more foster carers, and in test out. There would be vulnerable adults living in residential care, as the hon. Member for East Worthing homes with much younger vulnerable children—despite and Shoreham (Tim Loughton) pointed out, it is to find the fact that that happens in many households throughout staff who will stay long-term so that we have a more Britain. In addition, a children’s home accommodating experienced, quality work force? three care leaders and one child would technically no longer be a children’s home. The Government also Craig Whittaker: Of course the hon. Gentleman has mentioned money, and that has to be taken into a point, but it does not make sense to allow young consideration, particularly in these economic times. people in foster care to stay on until the age of 21, but None the less, the Department recognised that those exclude the 9% in residential care homes—the most challenges should not be viewed as insurmountable vulnerable young people—particularly given that the barriers. It said it was working in collaboration with 91% are arguably the ones clogging up the system. charities to consider some of the issues associated with The scoping exercise discussed four options, and the Staying Put and residential children’s homes. Natasha results were interesting: 25% of the young people preferred Finlayson, from the Who Cares? Trust, confirmed that option 1—care leavers live in the same children’s home that work was in progress. The Minister confirmed all until they are 21; 13% preferred option 2—care leavers that nearly a year ago, when I secured an Adjournment live in a separate building but in the same grounds as debate on this very issue. the children’s home; another 13% preferred option 3, which was like supported lodgings—care leavers live in In fact, a scoping report was requested from the a different house and need to be at least 16; and 25% Minister from a collaboration between the National preferred option 4, the staying close agenda—care leavers Children’s Bureau, the Who Cares? Trust, Action for live independently in their own flat down the road or Children, Barnardo’s, Together Trust, the Centre for close to the children’s centre, and they have a key Child and Family Research, and Loughborough university. worker. It was clear from the scoping exercise that Their work was published only yesterday, after a year of young children in residential homes would prefer those working on the scoping exercise. A stakeholder workshop types of options. identified four different options for residential care Staying Put arrangements, which formed the basis of a The cost of extending those four options to all consultation with young people. Overall, the scoping children—if we do it for one group, surely we must do it exercise showed that care leavers from residential homes for all young people in care—would be about £75 million would prefer to have options, rather than a one-size-fits-all a year. It is not a small sum by any stretch of the approach. imagination, but the cost of not giving any such option, particularly to residential care leavers, is many times Tim Loughton: My hon. Friend is making a good case that amount, and let us not forget the 23% who end up for what is a very difficult solution for kids in residential in our penal system, the cost of NEETs, drugs, crime, care homes, but does he not recognise that the Staying mental ill health, homelessness—to name just a few Put exercise is largely staying put with carers, which is aspects. more easily achieved through foster care, for example? The scoping exercise made several recommendations, In residential homes, workers tend to move on. Indeed, and here are three of them: that the Department for the average stay in residential homes is rather short, so Education develop plans for a new overarching duty of there is not that attachment. Would it therefore not be continuing wide-ranging support up to the age of 21 for better to try to establish options, which he is now all young people leaving care and, in doing so, draw on describing, that form links with foster carers and others the learning of the Scottish reforms; that Ofsted work to give a proper bonding and link with advice and with stakeholders to clarify the ability of children’s support, which one does not get from an attachment to homes to maintain registration when they routinely a building that is a residential care home? That is rather cater for young people over 18 and how children’s different to a foster care relationship, which the young homes’ provision of accommodation and support for person will have been in for many years in many cases. young people over 18 will impact on the inspections process; and that the Department for Education and Craig Whittaker: I thank my hon. Friend for that the Department for Communities and Local Government intervention. He raises some valuable points, particularly review the option of extending regulation to a wider on the turnover of staff in residential homes. The point range of support and accommodation options for young is that a lot of young people in residential homes have a people. stigma attached to them. Not only that, quite often a To summarise, may I ask the Minister when young foster placement has broken down. One could argue people in residential homes can expect the Government quite easily that they are the more vulnerable of our to remove the discrimination and unfairness in the children in care. That being the case, to turf them out by system and provide a range of options to all young themselves at the age of 18, often with very little support, people leaving care, as recommended by the scoping is not the way forward. That will not be the case for all activity, and when he is likely to respond to that exercise? young people in residential homes—of course not. Some will be robust enough to take that step. For those who choose to stay, we feel strongly that that option should 5.43 pm be open. Alex Cunningham (Stockton North) (Lab): There could not be a more important subject for us to debate in Bill Esterson: One challenge in residential and in relation to some of the most vulnerable young people in foster care of Staying Put is that it leaves fewer places our society. Many will have found themselves homeless for other children to enter the care system. Does the as a result of abuse, family breakdown, bereavement or 809 Young People in Care27 JANUARY 2015 Young People in Care 810

[Alex Cunningham] such accommodation in 2013-14 by their local authority. Far from being merely unsuitable, B and Bs often other catastrophes in their lives, and, at a relatively present an environment that feels unsafe and threatening young age, at the end of their childhood, they are cast to a young person. I would love to know how many of into an adult world they are not necessarily prepared our directors of children’s services know for certain that for. the bed-and-breakfast establishments they use for 16 or The vast majority of professionals in local authorities 17-year-olds are as safe and secure as they would demand do their best to meet the needs of this group of young for a member of their own family. people, but still far too many—some at just 16 years of Statistics from Barnardo’s, compiled following a series age—are simply dumped somewhere, perhaps on a Friday of freedom of information requests, reveal the extent to night, and left to fend for themselves all weekend in a which many local authorities are failing to observe bed-and-breakfast establishment or unsuitable hostel Government guidance to avoid the use of inappropriate because there is nowhere else for them to go. It is not emergency accommodation for young people leaving good enough. I challenge Ministers, fellow Members, care. Despite guidance to the contrary, almost three councillors and the professionals responsible for these quarters of local authorities in England continued to young people to tell me whether they would be happy place care leavers in B and B accommodation during for their child, grandchild, niece or nephew to be treated the last year, with 43% doing so repeatedly and an as we treat many young people who need us to care for unacceptable 51% doing so for 28 days or more, despite them—young people who feel abandoned and in great B and Bs being described as emergency accommodation. distress. We can and must work towards a future where their use The presence in the Chamber of fellow members of is abolished altogether. the Select Committee on Education is testament to the Accommodation of this sort, whether designed for importance of this subject, which was reflected in our short-term use or otherwise, fails to offer support to report. The Committee identified a series of steps that young people and does not allow them to move on and we feel are needed to ensure that improvements occur, make progress with their lives. Worsestill, placing vulnerable both in the preparation of young people as they move young people in such accommodation risks exposing through to greater independence and in the stability them to a range of dangers and negative influences. I and support available. As others have said, one of the am clear that the use of B and Bs is avoidable, but if we core concerns, both of myself and other Committee are to achieve the right result for all our young people members, relates specifically to the use of bed-and-breakfast needing emergency care, more needs to be done, with accommodation for vulnerable young people at times of authorities working co-operatively in their areas to need. As the Chairman has said, statutory guidance ensure that suitable and safe accommodation is available. makes clear that care leavers should be placed only in Government, too, have a role to play. As my hon. suitable accommodation, meaning that it is safe, secure Friend the Member for Sefton Central (Bill Esterson) and located so as to allow them to take part in education, said, funding to local authorities has suffered huge cuts employment or training. However, the series of visits we in recent years. I hope Ministers will look again at how undertook and the discussions we had with young they can guarantee every young care leaver a safe place people did little to confirm that that was happening to live when they need it. universally and shone a light on the continued use of The north-east highlights perfectly what can be achieved. B and Bs for 16 and 17-year-olds, all too often for Local authorities across the area have demonstrated protracted periods—for instance, one person spoke of that sensible policies in this area can produce positive living in a B and B for two years. Little wonder that so results. Both Hartlepool council and Redcar and Cleveland many of them feel abandoned. council succeeded in placing 100% of care leavers aged The hon. Member for Beverley and Holderness 19 to 21 into suitable accommodation in 2014, while (Mr Stuart) talked about one young woman, and I am many other councils across the region achieved such going to repeat the story, because what she told us that outcomes in over 90% of cases. But there is still more to day in Ipswich really haunts me. When she spoke to do, and we need to act to make sure that this progress is members of the Committee, she told us about being made sooner rather than later. placed in emergency accommodation—a B and B—for The local authority serving my own constituency, several weeks. It was a placement primarily for adults. Stockton borough council, is a case in point. Last year, She was the only young person, yet while taking refuge it achieved a success rate of 96% in placing leavers aged in the care of the state, she was subjected to older men 19 to 21 into suitable accommodation, putting it in the braying on her door late at night and asking her to join top 10 of local authorities nationwide. That was not the them. That is not a situation I would wish on anybody, case for a few, but that small number at least indicates let alone a vulnerable young person. I hope that the that there were cases of genuine emergency. That said, I young person hears that her story has been told at least am pleased that those in charge of young people’s twice tonight—who knows, maybe it will be told more services are working alongside colleagues from housing times before this evening is over. to develop an initiative that will allow care leavers to be The statutory guidance that states that care leavers re-housed in close proximity to their former children’s should be placed only in suitable accommodation also homes—often on the same street, so that they can makes it clear that B and Bs are inappropriate for young continue to benefit from the local support network that people in care and should be used only in very particular is available, preventing any sense of abandonment. circumstances. To be certain, those circumstances should It is thinking like this that will see us making real amount to nothing short of an emergency situation; improvements in this area. I remain in no doubt, and yet, troublingly, the use of B and Bs continues, with as nor does our Select Committee, that bed-and-breakfast many as 800 care leavers in England being placed in accommodation should be banned as soon as practically 811 Young People in Care27 JANUARY 2015 Young People in Care 812 possible for young people, with proper inspection and family to fall back on. It is our responsibility as a nation regulatory oversight introduced to end the practice to ensure that we do not abandon them. We hope to once and for all. I know it cannot be done overnight, hear from the Minister how he is going to ensure that but I would love the Minister to be bold and to fix a that is the case. date for a ban to be introduced. Sadly, I already know that I will be disappointed, as the Minister has previously 5.54 pm indicated that he has no intention of doing so. Pat Glass (North West Durham) (Lab): I thank the I mentioned the effect of cuts and co-operative working, Backbench Business Committee for making time for and emphasise that again. If we are to succeed in taking this important debate. As the Chairman of the Education this step and bringing an end to a practice that so often Committee said, the report came out of an earlier puts young people at risk, national standards for proper inquiry in which we found that older children are neglected emergency provisions need to be established, while local in the care system. I pay tribute to the Minister for the authorities need to have access to the necessary resources— real interest he has taken in these areas and for the way whether it be through improved communication and in which he has tried—and often succeeded, I think—in working within local authorities, enhanced collaborative bringing about improvements for this group of vulnerable working between local authorities and organisations, or children. There is no doubt that he cares about these increased central funding. Indeed, we too often hear young people, and it is in that spirit that I make my that local authority departments do not work closely speech. enough together when providing accommodation options In my former life, I managed many areas of education for vulnerable young people, and I am clear that that that are closely linked to social care, child protection needs to be addressed. and safeguarding, but I was always careful to stay Making the transition from care to independence is removed from managing those areas directly, arguing to one of the most challenging periods for young people myself that I did not have the necessary expertise, and leaving care, especially for those who have had the most that issues such as safeguarding and child protection chaotic journeys through the care system. They need were better left to those who had been trained to support and guidance in many aspects of their lives. It is manage them. In reality, however, there was always a therefore common sense that service providers communicate healthy dollop of fear in there as well: fear that some with each another, and it would be very interesting to actions that I had caused to be taken, or had recommended, see further consideration given to the sharing of budgets would result in further harm to a child who had already or joint commissioning of services in a similar way to been harmed by those who should have cared for them that being examined in Stockton. the most. Often as a result of the lack of joined-up working, Even as an MP, when I first entered Parliament, I Barnardo’s has reported alarming findings, indicating tried not to become too closely involved in children’s that young people’s accommodation problems often get social care, but, in practice, that has proved to be worse after their 18th birthday. In its “The cost of not impossible. Along with my fellow members of the Education caring” report, examples are given of councils placing Committee, I felt that, given what appeared to be a lack care leavers in appropriate accommodation, fully funded of interest in the Department for Education, I had a by their children’s services, only for that to be withdrawn duty to ensure that 50% of our time was spent on when they turn 18 and cease to be eligible for support. scrutinising and challenging Government policy on Unprepared for the responsibility of paying their children’s social care. I recognise the Minister’s input, own rent and bills, and frequently lacking those all- but it often seemed that he was a lone voice in a important independent living skills, young people can Department that is focused almost entirely on education. find that their accommodation quickly becomes When we discuss these matters, I like to put them in unaffordable as they no longer have the support they context. The United Kingdom probably has one of the had previously relied on. Some on housing benefit find best records in the western world when it comes to that they can no longer afford their rent, which children’s safeguarding and child protection: we are much better services departments had previously funded while they at it than most—not all, but most—European countries, were still in care. That forces them into more affordable and we have a far better record than the United States. accommodation in alternative locations—invariably of Even in that context, however, we still do very poorly in lower quality. The new benefits regime introduced by some areas and in respect of some children. the Government only adds to the challenges and misery I think that what shocked me the most during the these young people face. Committee’s investigation of areas of social care and All of that adds up to care leavers having an increased child protection were the findings of our short inquiry risk of homelessness, not only during the transition out into 16-plus care options. We saw placements that we of care, but over the longer term. Studies have highlighted considered to be unsafe. Close as I am to this subject, I worrying figures that over a fifth of homeless people did not quite realise how difficult life is for these children, have been in care as a child, while 16% of those facing and how little support they are given by us—by, for additional complications on top of homelessness, such instance, the Government, Parliament and local authorities. as mental health problems or substance issues, have Like others, I listened in horror to the stories of young previously been in local authority care and had, on people leaving the care system about what had been average, left care aged just 17. done to them and how little support they had had. That I often reflect on the fact that my two sons left home comes on top of what we are now learning about what in their mid-20s after a life of support and stability, was done to young people— many of whom were living but that is seven or eight years older than the age at in the care system at the time—in places such as Rochdale, which we expect many young people leaving care to Oxford and Rotherham; and we know that many other fend for themselves. They do not have the luxury of a cases have yet to become public. 813 Young People in Care27 JANUARY 2015 Young People in Care 814

[Pat Glass] 16. The Minister has argued that he does not want to drive the best providers out of the market with regulation, One of my lasting worries following the inquiry is but that is simply not going to happen, because this is that, while the public are shocked and morally outraged lucrative. It is so lucrative that hedge funds are getting when they hear stories about such places as Rotherham, into it, but I think it is fair to say that the bottom of this the bottom line is that we—the Government, Parliament, market, as the Committee has seen, is not merely MPs, local authority officers, the press and the public— inadequate—that is a huge understatement—but dangerous, simply do not care enough about the children involved. and it is unsafe. It puts children who are at risk—the If we did, these things would not happen. It is easy to most vulnerable of our children—at greater risk and we blame hapless, overworked officials who often work simply cannot allow that to continue. without structures, support or adequate resources, but we are all responsible for those children, and we do not, Mr Graham Stuart: The hon. Lady is making a as a society, take our responsibilities for them seriously powerful speech. Does she share my concern that in a enough. market of supported accommodation, where there is no real and effective regulation, entirely unqualified people One child, a care leaver, said to me that not only can sit there supposedly supporting some of the most should we be providing additional funding for the education vulnerable young people? When we were doing our of such children, but if every child who went into care inquiry, we heard of such people sitting boarded up in at the age of 10 were given the vote, people like us would their office while the young people were rioting outside. take what happened to them seriously. Because they do That is the situation we are putting some young people not have that leverage, I doubt whether things will in by failing to regulate these individuals. change very much for them—even given the recent press coverage and the moral outrage—but I always try, at Pat Glass: I absolutely agree and we did see some of least, to travel in hope. that when we went on visits across the country. Two facts motivated our inquiry into 16-plus care Finally, we are calling on the Minister to extend options: the fact that “other arrangements”are unsuitable, Staying Put to all young people in care. It is great—and and the fact that the current Staying Put policy is I again have to pay tribute to the Minister—that young inequitable. My fellow Committee members and I call people in foster care can remain beyond the age of 18, on the Minister to address three issues as a matter of but in many respects those young people are the ones urgency. First, we ask him to outlaw the use of bed-and- who are the least vulnerable and who arguably have the breakfast accommodation for 16-plus care leavers. We best outcomes, and it is now time to do the same for the have heard all the arguments from the local authority others. officers, and even from the Minister himself, about the We are talking about a surprisingly small number of need for it as a provision of last resort and for emergency children each year. It has been said that £75 million is use only, but we believe that, while it remains an option, the sum required to deliver this. We should contrast that it will become the default provision in far too many with the £2 billion overspend on the academies and free cases. Local authorities can plan not to use bed and schools programme. If the Department can spend that breakfast for this purpose. Some of them have put real virtually without comment, surely it can find the money effort and resources into doing something else, something to provide this desperately needed safety and security better and, in the long run, something more cost-effective for this group of young people, if those young people for those young people. want it—I am not saying they have to have it. I remember exactly the same arguments being used We are pleased that the Government have taken when the Government of the day were pushing local forward many of our recommendations and we ask the authorities to provide full-time education for young Minister to look again at the rest, as they are necessary people who had been excluded from school. At the time, steps to ensure that there are improvements in providing local authorities were saying, “We can’t possibly do this, stability and support for young people as they move to we need to be able to provide part-time education in greater independence. emergencies,” but the fact is that the default position then was that most children who were excluded got less 6.3 pm than 10 hours of education and many got none. It took Ann Coffey (Stockport) (Lab): I congratulate the a Secretary of State really to lose patience with local hon. Member for Beverley and Holderness (Mr Stuart) authorities and to make it illegal, and I am glad that he and the members of the Select Committee on Education did. I am a great believer in the saying that we are never on their excellent report into care provision for young as swift as when we are chased, and I am absolutely sure people over 16, and I particularly welcome the opportunity that some local authorities still provide hours that are they gave to young people to speak to them directly. It is below the legal limit, but the vast majority got their act also a great privilege to follow my hon. Friend the together and did some proper planning, and the situation Member for North West Durham (Pat Glass), who is much better as a result. Now that the situation is very made a powerful speech. It was very moving to listen to clear and we have outlawed providing less than full-time her acknowledgment of the importance of social care in education for excluded children, those children have giving educational opportunities to young people. The redress. If bad local authorities are not providing that two are not separate; one is very dependent on the education, there is redress, and there is also a role for other. If a child or young person is emotionally damaged, Ofsted. it is very difficult to educate that child. Secondly, we are calling on the Minister to regulate Children in care are three times more likely to run 16-plus care provision. I find it unbelievable that we away than other young people, with an estimated 10,000 have stronger regulations to cover the provision of dogs going missing every year. The Missing Persons Bureau homes than we do for homes for children leaving care at reports that running-away incidents of children aged 815 Young People in Care27 JANUARY 2015 Young People in Care 816 between 15 and 17 make up the biggest number in the to be registered and inspected in the same way as that missing persons statistics. Some 45,000 incidents relating for children under 16, I hope the Minister will consider to this group were recorded in 36 police forces in introducing a requirement for a basic safety check. That 2012-13. The vulnerability of such children because of would ensure that consultation takes place with the their age and the nature of the accommodation in police, and that young people are not placed in environments which they are placed may offer an explanation for that where they are exposed to harm. high incidence. I have no breakdown of the number of Where vulnerable children are placed in supported over-16s in this statistic. However, the Children’s Society accommodation, they are often not reported missing reports that a significant percentage of its advocacy and are not always offered the return home interviews cases with care leavers focus on the accommodation that all missing children are entitled to when they go needs of the young person, because children feel that missing. That means that we do not know what is they are forced to leave too early or that they are not happening to them and what harm they have been offered the right type of accommodation, or because exposed to. Sometimes, those children do not return they are placed outside the boundaries of their authorities and nobody knows what happens to them. One reason and there are disputes about who should provide support. is that those employed to provide them with support do As the Education Committee highlighted, not all not have relevant training on their vulnerabilities, or do accommodation for care leavers is of good quality or not know what help they are entitled to advocate on suitable for young people. Examples provided to me by their behalf, as the Chairman of the Education Committee the Children’s Society include young people living in pointed out. Although the law states that someone is a fear of being robbed by other tenants, young women at child until they are 18, we often treat children aged 16 to risk of suicide living in an all-male house with other 17 as adults and force them to fend for themselves. We young people who are known to be involved in drug then often blame them if they do not take care of dealing, young vulnerable women who are regularly themselves properly and fall prey to sexual predators. being placed in accommodation targeted by individuals Recently, I visited a girl living in a secure unit who seeking to exploit vulnerable young people, and had been sexually abused from an early age and had accommodation provided in areas with high crime rates. started to take drugs regularly. This was the fourth time We know that 22% of looked-after 16 and 17-year-olds she had been placed in a secure unit because of going live in neither residential homes nor foster care, but in missing and the sexual exploitation she has suffered what is termed “other arrangements”. Unlike foster and while missing. As the head of the unit said to me, the residential care, these places are not regulated under the secure unit could offer only temporary refuge. She Care Standards Act 2000 and as a result will not be strongly expressed her concern about what would happen inspected by Ofsted. Accommodation provided is often to the girl—and others like her—when she turned of poor quality and not safe for young people, and yet it 16 because of the lack of quality provision available. It is not inspected. The examples the Education Committee could be argued that 16 to 17-year-olds are the most gave provide strong evidence that these are common, unprotected of all children in Britain. We are asking not isolated, situations. The Committee rightly said that many of them to fend for themselves; we would not ask such accommodation needs to be regulated and inspected our own children to do that. properly. Care provision for 16 to 17-year-olds should I congratulate the Minister on introducing the Staying be registered and inspected. The Government said it Put scheme, recognising that young people in care often would be very expensive to introduce a regulatory need extra support beyond 18. However, as has been framework—both for Government and for providers—and said, it throws into stark contrast the poor level of that it was better to maintain the flexibility of the provision for other children in the care system after current arrangements. 16 who have not been placed in foster homes. The Last year, the Government introduced new regulations Minister has demonstrated his huge commitment to requiring a safety check to be carried out before a improving the lives of children in care, and has brought children’s home could be registered. The June 2012 in new regulations and guidance to drive up standards. inquiry by the all-party parliamentary group for looked The all-party group on runaway and missing children after children and care leavers, and the all-party and adults is holding a round table meeting next week, parliamentary group for runaway and missing children on 2 February, to discuss with practitioners and experts and adults, identified the high proportion of children how support can be improved for 16 and 17-year-olds, being placed away from their local area—sometimes including those in care. We are particularly looking at hundreds of miles away—in locations where there was the position of children and young people who go also a high number of registered sex offenders. The new missing, because we are concerned that the risk to them safety checks will ensure that the home is in a safe is not fully recognised. We will be exploring what 16 and environment that will not increase the risk of sexual 17-year-olds are running away from and what they are exploitation for already vulnerable children. running to, the factors that lead to them going missing and the risks to which they are being exposed when they However, children’s vulnerability to sexual exploitation go missing. I hope this will add to our understanding of does not stop when they reach 16, and nor does our how we can better support the most vulnerable of those responsibility to ensure that they are in a safe environment. 16 and 17-year-olds. As the Education Committee report shows, children over 16 are being placed in a variety of provision. That is all the more reason to require a safety check, just as 6.12 pm one is required of children’s homes, to ensure that the Jim Shannon (Strangford) (DUP): First, I thank the accommodation that such children are being placed in hon. Member for Beverley and Holderness (Mr Stuart) is safe. If the Government are not willing to consider for introducing the debate and the report. I also thank regulating to require accommodation for over 16-year-olds all those involved in producing it, because it contains 817 Young People in Care27 JANUARY 2015 Young People in Care 818

[Jim Shannon] decade since I worked with Hammersmith and Fulham council to phase out the use of bed-and-breakfast many good and helpful points. It has been a pleasure to accommodation for vulnerable 16 and 17-year-olds, listen to all the Members who have spoken so far. They including care leavers. Given our special and unique have all spoken with passion, interest and a real, earnest responsibility to these young people who rely on the endeavour on behalf of young people, and it is good to state to keep them safe, and the fact that councils such hear the House united in that. as Hammersmith and Fulham showed over a decade Ensuring that our young people, particularly those ago that it could be done, surely the time has come to who are vulnerable, have somewhere to call home— outlaw the use of bed-and-breakfast accommodation somewhere that is important to them—is vital. I have for these young people. Does the hon. Gentleman agree no doubt in my mind that every child is entitled to a hot that such accommodation is entirely unsuitable? meal, a warm home and, most importantly, a loving Jim Shannon: I thank the hon. Lady for her contribution. home—that seems natural and fair. In fact, to me it is a Earlier, I said that I was surprised that she was not here basic human right. As the report states, not every child at the start of the debate, because I know that she has a has that, and we need to work extra hard to give those real, deep interest in this subject. I am pleased to see her children who, for whatever reason, do not have a permanent here now, and I agree wholeheartedly with what she home with their parents a home they can call their own. said, and I am sure that that applies to everyone else in That is why I am pleased to make a contribution here. A the Chamber. It is always good to exchange ideas. number of charities actively help to do just that, including Action for Children, Citizens Advice and Bridging the In Northern Ireland, a public consultation was held Gap, to name just a few. in 2012 to decipher the best way forward for young adults living in supported accommodation. Ten key Youngpeople leaving care are among the most vulnerable principles were developed and they are now used by groups in society, so it is little wonder that there needs charities and organisations in Northern Ireland for to be adequate provision in place, not just for when those in care and those leaving care. They are dignity young people are in care, but to help them when they and respect, independence, rights, equality and diversity, leave. Each Member who has spoken, particularly the choice, fulfilment, safeguarding, privacy, confidentiality hon. Member for Stockport (Ann Coffey), has made and partnership. A variety of options are available for that point clearly. those who leave care, and they include supported lodgings Some of the statistics about young people in care are and private rented or social housing. truly worrying. They are three times more likely to be Youngpeople may wish to remain with foster families cautioned or convicted of an offence; they are four or return to their birth parents, but the options available times more likely to have a mental health disorder; they to those over 18 who want to move on can be limited. are five times less likely to achieve five good GCSEs; Has the Minister had any discussion with John O’Dowd, they are eight times more likely to be excluded from the Minister for Education in the Northern Ireland school and less likely to go to university; and finally, Assembly, about the report we compiled in Northern one in five homeless people are care leavers. Those Ireland? The figures for young people in care working horrifying statistics make us think about those in society and having adequate academic achievements need to be whom we have a responsibility to assist. better. Supported lodgings are an option for young The fact that one in five care leavers end up living on people but, depending on where they live, they may not the streets is undoubtedly a direct result of academic be available to them. The option that is used the most in underachievement, criminal records and/or mental health Northern Ireland is social housing, but that young conditions, all of which stem from a disrupted upbringing. person can fall between two stools. No one seems to That is why we need to do more to create stable home grasp the problem, and it becomes very frustrating. environments as quickly as possible after problems arise. Although charities such as Action for Children do Our main aim is to ensure that young people have a roof fantastic work and try to give young people in care and over their head. We do not want them to be continually those who leave care the best opportunities and homes moving around as if they were playing a game of available, we need to do more. We must do all we can to musical chairs or as if they were just a piece of the reduce the number of people living on the streets, and furniture. We must promote stability, although I do to help young people in care to reach their academic understand that that is not always possible. We must potential. That means that they would be in a better also do our absolute best to work with the charities and position to get jobs and set up homes in the future. We other organisations to get young people into care and should consider setting up some sort of support system long-term homes. When the Minister responds to this in schools and further education colleges aimed specifically debate, perhaps he could tell me what discussions he has at helping young people in care to get the skills and had with the charities that work at the coalface, as they qualifications that they need for the future. understand the issues involved. I strongly believe that family is the cornerstone of The options available to young people in care include society. I am not necessarily talking about birth family. fostering, adoption, family short breaks and residential Family means providing care, support and love. It comes care, all of which ensure that young people have some in many forms and it is up to us to ensure that young form of accommodation. The greatest issue facing young people in care, our most vulnerable young people, get people is not necessarily while they are in care, but after the support and stability they need at home, which will they leave care. That concern has been expressed in give them the best possible chance to reach their academic every contribution so far. potential. Lisa Nandy (Wigan) (Lab): I am grateful to the hon. Finally, I say well done to the Education Committee Gentleman for giving way and to the Education Committee for producing this report, which highlights all the issues. for producing this important report. It is more than a I look forward to hearing the Minister’s response. 819 Young People in Care27 JANUARY 2015 Young People in Care 820

6.19 pm age of 21. Like others, I think that that is a welcome measure, although I urge him to look at authorities that Steve McCabe (Birmingham, Selly Oak) (Lab): I are trying to avoid paying foster rates, arguing that such congratulate the Chairman and members of the Education arrangements are in fact board and lodging provision. I Committee, many of whom have spoken today, on the have recently been made aware that that is happening in report, which is a model of the well-argued, thought- one or two places, and the Minister will agree that that provoking body of work that we have come to rely on is certainly not what he had in mind. from the Select Committee system. It has proved helpful in focusing attention on the types of accommodation I welcome the part of the Government’s response to available to young people aged 16 and over who are the report which says that they believe that fewer young cared for by local authorities—a population of about people should leave care before the age of 18 unless 14,000, representing about 20% of the total population there are exceptional circumstances. In his reply, can the of looked-after children, Minister say a little more about what practical steps the Government will take to translate this belief into reality? The Children Act 1989 requires that young people Despite personal advisers and strengthened guidance, aged 16 and over should be given a personal adviser to the Committee found that young people are often given help them to progress to independence. That involves neither a choice of placement nor the opportunity to helping them to make choices, and ensuring that their voice a preference. The Coram Group, an excellent pathway plan and review actually happen, and that the organisation, said in its evidence: plan includes the skills needed for independent living. The Select Committee cites the children’s rights director “The young person’s views are frequently not adequately considered as saying that almost half—49%—of care leavers thought and advocacy support is vital to ensure this happens”. that they had been badly or very badly prepared for An independent advocate is a statutory requirement, independent life. Key deficiencies include a lack of yet it is not a service that is always offered or that basic skills such as cooking and financial management. enough young people are made aware of. The report made me wonder whether there is too The Government say in their response that they have much focus on the post of personal adviser, and not given the Children’s Commissioner a new power to enough on the task. Foster carers and other significant provide advice and assistance to individual children in adults should principally perform those tasks, as they receipt of social care services and to make representations are the people with whom the young person already has on behalf of care leavers. Am I right in thinking that the an important relationship. I know that the Minister, commissioner has no real new powers? Is the Minister too, has reflected on that. I was struck during a recent satisfied that the power to make representations is a visit to Hackney’s fostering unit by the impressive work sufficient new power for the Children’s Commissioner? that it does, and its use of social pedagogy as a tool for The Government argue that they have strengthened the development. The Minister is on the record as saying guidance on pathway planning and point to the fact that the personal adviser is a function, rather than a that directors of children’s services are now required to specifically appointed person, and that there is nothing sign off the arrangements for any 16 or 17-year-old in the regulations or guidance to stop local authorities leaving care. However, as we have heard from a number using resources such as foster carers or people who of speakers today, the evidence suggests that the pathway work in children’s homes as personal advisers. plans are weak, and one glaring omission is the failure to consider maintaining positive relationships with siblings Lisa Nandy: I am grateful for my hon. Friend’s generosity and other people thought to be important in the young in giving way, especially as I could not be here for the person’s life. start of the debate. I was interested in his use of the My hon. Friends the Members for Stockton North word “relationship”. Does he agree that a key point (Alex Cunningham) and for Stockport (Ann Coffey) about the system that we have constructed for children both drew attention to the impact that this can have, in care is that often it does not see or value those crucial particularly when it is almost ignored in the planning relationships in young people’s lives? At the time when arrangements. Like others, I wonder how we can expect they most need them the system often drives a coach young people to develop into normal, well-adjusted and horses through them. Does he agree that if we were adults if we deny them the opportunities that we take serious about helping children, sustaining them through for granted for our own children and many others. I the hardest period in their life, we would restructure the welcome the addition to the guidance on the pathway system so that it could see, support and value those plans in this respect and I trust that the Minister will relationships with key trusted adults, whoever they are? continue to focus on this area in the months ahead. One of the inevitable results of the Staying Put Steve McCabe: That is exactly the point. We should initiative is that, as we heard, it has raised the question concentrate on continuity and relationships. At times of those in residential care and the related issue of we are sidetracked by posts and appointments. Staying Close. There appears to be a perception in some I want to move on to local authorities, whose local authorities that their responsibilities decrease when responsibilities change when a young person turns 18. a child reaches 16. That is certainly the sense among Too many people think that local authorities interpret young people who feel that 16 is the cut-off point when that change as meaning that their responsibilities diminish, they are required to leave care. This came across in the despite the fact that they have a continuing obligation evidence that the Committee took. I am not sure about to those young people until the age of 21, or 25 for the equality aspect of Staying Put for non-foster care. I those still in education and training. As we have heard do not know whether it would withstand a legal challenge. several times, the Minister has recently extended the From his previous incarnation the Minister might be previous Government’s pilots to create a new obligation much more familiar with how the law would deal with or arrangement for staying put in foster care until the that. Aside from that, my own view is that 16 is the age 821 Young People in Care27 JANUARY 2015 Young People in Care 822

[Steve McCabe] I want to take up the Committee’s point about the problems of making full-time education and training for most young people to set out on their own. Like the central to continuing support until the age of 25. We hon. Member for Calder Valley (Craig Whittaker) I were all rather encouraged when the Minister said in attended a recent meeting of the all-party group for Committee that he intended to rewrite the guidance so looked-after children, where many of those said that that it would be sufficiently clear that he was concerned even at the age of 18 they did not feel that they were about those who were in danger of falling through the ready to move on. net. So far, the rewritten guidance does not appear to I know that this is a difficult matter for many people. have achieved that. Surely the real issue is that it is too I have some doubts about whether it is realistic for easy for those we refer to as NEETs— not in education, someone to continue in a children’s home to the age of employment or training—to disappear. Unless directors 21 or beyond, although I am rather sceptical of the of children’s services and others are under a specific validity of some of the counter-arguments. Particularly obligation to track and monitor these young people, on safeguarding, I tend to agree with the Every Child there is every danger that they will fall by the wayside. Leaving Care Matters group, which said that it is difficult I want to turn to “other arrangements”. As we have “to see how a young person who is settled in a children’s home heard, the Committee was very concerned about and enjoys positive relationships with staff and peers should accommodation that it felt was not of an acceptable suddenly become a safeguarding risk at 18 when they never were standard and might fail the statutory guidance tests of before.” being suitable for the child in the light of his or her I am keen that the Government set to work as soon as needs, including health needs, and of the responsible possible on addressing this matter. We have heard about authority having satisfied itself as to the character and some of the work involving the National Children’s suitability of the landlord. I acknowledge that the YMCA Bureau, the Who Cares? Trust, Barnardo’s and others. said in evidence to the Committee that some local Will the Minister tell us how much money from the authorities provide a decent variety of accommodation, innovation programme has gone into that work to date, and I do not dismiss the fact that there are examples of and what time scale he is considering for further proposals success out there. However, Ofsted found significant indicating his plans for Staying Close and Staying Put? variations in the quality and sufficiency of accommodation for care leavers. The Who Cares? Trust has also reported examples of unsafe and unsuitable accommodation. I Mr Graham Stuart: The hon. Gentleman says that he will not go over them all, as they have been mentioned has misgivings about the extension and that some of the by other speakers, but they include people being threatened arguments are bogus or weak. What are his concerns? or assaulted; living with those with drink and drugs As a Committee, we made these proposals in a cross-party problems; and having dirty accommodation infested spirit in the hope that parties such as his would adopt with bedbugs and cockroaches. The British Association them and put them in their manifestos. Why will he not of Social Workers has said that it is be making that recommendation to his party’s manifesto “firmly of the view that the government needs to apply regulatory group? duties to all accommodation providers who accommodate looked after children in order that they are appropriately safeguarded Steve McCabe: I said that I had some doubts. The and the provision meets acceptable standards.” hon. Member for Calder Valley said that the difference I noticed that the report highlights an interesting is that there is not necessarily the same stability with dilemma on regulation. It is fair to point out that one regard to children’s homes. The situation is not guaranteed witness warned of the risk that if regulation is too in the same way. Fostering arrangements, by definition, onerous it will stifle creativity in support arrangements tend to be stable. The turnover of staff and other and inhibit independence projects. I was interested in children at a children’s home means that the situation Catch22’s suggestion for a national standards framework, may not be the same. That is my major reservation. which, if I have read the report accurately, the Committee appears to have liked. I am not sure that the Government’s proposals go anything like far enough, and I urge the Mr Stuart: The idea of Staying Put, wherever it is, is Minister to reflect again on that point. About 3,000 that it is suitable for all concerned. The aim is not to young people are covered by other arrangements, and impose it on anybody. Like our recommendation on that is an awful lot of lives at risk. extending care services to the age of 25 for those who are not looking for a job or training, it is there if people want it, and if it is not appropriate, there is no suggestion Bill Esterson: On what my hon. Friend is saying that it should have to happen. about our recommendation for a framework of individual regulatory oversight, I confirm that we recommended that the DFE consult on setting one up. Does he agree Steve McCabe: I entirely accept the point that the that that is a sensible way forward? Committee Chairman is making. The hon. Member for Calder Valley said that there may well be options. My point is simply that the situation is not directly comparable. Steve McCabe: I would welcome that, and I urge the I am minded that we look at this carefully. We cannot Minister to think again. say that children in foster care get the benefit of Staying Finally, there is general consensus that bed-and-breakfast Put until the age of 21 and children in children’s homes accommodation is unacceptable and that a deadline are completely disregarded. That would not be acceptable, must be set for phasing it out altogether, although I and I do not think that anyone is saying that. I am acknowledge that that cannot happen until more work simply suggesting that the situation may be slightly has been done on developing alternatives. I welcome the different. fact that the Minister has set a maximum of two days 823 Young People in Care27 JANUARY 2015 Young People in Care 824 for the time a child can spend in a bed and breakfast. up to the age of 21, or 25 if they are in education or How will that guideline be monitored, because that will returning to education, or if they have a desire to do so. be the first test of whether it is having any impact? We have introduced bursaries for those who are participating I must say that I am disappointed that the Minister in further or higher education. We have pushed all local does not seem to have accepted the need to set a date by authorities to provide a setting up home allowance of at which the use of bed and breakfasts must be phased least £2,000. We have been responsible for the introduction out. I welcome the decision to collect more data on the of more than 54,000 junior individual savings accounts use of this arrangement, although I am not clear why he for children in care. We have made it easier for care did not accept the suggestion that the Department leavers to access their social care records. I am pleased simply mirror the current arrangement for housing to report that the vast majority of local authorities have authorities to report to the Department for Communities signed up to delivering the care leavers charter. and Local Government. It seems to me that that is a Since launching the care leavers strategy, we have tried and tested system, so it would make sense and be continued to look at further ways to support care quite helpful to repeat it. leavers. Most notably, we have introduced the Staying Will the Minister say when the Department will Put duty, which will allow thousands of children in commence work with stakeholders to understand the foster placements to remain with their foster carers until issues better, as was mentioned in the Government the age of 21. We are providing local councils with more response? When can we expect to see substantial progress? than £40 million over three years to implement the new The use of bed and breakfasts for vulnerable young duty. I will return to that later. people who need care must rank alongside other great We have strengthened the Ofsted inspection framework housing scandals of the past, such as those highlighted so that it includes a specific judgment on the quality of by the drama “Cathy Come Home”. I do not accept care leavers’ services. As Ofsted told the Education that it has a continuing place in the plans to care for Committee: vulnerable young people. “The quality and suitability of accommodation for care leavers I again thank the Committee for its excellent report contributes significantly to the judgement that inspectors make and the Minister for the Government response, but I on the experiences and outcomes of care leavers.” feel that there is more to do before we can be satisfied As the hon. Member for Sefton Central (Bill Esterson) that the arrangements for children over the age of and my hon. Friend the Member for Calder Valley 16—for whom we, the state, are responsible—are adequately (Craig Whittaker) said, care leavers often have difficulties cared for. accessing mental health support when they need it. We are determined to address that problem and have announced 6.39 pm the creation of the children and young people’s mental The Parliamentary Under-Secretary of State for Education health and well-being taskforce to consider what changes (Mr Edward Timpson): I thank the Chairman of the are needed to improve outcomes for children and young Education Committee, my hon. Friend the Member for people with mental health difficulties. Crucially, that Beverley and Holderness (Mr Stuart), who secured this work will include a focus on the needs of vulnerable important debate. I also reiterate my gratitude to his groups, including those who have been in the care Committee and its members for their continued interest system. in our collective efforts to improve the lives of children in and leaving care—a group of young people who are Bill Esterson: I know that the Minister is aware of the among the most vulnerable in our society and who have shortage of CAMHS workers. He will appreciate that not always received the support that they need to overcome unless that is addressed, it will be difficult for him to live the difficulties they often face in making a successful up to what he has just pledged. What work is he doing transition to adulthood. with colleagues at the Department of Health to ensure Before dealing with the specific points that have been that there is an increase in the number of staff who are raised by hon. Members in the Select Committee report available to deliver what he has promised? and in the thoughtful contributions today, I will take a few moments to set out the wider work of the Government Mr Timpson: As is often the case, the strange dissection on our commitment to improve the lives of care leavers. of responsibilities across Government means that ministerial As the Chairman of the Select Committee fairly set out, responsibility for CAMHS resides elsewhere in the since 2010, we have put in place a series of measures Department, but the Under-Secretary of State for that mean that young people who leave care receive Education, my hon. Friend the Member for East Surrey more help than ever before. In 2013, we published the (Mr Gyimah) works directly with the Department of first cross-Government care leavers strategy, which illustrates Health, through the taskforce, to look at what resources the priority that the Government give to improving the are required. In recent weeks, it has been announced lives of care leavers. It includes measures to improve that further money has been made available to improve care leavers’ access to education, training and employment; the services that are available to children who have help to access appropriate benefits and health support; mental health problems. and extra support for care leavers who have unfortunately Every party in the House recognises that the mental ended up in the criminal justice system. Many of those health services that are on offer to children, particularly measures cut across departmental budgets. those who are in care, on the edge of care or leaving The strategy was preceded by a number of important care, are simply not good enough. That is why we need a changes that were designed to improve the level of fundamental review of how we commission, deliver and support that care leavers receive from their local council. review the progress of children and young people who We have made it clear in statutory guidance that all care should have access to those services. We have made leavers should receive support from a personal adviser some significant changes to how we approach special 825 Young People in Care27 JANUARY 2015 Young People in Care 826

[Mr Timpson] We know that there are some excellent examples, which hon. Members have noted today. The hon. Member educational needs—there is joint commissioning, and for Stockton North (Alex Cunningham) mentioned we are looking at a system that can be used from birth Hartlepool and other parts of the north-east, and Wiltshire to 25—and we can learn a lot of lessons from that in has also managed to find ways to provide suitable how we deal with mental health services, particularly accommodation without needing to resort to bed and for children in care and care leavers. breakfast, so it can be done. I should add that the As part of our commitment to improving services for Department for Communities and Local Government care leavers, we have funded a number of projects has provided £1.9 million to support local authorities in designed to stimulate new and innovative approaches. developing sustainable solutions to stop the unlawful For example, we have given funding to the Care Leavers use of bed and breakfast for families and children. The Foundation to run the New Belongings project, in seven funded councils have achieved and sustained a which care leavers play a central role by helping to 96% reduction in the number of households with children identify barriers and find solutions to improve services in bed and breakfast for longer than six weeks. in nine local authorities. I am pleased to tell the House Alex Cunningham: I do not want to tease the Minister, that we will provide further funding to extend the New but if a large number of authorities across the country Belongings project. The second phase will be rolled out can achieve a 100% reduction, the best practice is out shortly and will involve embedding progress in those there and authorities know how it can be done. Is it not nine councils. It will also extend the project to more time just to say, “Do it”? local authorities. We will also continue to fund the From Care2Work programme, which helps care leavers Mr Timpson: Of course we want every local authority to get a foot in the door with some of our major to do it, and the more that we can help them achieve employers, providing work experience, apprenticeships that the better, but we have to consider the practicalities and employment opportunities. It is only right that we of a ban, bearing in mind the mixed views about how it record the progress that has been made in recent years, could be implemented and the emergency situations in but as the debate has shown, we clearly still have some which bed and breakfast might be required. We must way to go before every care leaver will be getting the also ensure that local authorities that are falling short support they need. understand how ending the use of bed and breakfast I turn to the specific issues that have been raised in can be achieved, and that is one purpose of the innovation the Education Committee report and by hon. Members programme—to spread good practice so that places today, beginning with the difficult but important issue such as Wiltshire and Hartlepool do not hold a secret of bed-and-breakfast accommodation. I agree with all but can impart their knowledge successfully across the Members, led by the Chair of the Education Committee, country. who have said that bed-and-breakfast accommodation I can confirm that, following the Committee’s report, is not suitable for care leavers. That is, of course, what we have further strengthened our statutory guidance to the law says. However, as I said in our response to the make it clear that for 16 and 17-year-olds emergency Committee’s report, we do not think an outright ban is placements in B and B should be used only in exceptional the right approach. We are not a lone voice—the chief circumstances and be limited to no more than two social worker for children and families has said: working days. I will write to all directors of children’s services shortly on a range of matters relating to children “A total ban on bed and breakfast restricts the ability of in care and care leavers, and I will bring to their attention professionals to exercise their judgement in making best interest decisions about young people’s safety and welfare.” in that correspondence the amended guidance on bed and breakfast. It may be a good opportunity to let them The charity Catch22 has said: know about the good practice in other parts of the “The reality is that there is a need for emergency, crash-pad country. accommodation for a very distressed young person who is in an On 31 March, we will receive data collected on the urgent situation and needs accommodation. An outright ban accommodation of 19, 20 and 21-year-olds and whether could deny them access to much needed support in an emergency.” it was deemed suitable, including a breakdown on bed That position is supported by the Association of Directors and breakfast. For the first time next year we will collect of Children’s Services and by the Local Government data on 17 and 18-year-olds too, and that will help us to Association. The Care Leavers Foundation has said establish the impact of the strengthened statutory guidance that it on bed and breakfast. I return to the arguments made by the chief social worker and the central premise that if “reluctantly concedes that permitting use of B&B in emergency we have a high-quality professional body making sound situations is probably a necessary caveat, as there may be circumstances where in the absence of a B&B option a care leaver could decisions and backed by tailored support, no care leaver potentially be at risk of street homelessness or being warehoused need be put in unsuitable accommodation. in a hostel.” Mr Graham Stuart: The Minister said that data are As I indicated to the Education Committee, in light collected on 19 and 20-year-olds and next year they will of those concerns we want to test further the practical be collected on 17 and 18-year-olds. What is the situation implications for local authorities if a total ban were for 16-year-olds? introduced. We have started that process and are continuing to talk to relevant parties such as the independent Mr Timpson: I anticipated that I might be asked that reviewing officers group, Barnardo’s, Catch22, the Care question and, in his usual manner, the Chairman of the Leavers Foundation, homelessness charities and others Committee has established my exact thoughts. I am told to better understand the issue. I know that the hon. that, for technical reasons, we cannot collect data until Member for Strangford (Jim Shannon) raised that point. after the age of 16 as young people are still in care 827 Young People in Care27 JANUARY 2015 Young People in Care 828 before that point, but we intend to refine the data when The hon. Member for Birmingham, Selly Oak (Steve we receive them to establish whether any 16-year-olds McCabe) referred to the view of Catch 22 that any are in bed and breakfast. The data are collected on the universal approach to regulation on quality assurance young person’s birthday as opposed to at financial year would face considerable challenges. It may also stifle end. They cannot be collected on their 16th birthday so the creativity and support arrangements needed to we have to wait until their 17th birthday. We will look at allow young people to practise their independence how we can retrospectively analyse the data and establish skills. Ofsted was not convinced that stronger how many 16-year-olds have been in bed-and-breakfast regulation of a complex and varied sector would accommodation during that year. If we can refine the address the uneven quality of care and support for data in the future, we will look to do so. young children. I take very seriously the point raised by Several hon. Members raised the issue of alternative the hon. Member for Stockport (Ann Coffey) about accommodation. It is right that all forms of alternative safety checks and ensuring that those charged with accommodation—bed and breakfast, supported lodgings, the care and protection of children and young foyers and so on—should provide care leavers with a children make every effort to place them where they are safe and secure place to live. Clear legal duties require safe and secure. The DFE statutory guidance could not that children are placed only in accommodation that be clearer: meets their needs. Ofsted, through its new single inspection “Youngpeople should only be placed in accommodation where framework, monitors local authorities’ performance in they receive high quality support which meets the needs set out in supporting care leavers in the round, including the their care plan. Where local authorities use unregulated supported accommodation for young people aged 16 and 17, they should quality of accommodation provided. Care leavers have ensure that all providers are vetted and approved to the standards access to a personal adviser who can advocate on their they require.” behalf and challenge decisions by the local authority if, for example, they believe that the accommodation provided That is being achieved by local authorities such as is unsuitable. Hertfordshire, which uses a clear framework of quality assurance to assess provision before placing. We are considering whether further external oversight I understand the desire of hon. Members to be confident is needed of the decisions that local authorities make. I that all possible avenues have been explored fully to am not persuaded, having listened carefully to hon. help to improve placement decisions on alternative Members, that we need to establish a new inspection accommodation for care leavers, as well as the accountability regime in order to achieve our aims, and others share and oversight surrounding those decisions. To that end, that view. The chief social worker, Isabelle Trowler, has I intend to commission a piece of work in the Department said that regulating all alternative accommodation would to look carefully at other arrangements to establish in severely limit placement choice and the ability of more detail the veracity and likely consequences of professionals to use their discretion. Social workers taking a different approach, as proposed by the Committee, should be visiting placements on a regular basis to together with other potential options. ensure that the accommodation remains suitable for the individual. Most critically, we already have checks and Staying Put was mentioned by a number of hon. balances in place. Members, particularly my hon. Friend the Member for Calder Valley (Craig Whittaker). The Staying Put duty, As I have said, Ofsted inspects the quality of support which we introduced last year, is giving more young provided to care leavers as part of the single inspection people the opportunity to remain in a stable and secure framework, and independent reviewing officers consider family setting beyond the age of 18. The hon. Member the decisions made about a child and would, of course, for Birmingham, Selly Oak wanted to know how the be expected to raise any concerns about unsuitable implementation was going. I will happily write to him accommodation placements. We need to trust and support with the details, as time prevents me from going into professionals to make sound judgments in the best detail at this stage. interests of the child, rather than creating further bureaucratic processes. Local areas already have a clear Some Members would like to see the extension of the duty to ensure that children are placed only in Staying Put principle to those in residential care settings. accommodation that meets their needs and, as mentioned, As they may be aware, we are continuing to work with we already have checks and balances in the system to the NCB, the Who Cares? Trust and others to explore ensure that the best interests of the child are met. how that might work, and providing funding from the innovation programme to test a model of Staying Put for those in residential care. That is with North Yorkshire Alex Cunningham: The Minister will recollect the county council, to the tune of £2 million, under its No story that the Chair and I shared about the young Wrong Door project. That will work with about 700 young woman in extremely unsuitable accommodation. She people and, importantly, ensure that if young care was there for some time, with men braying at the door leavers up to the age of 21 need it, they will be able to trying to gain entry. If the current inspection regime is use that intensive period of extra support through the not stopping that sort of thing, what will the Minister hub linked to their independent living. do to ensure that it does not happen again in future? Early feedback from children in care suggests that, while the majority of young people in residential care Mr Timpson: Clearly the situation that the hon. would like to have some kind of Staying Put arrangement, Gentleman describes is totally unacceptable, and we a single model of Staying Put would not be suitable—a would not wish it on any young person. The statutory view I think endorsed by my hon. Friend the Member guidance makes it clear what checks local authorities for East Worthing and Shoreham (Tim Loughton). I have to make before they commission any alternative will of course consider carefully the scoping study and accommodation place. its recommendations. I have only just received that 829 Young People in Care 27 JANUARY 2015 830

[Mr Timpson] Durham Free School Motion made, and Question proposed, That this House advice and cannot comment further at this stage. We do now adjourn.—(Gavin Barwell.) commissioned that important work and I look forward to considering it in the next few weeks. I am aware that my hon. Friend the Member for 7pm Beverley and Holderness will want to say a few words at Roberta Blackman-Woods (City of Durham) (Lab): I the end of the debate, so in conclusion, I once again am grateful to you, Mr Speaker, for giving me the thank hon. Members for demonstrating that they, like opportunity to hold this debate, which, in my opinion, me, care deeply about what happens to children who is much needed, given local anxiety about the situation have been in the care of the state. It would be good if we of Durham free school and the strong interest in its could widen the field of Members at these debates future. beyond those present, so they too could demonstrate I begin by expressing great sympathy for the parents their commitment. The Government have worked hard and children facing this most unfortunate set of to put children in care and care leavers at the heart of circumstances, but I called the debate to put in the our efforts to improve the lives of some of the most public domain factual information about why the school disadvantaged and vulnerable in our society. We have is facing an announcement by the Secretary of State of taken a series of important steps to achieve just that, her intention to withdraw its funding. Members will but I accept there is still more to do. I, and the Government, know that I have had concerns about the free school for remain fully committed to giving children in and leaving some time, partly because it has been so difficult to get care the support and future they deserve. accurate information about it and its funding. However, even I was surprised by the response from the Secretary 6.58 pm of State to my question last Monday. I thank her and Mr Stuart: The Minister should not have feared my the Minister for the honesty and decisiveness of her words so much that he needed to limit them quite so response. strictly. One thing we should say at the end of this Parliament Alex Cunningham (Stockton North) (Lab): This report is that there has been a significant advance in this is probably the worst I have ever seen during my years in Parliament, against a pretty tough economic backdrop, education. I have been inundated by e-mails from parents to improve material outcomes for some of the most who still think it is a great school, that there have been vulnerable children in care. That is something we should inappropriate conversations with children and that there be proud of. Casting aside my impartial Select Committee is some sort of political agenda, yet a Conservative hat, as a Conservative politician I have to say that, as Secretary of State has taken the decision to close a part of this coalition Government, that is significant. school that is part of the Government’s flagship policy. Regardless of who wins the election in May, I hope we Does my hon. Friend think that the inspectors could get can take that forward and that we have a Minister in it so badly wrong in such circumstances? place as committed as this one to ensuring that we do more to look after young people whose life chances we Roberta Blackman-Woods: My hon. Friend raises an know are horribly stunted by their time in care. We have interesting point. As I will say later, the decision has a duty to act as their parents. We should give them the been made not just on the basis of the Ofsted inspection, care, consideration and extended support that we would but in the light of other information. give to our own children, because the children in care To date, 18 parents have written to me about the are our children. We have the same responsibility to school, and an additional 25 with no direct knowledge them. of the school have also written about the proposed Question put and agreed to. closure, requesting that the decision be reversed. Nearly all these letters concentrate on challenging very selective Resolved, aspects of the Ofsted report. A handful of parents have That this House notes the Second Report from the Education also written to say that the school should be closed in Committee, Into independence, not out of care: 16 plus care the light of the Ofsted report and to urge that their options, HC 259, and the Government’s response, HC 647; welcomes the progress made and the commitment to improve the care voices be heard too. provided to these vulnerable young people shown in the Government’s Information I have obtained from the Education response; regrets that the Government has not gone further by Funding Agency and elsewhere indicates that a thorough exploring with local authorities how to ban the use of bed and analysis and evaluation of the school has taken place. breakfast accommodation for this age group and by moving to As I suspect most people now know, the Department inspect and regulate all accommodation provided to children in was alerted to problems at the free school by a whistleblower, care; and calls on the Government to do all it can to improve the which prompted the inspections due to take place early accommodation and care given to these young people. in 2015 to be brought forward to November 2014. The EFA inspection was comprehensive and included representatives from the EFA, the office of the schools commissioner, the Department and the due diligence unit, as well as the free schools section. The inspection findings underpinned the financial notice to improve that the school received in December, with a time scale for it to reply by 19 December 2014. The notice chronicled failure not only in financial management, but in other aspects of governance, and 831 Durham Free School27 JANUARY 2015 Durham Free School 832 prompted a request from the schools commissioner to on from the intervention by our hon. Friend the Member the Secretary of State for an Ofsted inspection. This, for Stockton North (Alex Cunningham), I would like to too, was carried out in November 2014. The Ofsted ask her, on behalf of the hundreds of parents who have report chronicled failure at every level and showed the written to me, whether she agrees that Ofsted has questions school to be inadequate in every category, including in to answer about the inspection, to ensure that the public leadership and management; behaviour and safety of can have confidence in Ofsted, which is something that pupils; and quality of teaching and pupil achievement. the parents who have written to me do not have. It found that students’ achievement was weak; that leaders, including governors, did not have high enough Roberta Blackman-Woods: It is important that we expectations; that governors placed too much emphasis maintain confidence in Ofsted, which I hope will get—as on religious credentials when recruiting staff; that teaching I am sure it will—challenging questions from the Select was inadequate over time; that teachers’ assessment of Committee tomorrow. Again, I hope that Ofsted is able student work was inaccurate; that the behaviour of robustly to defend the way in which it carried out these some students led to unsafe situations; that leaders, inspections. including governors, had inaccurate views of the quality Clearly a number of parents are very upset and want of teaching and students’ achievements; and that targets the school to stay open. I genuinely sympathise with for achievement were set too low. That is in great them, but given the inadequate rating, I am not clear on contrast to what I think the parents believed the school what grounds it can do so. would deliver. In 2012, the head teacher said that it would be a Sir Gerald Howarth (Aldershot) (Con): I am most “unique secondary school providing a high quality of education in a close-knit” grateful to the hon. Lady for her courtesy in giving way again. The chairman of the governors has written to a scaring—[Interruption]—or rather, a close-knit “caring number of us, including me, to say that they feel that the school environment.” Indeed, it appears to have gone Ofsted report was grossly unfair. One of the things from being caring to scaring for some of those young Ofsted said in that report was that people. As my hon. Friend the Member for Stockton North “RE is a narrow study of the Bible,” (Alex Cunningham) has said, it is unusual for a school when in fact it took up only 5% of the time. The school to receive such a negative report. To put that in context, feels—along with many parents, as she obviously as of 31 October 2014, the proportion of all schools understands—that it has been seriously badly treated judged good or outstanding by Ofsted at the most by Ofsted, which has asked inappropriate questions of recent inspection had reached 81%. That compares with young people. I hope that she and the Committee will 70% for free schools. Even so, it is highly unusual to get be able to hold Ofsted to account tomorrow. a school rated as inadequate across all its categories. The report would be worrying for any school and Roberta Blackman-Woods: That is a very interesting community, but, coupled with the detailed report from intervention given that I started the debate by asking the Education Funding Agency, it is obvious why the for information about the decision to be in the public Secretary of State would consider issuing a notice to domain. I understand that the decision taken by the close the school. It appears to be based not on any one Secretary of State was based not only on the Ofsted aspect of the school’s weakness, but on the combined report, but on the detailed assessment carried out late picture of mismanagement and poor quality education last year by the Education Funding Agency and observed and inspected thoroughly by the EFA, the representatives from the Department for Education and Department and Ofsted. I am aware of no evidence to the free school unit. I know that the school is concerned date that these inspections were not in any way suitably about aspects of the Ofsted inspection, but there are robust or conducted in a way that they should not have many more aspects of that inspection that need to be been. taken into consideration. Given the inadequate rating, I am not clear on what grounds the school can challenge, Alex Cunningham: Tomorrow the chief executive of but I understand that it has until next Tuesday to set out Ofsted is due to appear before the Select Committee on its case. Education. Parents will want us to hold him to account In addition to being clear about the extensive nature for the decisions made at Durham and in Sunderland, of the information on which the decision to remove the where just last week Grindon Hall free school was also school’s funding was based, I want to see what lessons put into special measures. Does my hon. Friend think can be learned from this sorry saga, whether or not the there are any particular challenges we should be laying school remains open. First, I am totally unclear about at his door tomorrow? why this school was given approval to start up in the Roberta Blackman-Woods: It is important that the first place in a city that has good quality schools and chief executive of Ofsted establishes very clearly that surplus places. Community acceptance of the free school the inspections were carried out in a suitable way and was not helped by the fact that this new school of following the correct guidance, and therefore that there 30 pupils was expected to be set up on the site of a should be public confidence in their outcomes, because school that had just closed down because it was not I know that a number of colleagues have received letters considered to be financially viable with 400 pupils. from a variety of people calling into question the veracity Numbers at the free school remained low, even though of the Ofsted inspection. as soon as it was established the local authority was obliged to inform parents in the area that it was their Mrs Sharon Hodgson (Washington and Sunderland nearest school, and that if they wanted free school West) (Lab): As my hon. Friend will know, Grindon transport they would have to send their children to that Hall Christian school is in my constituency. Following school—they did not have a choice. 833 Durham Free School27 JANUARY 2015 Durham Free School 834

Mr Kevan Jones (North Durham) (Lab): I am grateful addressed, but I hope that, before he speaks, I can crave to my hon. Friend and parliamentary neighbour for the indulgence of the House and allow my hon. Friend giving way. Does she agree that another scandalous the Member for North West Durham (Pat Glass) a few aspect is that millions of pounds of taxpayers’ money minutes in which to comment on the issue from the has been sunk into a school in an area, as she rightly point of view of the Education Committee. says, of surplus places, where other local schools, such as the excellent St Leonard’s, which serves both her and 7.15 pm my constituency, are crying out for resources? Is it not a Pat Glass (North West Durham) (Lab): I shall speak scandal that just last Saturday, this school was spending very briefly. My main purpose is to thank the Secretary taxpayers’ money on a half-page advert in The Northern of State and the Minister for the decisive and swift Echo? Is that a good use of public money? action that they have taken in this case. Roberta Blackman-Woods: My hon. Friend reiterates I have been raising issues relating to Durham free a point that I have made many times. I have been greatly school with the Department for Education, and with its concerned about the amount of money the school has former Secretary of State, for several years, both in the received, how it has been spent and the impact of that Education Committee and in the Chamber. I find it on other schools in the community. disappointing that the former Secretary of State chose Secondly, on lessons learned, how much money has not to take action, and that, until very recently, he was the school received so far and has any analysis been praising a school which—let us not forget—has failed made of how that money could have been better spent and has been found to be inadequate in every respect, to assist local schools, especially as they had to including safeguarding. That is why I am so grateful for accommodate the 400 children from the closed school the swift action that has—finally—been taken. with no additional resources? Why did the Department I consistently raised the financial and educational think it was better to support a free school for the few questions that surrounded the opening of a free school rather than invest in the planned academy, which would in a city where there was already a sufficiency of both have supported many more children? surplus places and good and outstanding schools. I said One of the first things the then Secretary of State, the many times, “You cannot spit in Durham city without right hon. Member for Surrey Heath (Michael Gove), hitting an outstanding school.” There were surplus did on the election of the current Government was to places in that city, and I could not understand the cancel the academy for Durham city that was very reasoning behind the setting up of another school. I much needed locally and that was supposed to raise also consistently raised the fact that the school had standards for the school that closed. This is particularly never been more than half full in years 7 and 8, that the concerning in the light of findings by the National cost per pupil was therefore in excess of £80,000, and Audit Office that that applications to Durham county council for places “the primary factor in decision making has been opening schools in other schools from the parents of existing pupils had at pace, rather than maximising value for money”. been regular and even excessive since the day on which Surely it was wrong to put ideology before evidence-based the free school had opened in September 2013. education policy. However, my real concerns—I raised them with the The shadow Secretary of State picked up on that in Secretary of State in, I think, November, which is why I highlighting the deficiencies now emerging from the think that progress has been swift—related to staffing at Swedish system, which saw a radical expansion of free the school. There are good teachers there who will find schools, accounting for a quarter of all pupils by 2013. it difficult to secure alternative employment, and I am This seems to have come at a great cost for those pupils, sorry for that. However, as a former senior education as Sweden saw a massive drop in standards during this officer in the north-east, I was aware that there were period. In 2003, Sweden was ranked 17th in the global very high levels of teachers working at Durham free league table for mathematics; now it is ranked 38th. I school that I knew had already undergone competency hope that the Department is keeping a good check on procedures with other local authorities. A head teacher what is happening to overall standards for schools such in the region told me that the school had become a as Durham free school. haven for every crap teacher in the north-east. I am I regret the accusation that some of us are turning sorry if that is unparliamentary language, but that was this into a political issue. That is not the case. I want a what he said. rational debate about the school’s future. When parents I am concerned about the £4 million that the school approached me in 2011-12 for support to set up the free has cost in 15 months. I am concerned about the negative school, I did what I think was the right thing and impact that the school has had not only on its own pointed them to the Department so that they could get intake, but on all the other schools in the City of the information and support they needed. I do not Durham. I remind Members that it was judged to be know whether that happened in practice. What I do inadequate in every respect. Those children have lost know is that when things go wrong, we need decisive 15 months of their education that they will never get action. I know that the local authority is trying to work back, and for that reason I am extremely grateful for the with the school and with parents by offering alternative actions that the Minister has taken. This has gone on places. It is interesting that we always expect local for too long, and I am pleased that he has pulled the authorities to step in and sort out problems; perhaps we funding agreement to ensure that it goes on no longer. should consider giving them a much bigger role in the management of all schools. 7.18 pm The main thing that I wanted to do this evening was The Minister of State, Department for Education put my concerns on record. I look forward to hearing (Mr Nick Gibb): I congratulate the hon. Member for what the Minister will say about how they will be City of Durham (Roberta Blackman-Woods) on securing 835 Durham Free School27 JANUARY 2015 Durham Free School 836 this important debate. I know that, as a Member of notice of her intention to terminate Durham free school’s Parliament and as a governor at Durham Johnston funding agreement just three months after receiving School, she is a passionate advocate for education in her notification of the initial concerns. constituency, and I also know that she has been concerned about Durham free school for some time. Alex Cunningham: I welcome that decisive action, but We all agree that every parent should be able to Durham free school was receiving its bursary services choose a good local school for their child, and we are from Grindon Hall Christian school, which itself has committed to giving parents a genuine choice between just been found to be in special measures. What measures high-quality schools. Pupils and parents are let down will the Minister take to make sure all these free schools when local schools are not of the highest quality, and and academies—and everything else, for that matter—have we must act quickly and decisively when schools fail. appropriate financial systems and support and that we That is precisely what we have done in the case of do not have a situation where one poor school is trying Durham free school. to provide services to another? There are currently 255 open free schools. Of those Mr Gibb: We want collaboration between schools as that have been inspected, more than two thirds have part of a school-led autonomous system, but we now been rated good or outstanding and nearly a quarter have very strong financial controls through the Education have been rated outstanding, just three years after the Funding Agency, and they are stronger in academies first free school opened its doors to pupils. More than than any maintained school, with annual reports that 100 free schools are in the pre-opening phase, and are are audited and very detailed academy financial handbooks due to open in 2015 and beyond. Once full, all open and that academies have to adhere to. approved free schools will provide 200,000 pupil places. Free schools have introduced new ideas and approaches Durham free school is a mixed 11-19 secondary school to the school system. Schools such as Dixons Trinity with a Christian ethos. It has an overall capacity of 630. academy in Bradford, Harris primary free school, Peckham, It opened in September 2013 with 31 pupils. It currently and Perry Beeches in Birmingham have been ranked has 92 year 7 and 8 pupils on roll, out of 120 available outstanding by Ofsted less than two years after opening. places. They also give parents and local people a say in the type of education they want for their children, and they are Roberta Blackman-Woods (City of Durham) (Lab): helping to raise academic standards. Free schools also What assessment was made before the school was opened bring diversity into the system. Charities, universities, of its ability to meet the numbers that would be required businesses, and teachers and parents have all opened to make it a good and stable school going forward? It free schools, and they are having a positive impact on has consistently failed to attract the numbers of students the educational landscape. that would be necessary, so we have had a situation of, first, 30 children in one year and then the combined two years of 90 children in a school that was built to cater Mr Kevan Jones: The Minister mentions choice. In for 700 or 800 students. Durham there is choice. There is the very good St Leonard’s Catholic school, there is a choice of very Mr Gibb: It is a common feature of free schools that good secondary schools, and a good proposal was put they do not often fill their places in the first year, but forward for an academy backed by the local FE college. they generally increase their numbers in their second This Government cancelled that. We should have added and third years. That is what we expected to happen to the choice, instead of taking the ideological step of with this school, but of course it did not happen because introducing this free school which was not needed in the of the problems identified by the Ofsted report. area. The vision of Durham free school came from a community who wanted a local secondary school for Mr Gibb: The hon. Gentleman says that, but the local their children in the Bowburn area, south-east of Durham. community in Bowburn says differently, and that is why Closures of schools in the south and south-east of it got together and formed a committee to open the free Durham had left people concerned about the distances school. that their children were required to travel to school. Prior to opening, all free schools undergo a rigorous Before they are allowed to open, free school proposers assessment and Durham free school was no exception, receive a significant period of support and challenge but the real test of a school’s effectiveness comes when from departmental officials. As with all free schools, the the school is open. The leadership and governance of initial Durham free school proposal was assessed against the school must be strong. The standard of education rigorous published criteria, including a compelling vision must be high and sustainable to realise the promises and ethos, a detailed education plan, strong governance made as the school prepared to open. A key strength of arrangements, robust evidence of demand, and clear the free schools programme is that we can act swiftly financial plans. The proposers then enter a pre-opening and decisively where we find schools that are not period where groups such as the proposers of Durham performing well. We closed Discovery new school within free school are supported by officials and education six months of an Ofsted monitoring inspection showing advisers as they develop their governance and education that insufficient progress was being made. Since then we plans, recruit pupils, consult the local community and have reviewed our funding agreements with proposers, work towards signing a funding agreement with the improving our ability to act without delay. Department. The Government have a zero-tolerance approach to We make it clear that we expect to see a strong under-performance in our schools, which is why the governing body to ensure that the governors have both Secretary of State took the decision last week to issue a the skills and the experience to deliver high academic 837 Durham Free School27 JANUARY 2015 Durham Free School 838

[Mr Gibb] issue the trust with a notice of our intention to terminate the funding agreement. I would like to address some of standards. At the point of opening, the Durham free those issues today. school governing body consisted of an existing head The school’s temporary location on the site of the teacher, a retired head teacher and a number of highly former Gilesgate school in Durham was not the preferred qualified professionals. A strong and effective governing location. Extensive site searches have been undertaken body is a crucial element in the success of any educational in the trust’s area of choice in Bowburn, which, as the institution. In this case, we were satisfied that the governance hon. Lady will know, is largely made up of agricultural structure had the capability to deliver an outstanding and residential land. We have already seen that many education to its pupils. free schools can offer high quality education in sites The school had 31 pupils for 60 places at opening, as that were not their original choice, and that that has not the hon. Lady said. That is undoubtedly below the level affected the quality of education, so we do not accept we would have wished for, but new schools can take that as a reason for the poor judgments given in the time to establish their reputation and build up their roll. Ofsted report. The school opened on a temporary site in Gilesgate—just The school has since received per-pupil funding at the spitting distance from where I lived during my three same rate as all other state-funded schools in the local years at Durham university—because of the difficulties authority and, as a new school, received an additional in finding a permanent site in the trust’s preferred £196,000 to defray the additional set-up costs and overheads location. while pupil numbers were growing. The Department spent £303,000 in capital funding, a large proportion of The trust was able to demonstrate that the school which was spent on construction, furniture, fittings, could be viable in the first year of opening due to the other equipment and ICT. way in which school funding is allocated in Durham. It is not uncommon for free schools to increase pupil Roberta Blackman-Woods: It has been extraordinarily recruitment significantly during the first year of opening difficult to get information about the total funding the and whilst in a temporary site. Our experience of the school has obtained over the two years of its existence. free schools programme is that schools often recruit far How can I easily get that information? better in year 2, which was the case at both Rimon Jewish school and Harpenden free school, where Mr Gibb: I am very happy to supply the hon. Lady recruitment in year 2 was almost 30% more than in with that information. Revenue and capital, in additional year 1. to the per-pupil funding, amounts to about £840,000, but I will write to her with the precise figure. The proposer group also produced a detailed education The Department received a number of worrying plan which demonstrated a clear and coherent vision, allegations about Durham free school’s governance in focusing not only on academic success but on transforming October 2014, 13 months after it opened. We acted the local area and increasing the aspirations of all its swiftly to investigate the claims. The Education Funding pupils. At the time of opening, Ministers agreed that Agency undertook an urgent review in November, which the educational plan, together with a secured temporary identified serious breaches of the academies financial site and the intention of finding a permanent site in handbook. Those included concerns about the governing Bowburn, made a strong case to proceed to opening the body, the completion of Disclosure and Barring Service school. checks, and the robustness of the school’s financial The school opened in September 2013, and early management. As a consequence, the school was issued indications from the Department’s education adviser with a financial notice to improve on 24 November, and were that it had made a positive start in delivering the the Secretary of State asked Ofsted to conduct a no-notice education plan and was making good use of other local section 5 inspection, which took place in November. schools. Disappointingly, that positive start was not We acted swiftly, and the hon. Lady will know that we sustained. The recent Ofsted report clearly states that take action whenever we see underperformance in our pupil aspiration is low and is not challenged by the schools system. school leadership. It shows that teaching is inadequate Question put and agreed to. and consequently that pupil achievement is weak. The school has a number of other significant issues, which is 7.30 pm why the Secretary of State took the difficult decision to House adjourned. 189WH 27 JANUARY 2015 Employment in Wales 190WH

day or week because of zero-hours contracts, which Westminster Hall bring no stability or security. Families do not even want to go in for mortgages, because they are not sure about Tuesday 27 January 2015 employment in a year’s time, so they are forced to stay in private rented accommodation. The net impact on families is a hit on their well-being [MR PHILIP HOLLOBONE in the Chair] and mental health, which is so unnecessary. Nor is it only the private sector that is extending the use of Employment in Wales zero-hours contracts; the public sector is increasingly Motion made, and Question proposed, That the sitting being hollowed out by the outsourcing of functions that be now adjourned.—(Alun Cairns.) councils used to do in-house to the private sector, the past masters in the use of zero-hours contracts. At the same time, Tory MPs and the press vilify public sector 9.30 am workers for having “gold-plated pensions”, saying they Mr Philip Hollobone (in the Chair): Bore da! This are mollycoddled and cosseted. important debate, with Wales’s finest in attendance, is The real situation could not be further from the truth. ably led by Chris Ruane. I speak for the 4,500 public sector workers who work for Denbighshire county council and the 4,500 who Chris Ruane (Vale of Clwyd) (Lab): Thank you for work for ysbyty Glan Clwyd—teachers, nurses, doctors, that great introduction, Mr Hollobone. Bore da! Sut social workers, care workers, all doing their best in wyt ti y bore ’ma? difficult times. Workers in secure jobs are being forced I will speak primarily about my constituency and to become self-employed and to take a hit on their north Wales, but I am sure that there will be interventions hard-won rights on holiday pay, sick pay, redundancy, and speeches by Members from elsewhere in Wales— and maternity and paternity pay. The rise in the number although not from any Government Members, because of self-employed has not resulted in an army of Richard no Conservative or Liberal Democrat Back Benchers Bransons, Alan Sugars or Nicola Horlicks; it has resulted are present—[Interruption.] No, here they come. Better in workers being thrown from security into insecurity. late than never. I will focus on five areas: the quality of jobs in the Guto Bebb (Aberconwy) (Con): I have listened to the UK and Wales; the impact of cuts on jobs and employment hon. Gentleman with interest, but the way in which he in Wales—not only the current cuts, but the proposed just described self-employment is a disgrace to any future ones highlighted by the Chancellor in his autumn politician in north Wales. In my constituency, which has statement; the rebalancing of a local economy highly the highest percentage of self-employed people in north dependent on the public sector; the possible impact if Wales, such individuals are making a real difference, we pulled out of the European Union on job prospects creating not only a job for themselves, but jobs in the in north Wales especially; and the impact of capital wider economy. The hon. Gentleman should applaud projects on jobs. them, not imply that self-employment is a dark option On the face of it, employment in north Wales seems forced on them by the Government. healthy, but scratch below the surface and we see a different picture. Wages in the UK have decreased by Chris Ruane: The hon. Gentleman totally misrepresents £1,600 per annum over the past five years. There has me. I am not talking about those small business people been a shift from secure, long-term employment to who want to go into business or about entrepreneurs, short-term, zero-hours, part-time working. whom I applaud; I am talking about people who were in Two years ago, the national press highlighted secure employment but were told, “We’re sacking you Denbighshire as having the highest level of zero-hours now—you can go and get a job in the private sector, contracts in the UK, although the local authority disputed which will take away all your rights.” They have been the figures. Nevertheless, the whole of the UK has forced into self-employment. Those are the self-employed suffered from the steep rise in the use of zero-hours whom I am talking about. I pay tribute to the Federation contracts. The public sector has had a pay freeze at only of Small Businesses, especially the FSB in north Wales, 1%, which in real terms amounts to a cut, while the and I will come on to the CBI in a moment. impact on ordinary workers of the casualised employment promoted by the Government is stark. Families cannot The net effect of all that uncertainty, low pay and plan for their summer holidays, as they might usually zero-hours contracts in my constituency is that, according do in January, because people do not know whether to the citizens advice bureaux, the Vale of Clwyd has they will still be in employment in six months’ time. the highest level of insolvencies in the whole UK and the highest percentage of people seeking debt advice Ian Lucas (Wrexham) (Lab): Is my hon. Friend aware through the CAB. That is the legacy of five years of that Office for National Statistics figures indicate that, Tory rule. in the past year alone in Wrexham, the median wage fell by 7.4%? That is the impact of the Government’s policies Wayne David (Caerphilly) (Lab): My hon. Friend has on individuals in my constituency. referred to parts of his constituency that are desperately poor; as he knows, parts of my constituency are also Chris Ruane: I thank my hon. Friend for his intervention very poor. Does he agree that what has really made the —the freeze or cut in the public sector has been bad for difference in pushing down living standards for many workers and families in my constituency as well. Parents people has been the extremely harsh and unfair so-called cannot even plan to pick up their children the following welfare reforms? 191WH Employment in Wales27 JANUARY 2015 Employment in Wales 192WH

Chris Ruane: Absolutely. I agree with my hon. Friend genuine choice and flexibility, they really contribute to entirely, and the point has been ably illustrated by my insecurity? If we are serious about enhancing family life hon. Friend the Member for Alyn and Deeside (Mark and stability we have to tackle that. Tami). When a person has invested tens of thousands of pounds in installing disability access into their council Chris Ruane: I agree entirely. The impact on mental house, where is the sense in forcing them out of it into health and well-being can only be detrimental. private sector accommodation, which must then have Going back to the CBI, I pay tribute to John Cridland. disability access added? The previous place will not He has made a brave intervention on this matter and I necessarily be used by a disabled person. It makes hope the Conservatives heed his wise words. absolutely no sense. The next aspect I will look at is the impact of public We have reached the point where even the CBI is sector cuts, especially cuts to local government. I have telling the Government that they have got it wrong and the statistics from the House of Commons Library. that workers need a decent wage and job security. John English local authorities have had cuts of up to 43%: Cridland said in The Observer on Sunday: Kingston upon Thames, Bournemouth, West Berkshire “I am not sure this would have been natural territory for us and Brighton and Hove have all had cuts of 43%. Those five years ago. cuts to local government come from this Tory central I have been banging on for a year about higher earnings Government. growth. I have been doing that in part because it is a sensible part of economic rebalancing to have sustainable consumption. It is Guto Bebb: Will the hon. Gentleman give way? important that low-paid workers are able to play their part as active consumers”. Chris Ruane: No, the hon. Gentleman has had one He also talked about bite of the cherry. “inequality having reached a point where it is not acceptable from The cuts that English local authorities have experienced a moral point of view and that, in a commercial sense, it’s bad for are more than decimation. The same research says that business.” the Welsh Government have largely protected Welsh That is the head of the CBI. He did not think that local authorities from those cuts over the past five five years ago, when Labour was in power; he thinks it years. According to that research, in my own county of now, at the end of five years of Tory rule. The loss of Denbighshire there has been an increase in funding £1,600 from each worker’s pocket has had a negative of 3% from the Labour Welsh Government. That protection impact on consumption, demand and profits. That comes has now ceased, however, as the Welsh Government feel from the top. the full impact of a £1.7 billion loss to their budget because of the Tories here in Westminster. Ian Lucas: Another crucial impact has been from the Tory VAT increase, which takes money directly out of Wayne David: Does my hon. Friend agree that the consumers’ pockets—[Interruption.] I am sorry that situation is bad now, but if, God forbid, the Conservative the Government Members are so upset by my saying party should win a majority at the next election, things that, but my constituents are upset about money out of will be a lot worse? We will be back to 1930s levels of their pockets going straight to the Treasury rather than public expenditure. our high streets. Chris Ruane: My hon. Friend predicts the next part of my speech. Chris Ruane: Absolutely. When Labour reduced VAT, that had a positive effect. All the economic indicators Guto Bebb: Will the hon. Gentleman give way? from 2008 to 2010 were going upwards; in June 2010, they started to go down. [Interruption.] The hon. Member Chris Ruane: No! for Aberconwy (Guto Bebb) might laugh, but he does not know his economics. Welsh local authorities are implementing cuts that in my county will see the closure of the pest control John Cridland added: department, the ending of help with school uniforms “I am particularly interested in the escalator that takes people for low-income families and the loss of jobs for those who are unemployed or low-paid on to better-paid work. Something who help children with psychological problems. I do has gone wrong with it. There are two or three missing steps in the not blame the local authorities—not the officers, and middle.” not even the Tory councillors. The finger of blame has The missing steps to which he refers will not be provided to point at those at the top of this Conservative by zero-hours contracts, the minimum wage with no Government, who decided that, of all the departments prospect of progression and cutbacks in skills and in the UK, local government should have the biggest training. cuts. They planned for 27% but have implemented 43%.

Susan Elan Jones (Clwyd South) (Lab): I am grateful Jonathan Edwards (Carmarthen East and Dinefwr) to my hon. Friend for making an insightful, thoughtful (PC): The hon. Gentleman is making a typically and comprehensive speech. Does he agree that another impassioned attack on the austerity policies of the theme related to this issue is instability? Several years Conservative party, and I agree with a lot of what he ago, I read some of the writings of the Centre for Social says. Will he explain why he and his colleagues voted for Justice, an institution that many people see as tending the Tory austerity charter only two weeks ago? to favour Conservative thinking, although not exclusively. I was interested that one thing the centre spoke about Chris Ruane: Cuts have to be made, but the tempo, was how insecurity affects family life. Does he agree pace and degree of cuts, and the ideology behind them, that when zero-hours contracts are not a matter of are the key issues. These are cuts for cuts’ sake, because 193WH Employment in Wales27 JANUARY 2015 Employment in Wales 194WH the Conservative party believes in a low percentage disingenuous. As far as Army recruitment centres are expenditure of GDP on the public sector—an issue I concerned, I know that he knows that the closures are will come to in a moment. nothing to do with resource, but to do with different recruitment procedures that are more effective in the Hywel Williams (Arfon) (PC): I am sorry, but does 21st century. I would be grateful if he were careful that not sound like trying to be a little bit pregnant? about that. Chris Ruane: I am not sure whether the hon. Gentleman has ever experienced that state in his time in Parliament. Chris Ruane: The hon. Gentleman may have a point, I am saying that the cuts proposed by my party—indeed, as the Government have cut back the number of members his party has had to make cuts in Gwynedd—are not of the armed forces dramatically; but I see a closure as a ideological. They have been practical cuts. The Conservative closure. party wants to introduce cuts for ideological reasons. It Last Thursday, I met Jane Hutt, the brilliant Welsh wants to cut back the state and sees the public sector Finance Minister who is masterminding much of the and the state as bad. I do not perceive them in that way. investment that I have mentioned. We met at Rhyl high In the autumn statement, the Chancellor said that he school, which as I said is undergoing a £25 million wants to see the percentage spent by the state come rebuild. The contractors, Willmott Dixon, said that down to 35% of GDP. His own creation, the Office for 60% of the investment will be spent within a 30-mile Budget Responsibility, said that, if he did that, public radius of Rhyl. The jobs, training and growth from that sector spending would be at its lowest since the 1930s, investment will be multiplied many times over because before the establishment of the national health service—we of local procurement. The Labour Welsh Government spend £115 billion on the NHS, yet the Chancellor are playing a vital role in ensuring that my constituency wants to take us back to the 1930s. His vision for the is able to withstand the ravages of Tory cuts. UK economy and our society is “The Road to Wigan In Vale of Clwyd and, indeed, in the neighbouring Pier” and “Love on the Dole”. It is not a vision I share, constituency Clwyd West—it is interesting that the right or one that the Labour party shares; I dare say Plaid hon. Member for Clwyd West (Mr Jones) is not here Cymru does not share that vision either. It is a dark, today—there is a huge percentage of public sector bleak vision, offering no hope. The British public, especially workers; 37% of the workers in those two constituencies in those areas that rely on public sector jobs, will reject work in the public sector. What will happen when we the Chancellor’s vision. have these huge cuts? We know what has happened in Although one faced the effects of recession and the the past. In the early 1980s, Shotton steelworks closed, other the effects of war, Franklin D. Roosevelt’s and 7,000 jobs were lost in one day—the biggest lay-off Government of the 1930s and the Labour Government in British industrial history—with no help or intervention of the 1940s knew that investment and capital projects from the Tories. were the key to recovery and growth. The Labour Welsh Government are heeding the lessons of history and have implemented a huge capital building programme Mark Tami (Alyn and Deeside) (Lab): I am sorry to in the Vale of Clwyd. They have invested £100 million intervene on my hon. Friend when he is making that in refurbishing ysbyty Glan Clwyd. In partnership with important point, but may I just correct him? Over Denbighshire county council, they are investing £70 million 8,000 jobs were lost on that day, and the area still shows in refurbishing and rebuilding schools. the effects of that devastating loss of jobs—still the I will graphically illustrate the difference in approach largest single loss of jobs at a single plant on a single between the Welsh Government and this Government day in the UK. in just one town in my constituency—my home town of Rhyl. The Prime Minister stood at the Dispatch Box Chris Ruane: I thank my hon. Friend for that, and I and said that the town of Rhyl had been neglected by accept his correction. the Labour Welsh Government and the local authority. While he was speaking those words, he was closing The Government in the 1980s gave no support. There down the Army recruitment centre in John street in was no compassion and no thought. Areas were almost Rhyl, which opened in 1914, and was closed in 2014 by punished for being Labour. I have repeatedly asked the Tories; while he was speaking at the Dispatch Box, Tory Ministers, from the Chancellor to the Secretary of he was also closing down Rhyl county court and the tax State for Wales, what measures are in place to help the office in Rhyl, and relocating the Crown post office rebalancing between the public and private sectors in from Rhyl. areas with large numbers of public sector workers. In one constituency, which is, I think, in Edinburgh, 78% Compare and contrast that with the investment that of the workers are in the public sector, but there is no has come to my home town of Rhyl from the Welsh help from this cold-hearted Conservative Government. Government. There is a £10 million new harbour, a £22 million new community hospital, opening in 2017, Finally, I turn to Europe. Shotton was rescued by the and £28 million is being spent on replacing the old houses rise of Airbus. The factory has 7,000 workers and of multiple occupation with decent family accommodation. 600 apprentices, and there are 70,000 jobs in the supply As we speak, £25 million is being spent on a new high chain—it is one of the biggest factories in western school and £12 million on new flood defences in Rhyl. Europe. This is a joint European venture, which includes Now tell me who is neglecting Rhyl. Spain, Germany and France; it is a living example of how co-operation is better than confrontation. However, Simon Hart (Carmarthen West and South those jobs will go if we pull out of Europe, as Tory Back Pembrokeshire) (Con): The hon. Gentleman needs to Benchers—I am sure there are a few out there now—want be careful about using examples that are tantamount to us to. There would be massive job losses at not just 195WH Employment in Wales27 JANUARY 2015 Employment in Wales 196WH

[Chris Ruane] The title of the debate is “Employment in Wales”, and any politician who takes themselves seriously should Airbus, but Toyota and other foreign inward investment at least acknowledge that the employment figures in businesses, which have said they will leave Britain if it Wales are most encouraging. pulls out of the EU. In St Asaph, in my constituency, work is being done Chris Ruane: Will the hon. Gentleman give way? on the Extremely Large Telescope—a £2 billion project to put the biggest telescope the world has ever seen in Guto Bebb: No, I do not think I will—I shall retaliate the Atacama desert in Chile. The lenses alone will be in kind. The hon. Gentleman had his opportunity. £200 million. I hope they will be made in my constituency, but there is no chance that that will happen, with the Mark Tami: Will the hon. Gentleman give way to me? high-tech, highly skilled jobs that the project would bring, if we pull out of the EU. Guto Bebb: Of course.

Mark Tami: My hon. Friend is correct about Airbus. Mark Tami: Does the hon. Gentleman not agree that, Does he agree that such companies have choices? They even if we do accept that more jobs are coming in, we do not have to invest in the UK. Airbus is an example of are also losing jobs? A few days ago, we had the a good partnership, but, equally, the factories in Germany, announcement that 120 jobs were going at the Shotton France and Spain want the wing work we have in this paper mill. Although I welcome all jobs, replacing those country, and further investment in the Broughton plant quality, highly skilled jobs with minimum wage jobs is would be in doubt if we were outside Europe. not the same thing. Chris Ruane: Absolutely. The Conservative element of the Government thinks we can pull out of Europe, Guto Bebb: I accept entirely that we would be where we do about 40% of our trade, and stick two disappointed to see job losses in any part of Wales. I fingers up to it, and that everything will be the same know full well how the north Wales economy works, afterwards—that that trade and co-operation will carry and a number of people who work in the hon. Gentleman’s on. That will not be the case. Europe will punish us. It constituency live in mine. People travel to work down does not want us to pull out; it wants us to be included. the A55 corridor, whether that is from east to west or We are 60 million people out of 6 billion—1% of the west to east. Even though the road makes that difficult, world’s population. If we pull away from Europe, our I often meet people who work in Chester or in Alyn and voice will be miniscule. We are part of the biggest Deeside when I am out canvassing. I accept that any job trading bloc in the world’s history. lost is a concern, but it is important to remember that although the Labour party has been highlighting the Simon Hart: Will the hon. Gentleman give way? doom and gloom, and saying that Wales will never recover from public sector job cuts, the number of jobs Chris Ruane: No. I will finish on that note. created in the private sector in Wales has far exceeded the number lost in the public sector. Several hon. Members rose— In that respect, we need to respond to the slur made by the hon. Member for Vale of Clwyd regarding Mr Philip Hollobone (in the Chair): Order. We will Government Members’ attitude towards public sector hear from Mr Ruane at the end of the debate, because it workers. I have never heard a Government Member is a Back-Bench debate, and he will have between three criticise anybody who works in the public sector. The and five minutes to sum up. I will call the Front Benchers one simple point we have made is that we need to have no later than 10.35 am, but it might be before that. fairness between those who work in the public sector Before that, the order of speakers will be Government, and the majority—even in Wales—who work in the Opposition, Government, Opposition. private sector. Do public sector workers have gold-plated pensions? No, they do not in terms of what they get out of their pensions, but in comparison with the situation 9.52 am for somebody in my constituency who is self-employed, Guto Bebb (Aberconwy) (Con): It is a pleasure to “gold-plated” is a fair description. The changes the serve under your chairmanship, Mr Hollobone. I turned Government have brought in simply move the balance up to the debate thinking that we would at least have a of pension contributions slightly from the taxpayer to reasonable discussion of the facts, but what we actually the recipients of the significant pensions in the public heard was a pre-election rant from the hon. Member for sector. The Government’s changes on pensions are to be Vale of Clwyd (Chris Ruane). That is a real shame applauded because they have ensured that we retain a because, outside the Chamber, he is often thoughtful degree of support for those who opt to serve in the and constructive; in the Chamber, however, he becomes public sector, and that support is well beyond what is blatantly partisan and can see good only within the available to those who work in the private sector. confines of the Labour party in Wales. The hon. Gentleman should remember a simple point: Listening to the hon. Gentleman reeling off the record even on trade union figures, the average public sector of significant investment in his constituency, one wonders pension is about £8,000, and that is equivalent to a whether there really is a shortage of money in the Welsh pension pot of roughly £120,000. If Labour Members Assembly. If there is, that is probably because the do care about people in Wales, they should be aware money has been spent in Vale of Clwyd. If nothing else, that the average pension pot for somebody in the private therefore, we will have to compliment him on his ability sector in Wales is £30,000. Even the trade union figures to lobby his political colleagues in Cardiff. still imply that people in the public sector have a fund 197WH Employment in Wales27 JANUARY 2015 Employment in Wales 198WH that is four times more than that of somebody in the recognise the work that the self-employed do. Labour private sector, but I see no concern among Labour Members say that they will change things, but vote for Members about the situation faced by the vast majority exactly the same fiscal position as the Government. of Welsh workers. It is important to highlight that Labour Members Owen Smith (Pontypridd) (Lab): Will the hon. Gentleman have said time and time again that there is concern give way? about youth unemployment. What we have seen, however, is that there is a difference between what happens when Guto Bebb: I will not give way to the hon. Gentleman, Labour is in power and what Labour thinks happens but I will ask him a question. We heard of a litany of when it is in power. In my constituency, for example, cuts that are unacceptable to the hon. Member for Vale youth unemployment has fallen by almost 50% since of Glamorgan—[HON.MEMBERS: “Vale of Clwyd.”] I 2010. That fantastic achievement is the result of this apologise. I would not have expected any such nonsense Government’s attitude that people are better off in from the Minister, my hon. Friend the Member for Vale work than not working. Under the previous Government, of Glamorgan (Alun Cairns). youth unemployment went up and the benefits system The hon. Member for Vale of Clwyd gave a litany of picked up the strain. Nobody who is young should be complaints about cuts, but I want the shadow Secretary on benefits; they should be able to be trained and to get of State to tell us which of the cuts Labour would work, and that is exactly what we are seeing in Aberconwy reverse, because I understand that the Labour party is as a result of the Government’s changes. conducting a zero-sum spending review. That means that there will be no additional spending, and that any Susan Elan Jones: It is interesting that the hon. cuts that are reversed will be achieved by making cuts to Gentleman is posing as Mr Egalitarian between the another area of activity. We have been told that local public and private sectors. Is he not part of a Government government cuts were the wrong decision—the hon. party that spent millions of pounds of our money Member for Vale of Clwyd made that very clear—so contesting a court case so that bankers in this country where, in the zero-sum spending review, would be the could get extra bonuses? Where does that put him? We right place to cut to make right the local government are not talking about the difference between the public cuts that he believes were too great? and private sectors when it comes to ordinary jobs in Alternatively, is all that we are getting from Labour north Wales, but about a Government who act rhetoric? The truth is that when there was a vote last fundamentally against the interests of people in north week on spending plans for the forthcoming Parliament, Wales when they take such actions. the official Opposition—fair play to them—recognised the reality and voted to support the Chancellor’s view Guto Bebb: I am constantly amazed at Labour Members’ that £30 billion of additional cuts are needed. Labour hatred of the entrepreneurial spirit. The simple fact of Members can claim to represent people who are typically the matter is that we need a successful economy to pay of the view that they have been served by that party, but for the public services we need. The Labour party has all their rhetoric is trumped by the reality of their always believed that money derives from thin air; it does support for the Government changing the economy in not understand how the economy actually works. To the right way. have a strong health service, we need a strong economy. We should be proud of our record on employment To have employment growth, we need a strong economy. and the re-emergence of entrepreneurial spirit in north To have a strong economy, we need a strong entrepreneurial Wales. We need a continuity of purpose. The dead hand spirit. This Government understand that simple fact; of Labour has damaged Wales time and again and the Labour party clearly does not. should not be allowed to derail the economic recovery, The key issue we need to look at is employment rates. which is giving hope of full employment in Wales for Employment rates in Wales are notoriously low by UK the first time in a generation. standards, but they are going in the right direction. I was interested to note from the debate pack that the hon. Member for Vale of Clwyd once tabled a question 10.3 am requesting employment figures for north Wales constituencies. Remarkably, in comparison with the Hywel Williams (Arfon) (PC): I congratulate the hon. glory days of the Labour Government, the employment Member for Vale of Clwyd (Chris Ruane) on securing numbers for all of them are higher than they were when this important debate. I will begin with a timely reminder Labour was in power. We hear rhetoric from the Opposition, to the hon. Member for Aberconwy (Guto Bebb); he is but when they are in power we always see failure. slightly behind the wave on the matter of cuts. The Everyone in UK politics knows that not once has a Prime Minister, on Radio 4 this morning, called them failed Labour Administration left government with not cuts but adjustments—but of course, both sides are unemployment lower than it was when they came to signed up to those adjustments. power. That has always been true—[Interruption.] The I want to consider some of the more interesting hon. Member for Pontypridd (Owen Smith) suggests facts of the matter, as opposed to engaging in rhetoric that that is an old chestnut, but he knows that where such as we have heard this morning. A key element in there is unemployment, there are Labour Members. The respect of employment in Wales is the balance between eight constituencies represented by the Conservative the public and private sectors. That is extremely party in Wales have a lower unemployment rate than important in my constituency, and in Vale of Clwyd, the Welsh average. Suffice it to say, the areas of hard-core Aberconwy and other constituencies. A key element of unemployment are typically represented by the Labour the Government’s austerity strategy is that public sector party, which despises enterprise and is not willing to expenditure cuts will be rebalanced by growth in private 199WH Employment in Wales27 JANUARY 2015 Employment in Wales 200WH

[Hywel Williams] We in Plaid Cymru were concerned about whether growth in private sector employment would be achieved sector employment. What has happened and, in particular, for the UK, and particularly for Wales, because of its how far has Wales succeeded compared with the rest of greater dependency on the public sector and the fragility the UK? of its private sector. After four and a half years, and The financial crisis broke in 2008 and the immediate with an election pending, the statistics are interesting, impact was seen in the sharp drop in employment in the but we must be careful because, for example, the ONS private sector in the following year to September 2009. reclassified staff of RBS and Lloyds Banking Group There were 60,000 fewer people employed by the private from the private sector to the public sector in 2008, and sector in Wales in the year to September 2009 compared that represented 225,000 workers. Royal Mail staff went with a year earlier. Since bottoming-out in 2009, private from the public to private sector following privatisation sector employment in Wales has steadily increased and in the fourth quarter of 2013, while further education is now slightly higher than in 2008, with an increase of staff in England were reclassified to the private sector. 1%. I am, by the way, using figures from the Office for In a later twist, employees at Lloyds Banking Group National Statistics. That 1% compares poorly with the have been reclassified to the private sector, as the share figure for the UK as a whole, which is 12%. We have of private sector ownership of Lloyds has grown. done comparatively badly. Had private sector employment The total private sector year-on-year decline of 6% in in Wales tracked that of the UK since 2009—the low Wales compares unfavourably with the corresponding point—and had we performed as well as the rest of the fall of 4% across the UK as a whole. Since the trough in UK, there would have been an additional 43,000 people 2009, private sector employment in Wales has steadily in private sector employment in Wales by September increased, as I said, but that compares poorly with the 2014. That is a criticism of the UK Government’s UK, where private sector employment has grown by a macro-economic policy, but also of the performance of massive 1.7 million jobs. As I said, public sector employment the Welsh Labour Government in Cardiff. in Wales has declined, while private sector employment If employment in the public sector in Wales had has risen slightly, but in the UK, the situation is a good shown the same rate of decline as in the UK between deal better. The conclusion that one has to reach is that 2010 and 2014, an additional 12,000 jobs would have had private sector employment in Wales tracked that of been lost. The Welsh Labour Government have protected the UK since 2009, an additional 43,000 people would public sector employment, which is a good thing, and it have been in private sector employment in Wales. Public has been more resilient than in the UK as a whole, but sector employment in Wales has been quite resilient, the figures are significant for the Government’s contention which has been a good thing. that cutting public sector employment leads to growth Let us have a quick look at the unemployment figures. in the private sector. If Wales had tracked the UK since If the unemployment rate in Wales was the same as that the Conservative-Lib Dem Government came to office of the UK, 10,000 more people would be in work. In in 2010, there would have been an additional 41,000 in Wales, the figure for those who are economically active employment in Wales by September 2014. is 74%, whereas it is 78% for the UK as a whole, so we also have a problem with economic inactivity. That is Jonathan Edwards: My hon. Friend is giving a forensic well known, but the point is the number of people analysis of the employment situation across the UK involved. It is equivalent to 67,000 fewer people of and in Wales in particular. Is not private sector employment working age in Wales either being in employment or growth geographically lopsided, located very much in seeking work, and that shows the size of the problem the south-east, with the other nations and regions of that we face. Of those economically inactive people, the UK lagging behind? There has not been the geographical 120,000 would like work. We therefore have people who and sectoral rebalancing of the economy promised in are looking for work, which suggests to me and other 2010. observers that the measures in place to encourage those who are economically inactive into work just are not working properly. That is the challenge facing Wales—not Hywel Williams: My hon. Friend makes an interesting only reducing the unemployment rate, but raising the point. We have such a geographical imbalance in Wales, rate of economic activity to the UK level and ensuring in relation to not only the number of jobs, but their that the quality of the jobs is right for Wales. quality, as the hon. Member for Vale of Clwyd pointed out. We have seasonal and low-quality jobs—some There is scant evidence that austerity has worked for part-time and some on zero-hours contracts. My hon. Wales, either from the viewpoint of rebalancing the Friend’s remarks have several implications. employment mix between the private and public sectors, or by growing total employment. A great deal needs to In the case of Wales, therefore, the figures show scant be done, and we are looking in vain to the two main evidence that austerity has worked either to rebalance London parties for action. the employment mix between the private and public sectors or to increase total employment. The data on 10.12 am the balance between the public and private sectors need to be treated with caution, because of the effects of Simon Hart (Carmarthen West and South reclassification. That political sleight of hand has frequently Pembrokeshire) (Con): I came into the Chamber at been used in the debate on the issue. For the UK, the half-past 9 naively hoping for 90 minutes of informed proportion employed in the public sector has fallen debate, rational argument and, to be honest, a bit of from 20.4% in 2008 to 17.7% in 2014. In Wales, the peace and quiet, so I was not really planning to speak, proportion has declined from 25.8% to 23.9%. That is a but the hon. Member for Vale of Clwyd (Chris Ruane), smaller drop, and of course there is a much larger who opened the debate, has driven me into an public sector in Wales. uncharacteristic state of fury and indignation. I hope 201WH Employment in Wales27 JANUARY 2015 Employment in Wales 202WH that people will forgive me if I try to paint a more when they hear people from the Labour party describing positive picture of the Wales that I know rather than their jobs as somehow unimportant, unrewarding or getting involved in the constant negative talking down unreal. Those jobs are the absolute opposite of those of a success story, which seemed to be the main theme things—they are important. of the hon. Gentleman’s speech. I remember only too well taking home my first pay I was also expecting more than we got, which was a packet when I had my first job, which would probably series of contradictions. We were told that the wicked have been described as low-paid, irrelevant and unimportant coalition was responsible for starving Wales of money, by one or two Opposition Members. To me, it was the yet in the same breath the hon. Gentleman listed a opposite of that. That was the most important moment whole range of ways in which investment has been of my life. The money for that job may not have been as made available to Rhyl in his area, presumably as a much as I might have got elsewhere, the hours may not consequence of not only Welsh Government intervention, have been very special and the terms of my employment but the underpinning strength of the UK economy. may not have been particularly good by today’s standards, but I did not half appreciate it and it put me on the road Chris Ruane: Will the hon. Gentleman give way? to a decent work ethic and a hard-working life. That was all because someone gave me the chance to do the Simon Hart: Let me make it clear early on that I job. No one talked down my job in those days, and I do probably will not give way to the hon. Gentleman, not think that we should talk down people’s jobs today, unless I have a sudden attack of good will. That does either. not mean that I will not give way to anyone, but I will As we approach the election, it seems to me that not be persuaded to do so just yet. Labour’s electoral fortunes depend on fear and failure. We also heard the contradiction of the hon. Gentleman It seems that the more fear and failure there is, the more condemning the coalition’s spending proposals in almost electoral opportunity there is for the Labour party. I the same week that his party voted in favour of them. Is find it quite offensive that we should go into an election it any wonder that we question the economic literacy of with one party almost promoting fear and failure as a his case when the shadow Chancellor of the Exchequer— means to success at the ballot box, and I think that that perhaps the hon. Gentleman will have some comments will reflect badly on it come May. to make about this—told us not long ago that interest I put down a challenge to the hon. Member for Vale rates would go up when in fact they have done down, of Clwyd, so I will take an intervention now if he wants that inflation would go up when in fact it has gone to make one. He condemned pretty well everyone, it down, that fuel prices would go up when in fact they seemed, for this country’s economic direction, strategy have gone down, and that unemployment would go up and success, yet the voters’ attitude seems to suggest when in fact it has gone down? Is it any wonder that that there is precious little confidence in his own party when the hon. Gentleman starts pontificating about a leader in terms of the economic future of the country. gloomy prognosis for Wales, we take it with a pretty big Opinion polls clearly show more confidence in the pinch of salt? Cameron leadership of the country, in terms of its economic direction, than the Miliband leadership. Perhaps Guto Bebb: Does my hon. Friend agree that there is a the hon. Gentleman would like to comment on the danger to the good name of politics in general when confidence that he has in his own leader in terms of Members complain about cuts as they make impassioned economic competence and the future of the country. speeches, yet vote for them in the House of Commons? Chris Ruane: The point that I want to make is about Simon Hart: My hon. Friend makes a good point. the hon. Gentleman’s argument that I was too negative Sometimes we think that we can get away with saying about the economy. Given the rosy picture that he has things in the Chamber because we seem to think that we painted, I think that he is too complacent about the exist in a bubble and that people are not watching, or economy. People outside the House do not believe him. listening to and examining the words that we say, whereas The people out there who have suffered a £1,600 loss in in fact, of course, the opposite is the case. That leads me their pockets do not believe him. quite neatly to a point that I wanted to make: there is ideology at play here. The Conservative ideology is that Simon Hart: I am glad that I took that intervention we tackle poverty through the creation of jobs and because the hon. Gentleman completely misrepresents opportunity, yet we heard this morning the Labour my view. No Conservative Member and no colleague in ideology that poverty should be tackled simply by swelling Plaid Cymru or in the Liberal Democrat party—indeed, the welfare state. If the former is an ideology, I am no politician, candidate or Government—has a monopoly pretty happy to go along with it, as the route out of on brilliant ideas, wisdom or compassion. It is crazy to poverty is obviously through the creation of jobs. A suggest otherwise. I am well aware that there are significant proper welfare state looks after people who need assistance, difficulties in my own constituency, which is why I have not those who simply choose to use it as a lifestyle organised five jobs fairs since I have been a Member. choice. That is an important ideology, so if an accusation That is why I spend most of my working day trying to is being pointed at me, I will happily plead guilty to it. resolve such hardships and to point people in the right I am offended every time I hear people describe direction on future job prospects. That is why I deal certain jobs in my constituency as somehow unimportant every day, as we all do, with difficulties when things go and not proper jobs. I can tell hon. Members that no wrong. one feels more patronised than those working in my It is wrong to suggest that we live in a bubble of constituency, whether in agriculture, tourism or engineering, complacency and that the future is gloomy. The distinction or in a multitude of small and medium-sized businesses, that I am trying to make is that there are plenty of 203WH Employment in Wales27 JANUARY 2015 Employment in Wales 204WH

[Simon Hart] For too long our welfare system has been broken. It teaches the wrong values, rewards the wrong choices success stories in Wales of which we should be proud. and hurts those whom it should help. We must offer Plenty of indicators suggest that we are pointing in the people on welfare education, training, child care and all right direction. I absolutely accept that we are halfway the things they need to get back to work. We need to along the road to success. Nobody is suggesting that we offer them opportunity, but at the same time we must have got there and nobody is suggesting that it will not demand responsibility. We know that no one wants to be a hard crawl from here to our destination. What we change the system more than those who are trapped are suggesting is that to alter the course now would in it, such as the single mother who came to see me damage the prospects of not only people who are recently in a surgery in Islwyn who has to work part working their way back into employment, but those time because she simply cannot afford to go full time. who already have a secure job. More than 70,000 people in Wales feel the same way. We have to end welfare as a way of life and make it a Wayne David: Is the hon. Gentleman happy that so path to independence and dignity. The problem is that many of his constituents who have recently found the terms of the debate are all wrong and too partisan. employment are on extremely low wages? Knock on any door in any constituency in Wales, and if it is answered by someone who is in long-term work, Simon Hart: I find that question extraordinary. It is they will attack those whom they term “benefit scroungers” like asking whether I am happy with an outbreak of and people who make benefits a way of life. The coalition incurable disease. Of course I am not. and the Opposition are locked in a battle over the merits of their respective approaches to tackling long-term Wayne David: So what is the hon. Gentleman going unemployment. The coalition has set a limit on the to do about it? annual increases in the majority of benefits; for tax credits it is 1% over the next three years. Only today in Simon Hart: What I am trying to do is to be part of an interview, the Prime Minister set out the battle lines an economic policy that creates greater opportunity, when he said that the Tories will reduce the welfare cap higher wages and better long-term prospects for families to £23,000 if they are elected in May. In fact, he said and individuals in my area. That is what I am driving that that would be the first piece of legislation for any towards. It is wrong to suggest that I could sit back and future Conservative Government. feel content if even a single person in my constituency was unemployed for avoidable reasons. I would be upset Hywel Williams: The Prime Minister has also said and disappointed, and I would strive to help them back that he wants to cut the welfare bill by £10 billion or into employment. The same is true of anybody on an £11 billion over the next five years. The hon. Gentleman’s unsustainable wage. The point I am trying to make is colleagues signed up to the welfare measures last that the direction of travel—I hate that expression, so week. Does he support that level of cuts over the next please forgive me for using it—is correct. five years? I could point the hon. Member for Vale of Clwyd to numerous people in my constituency who have been able to make the transition from the gloomy position Chris Evans: There we go again. I have a lot of time that he describes into a more prosperous world with for the hon. Gentleman, but I have just said that we better pay, better conditions and a better job. That is a need to change the terms of the debate. The debate is consequence of confidence among UK, European and once again about the various approaches, but we are global companies, which are investing in our area, and missing the wider picture. Every time that we talk about it might not have happened under a different form of welfare reform, it becomes about hitting various groups economic leadership. That is the point that I am trying in society. The major problem is not benefit scroungers, to make. Of course we are not there yet—we are some but the simple fact that thanks to globalisation—a good years away—but I think we are on the right path to that thing that is creating more opportunities than ever kind of success story, which was lacking from the hon. before for people in Wales, young and old—the labour Gentleman’s speech. market has changed beyond all recognition. As we have heard, the recent growth in jobs has been at either the very top or the very bottom. That means low pay at the 10.22 am bottom and high pay at the top, but those in the middle Chris Evans (Islwyn) (Lab/Co-op): It is a pleasure to are finding themselves forced out due to what we could serve under your chairmanship, Mr Hollobone, and to call a hollowing out of the labour market. When those follow the hon. Member for Carmarthen West and people lose their jobs, they encounter tremendous barriers South Pembrokeshire (Simon Hart). We nearly ran into to getting back into work, which forces many families each other this morning when we were on our daily jog. into poverty, and that process will only quicken as the years go on. Only a fool would not welcome the news that there are 4,000 more people in work this year than there were We must be honest about the fact that despite attempt last year. Even though Wales has the lowest employment after attempt, welfare reform, in all its guises, has failed. rate of any region in Britain, at 68.7%, anybody gaining Long-term unemployment remains stubbornly high and work can be only a good thing. However, the number of there are still long-term benefit claimants. At the same long-term benefit claimants and long-term unemployed time, we carry on debating the belief that there are remain stubbornly high. It seems that we cannot talk welfare scroungers abusing the system, but I believe about employment in Wales without mentioning the that we need to change the terms of the debate. Policy elephant in the room, which is welfare reform. Exchange recently came up with a programme with 205WH Employment in Wales27 JANUARY 2015 Employment in Wales 206WH three planks that merits further consideration. We need expectations. Prime contractors have reduced what they plan to to build self-sufficiency in the welfare system. In the spend on the hardest-to-help, with support for these participants UK as a whole, 60% of households receive more in lower than for those with better employment prospects.” benefits than they pay in tax, so they are net recipients We need reforms that build on the three principles of state support. That is, in part, the result of the tax that I mentioned to make the welfare state more effective, credits introduced under the previous Labour Government efficient and fair. That would rebuild support for the which, in an attempt to tackle low pay and to eradicate welfare state around the principles upon which it was relative income poverty for children, began to support founded by Beveridge all those years ago and ensure families earning as much as £50,000 a year. Poverty that all families receive the support they need to increase came down, but the problems remain. their earnings and reduce their reliance on the state. At the same time, it would ensure that those in need get the There is still a general presumption in the welfare support they require. As we face the general election, system that the solution to low pay and poverty is to those three principles should be the terms of the new redistribute income through cash benefits. I emphasise debate on welfare reform. that doing so simply subsidises low pay, leads to low wages for recipients and does nothing to encourage Mr Philip Hollobone (in the Chair): If the Front-Bench progression and self-sufficiency. Future reforms must spokesmen take 12 minutes each, we should have enough be built around the principle that income should come time for Mr Ruane to speak at the end of the debate. from work, not benefits, but that will require reforms to the scope of benefits while ensuring that family earnings increase along with the living wage. There needs to be 10.31 am more support for those who seek to increase their Owen Smith (Pontypridd) (Lab): It is a great pleasure income, but that is sadly lacking from this Government. to serve under your chairmanship for the first or second We need to build a system on the principle of “something time, Mr Hollobone. I congratulate my great and hon. for something”. Although it is important to build a Friend the Member for Vale of Clwyd (Chris Ruane) on system that encourages self-sufficiency, we must recognise securing this vital debate and on the clarity and passion that some families will fall on hard times. Companies with which he laid out his case. will close; that is the way of life and the way of the This has been a very good debate so far. It has been economy, no matter who is in government. In such slightly ill-tempered on occasion, but we have heard an times, the welfare system should support people and excellent speech from my hon. Friend the Member for recognise the contributions that they have already made. Islwyn (Chris Evans) and excellent interventions from The current welfare system does not reflect such my hon. Friends the Members for Caerphilly (Wayne contributions. Strengthening the contributory principle David), for Clwyd South (Susan Elan Jones), for Wrexham through a system of welfare accounts that sit on top of (Ian Lucas) and for Alyn and Deeside (Mark Tami). We universal credit, which can be drawn down in periods of have also heard equally passionate, albeit slightly misguided, need, should be a key plank of a “something for something” speeches from the hon. Members for Carmarthen West system that all parts of society believe to be fair. and South Pembrokeshire (Simon Hart), for Aberconwy Employment support is the most controversial part (Guto Bebb) and for Arfon (Hywel Williams). of the system—it is the biggest bugbear in my constituency. I wanted to respond personally to this debate, not The state must get better at helping people to move only because it was secured by my hon. Friend the back to work through a modern system of employment Member for Vale of Clwyd but because work and support, and that must begin with an acceptance that employment are at the heart of our debate in this Jobcentre Plus has not been effective for some years. Parliament, our politics and our economy. The success Although 75% of jobseeker’s allowance claimants move of working people, what they do with their time and off benefits within six months, only about half of them how they exchange their finite time for reward, are, of are still in work eight months later, while a third are course, at the heart of not only our economy in Wales claiming benefits again. The goal should be to support but all economies. claimants into substantial long-term employment and Our growth, productivity and dynamism are reliant that should be delivered by providing targeted support not on innovation, entrepreneurialism or capital for jobseekers not after six months, but from day one of investment—all words that one often hears from Ministers their employment claim. of all Governments—but on the sweat from people’s We should also look at examples such as that in brows. Hard work and hard graft underpin our economy, Australia with regard to building and improving the and they are key to a successful and stable society. More Work programme. That is particularly relevant for groups than an economic driver, work is the key to people’s furthest away from the labour market that currently dignity, security and, indeed, identity. In Wales we face being parked without support and still face a real know that more than in many other parts of the UK. In risk of benefit sanctions. Those groups need a new Wales, whether it has been colliers and quarrymen, support system that ensures that they have help for the women working in service or people working in steelworks very real difficulties that they face, and that view was or on the land, our work has been how we have defined backed up by a National Audit Office report on the ourselves. Work programme in July 2014, which stated: Jessica Morden (Newport East) (Lab): Does my hon. “The Programme has…not improved performance for harder- Friend agree that what has been ignored by Conservative to-help groups compared to previous schemes. The Department designed the Programme to help participants whose barriers to Members throughout this debate—yes, there is a welcome employment mean that it is more difficult for them to move into rise in the number of people in work—is the huge rise in employment. However performance has been similar to previous the number of people in temporary employment and initiatives and falls well short of the Department’s and bidders’ the lack of full-time jobs? Underemployment affects 207WH Employment in Wales27 JANUARY 2015 Employment in Wales 208WH

[Jessica Morden] It is a reality that wages are down on average by £1,600 per family over this Parliament. It is also a 70,000 people in Wales, and a similar number are on reality that Wales already has the lowest disposable zero-hours contracts. The Conservative party is ignoring incomes of any part of the UK—just £14,623 versus an just how precarious the employment situation is for average in England of £17,066. The Conservatives have many people who do not have a guaranteed income. succeeded in overseeing a shift in the nature of our employment from a relatively secure, better paid work Owen Smith: I agree. That has been the yawning hole force to a less secure, worse paid work force. The facts at the heart of what we have heard so far from Conservative do not lie. Total temporary employment across Wales Members, and I suspect it will not be filled by the has increased by 28%, and in the same period the Minister. In the past, our work has defined us in Wales, number of people on permanent contracts in Wales has and work is in danger of defining us once more as a decreased by 25,000, more than 2%. low-wage, low-security economy. That is becoming the There is a direct transfer of people from being full-time reality of the world of work for people in Wales, which employees to effectively being part-time employees. Some frankly is not good enough. of those people are calculated and recorded as FTEs, I do not expect the Minister to recognise that picture, but that is because of the nature of their zero-hours and I am sure he will talk to us in a moment about the contracts. There are 300,000 people in Wales on less recovery and the extra jobs that his Government have than a living wage, and far too many of those people—more created, but unfortunately the facts do not bear out his than 40,000—are currently on zero-hours contracts, arguments or the arguments of the hon. Member for which have been the great explosion and change in our Aberconwy because the statistics are relatively clear. economy. That shift from permanent, properly contracted Despite all the rhetoric, the truth is that in May 2010, work, in which people have rights to maternity pay, when the last Labour Government left office, there paternity pay and sick leave, towards a low-wage, insecure, were in total 1,471,000 economically active people zero-hours-driven culture is unparalleled in any other in Wales. Today, on the latest numbers, there are period of modern economic history. 1,471,000 economically active people in Wales. That is I will give one illustration, involving a young woman the reality. We have not seen a surge in new jobs in in my constituency whom I met a fortnight ago. She is Wales; we have seen a displacement of jobs, often from 17, just about to turn 18, and she works in a local pizza the public sector to the private sector and absolutely restaurant. She goes in to work at 10 o’clock, when she from more secure, more stable, better paying jobs to is expected to be there. She has no guarantee of how worse jobs. many hours she will work that day: it might be six, eight The other statistics are even more damning. In Wales, or two. The nature of her contract is such that she can according to the Office for National Statistics labour be laid off by the company for a period of its choosing force survey, the number of economically inactive people during her working day if demand in the pizza restaurant has gone up from 989,000 to 1,039,000; the economic drops below a certain level. She cannot afford to go activity rate has gone down as a percentage; the employment home and wait for the company to call her to bring her rate has remained absolutely static at 54.4%; and the back in, so she sits in the back room of the pizza economic inactivity rate has gone up from 40.2% to restaurant for up to four or five hours in the middle of 41.4%, which is in part a reflection of the offsetting the day, waiting for the volume of customers to pick up effects of public sector job losses in Wales over the later in the evening so she can be taken on. period. Some 351,000 people were employed in the It is an utter scandal that that sort of practice is going public sector at the beginning of the Government’s on in Britain—and not just occasionally; it is becoming term; the figure is now 315,000. That is a reduction of the norm, just as minimum-wage jobs in Britain are 36,000, part of the 1 million public sector jobs that have becoming the norm, not the exception. The minimum been lost. wage in this country is becoming a ceiling on wages, not a safety net. Governments of all colours must recognise That is the truth of the headline statistics, but let us that, and the fact that we must do something about it. look a little deeper at the nature of the jobs that people are currently enjoying. There are perhaps more jobs in Jonathan Edwards: I agree with everything that the the private sector, but the truth is that productivity in hon. Gentleman is saying about the situation in Wales. Wales and in Britain is down; corporate and personal It is true not least of the care sector in Carmarthenshire, tax receipts in Wales and in Britain are down; investment where the Labour council has privatised social care by in Wales and in Britain is down; and consumption in outsourcing it to private contractors, and many workers Wales has flatlined. are in the same scenario. They are not paid for travelling My hon. Friend the Member for Vale of Clwyd made between calls, so in very rural areas, such as some parts the point earlier in relation to the respected leader of of Carmarthenshire, they can travel for half an hour the CBI, John Cridland, who says that, if we have a and not be paid for that working time. low-wage economy with increasing numbers of people During the recent passage of the Social Services and who are unable to pay for white goods or even basic Well-being (Wales) Bill in the National Assembly, Plaid services, we will have lower consumption, less productivity Cymru tried to deal with that situation by outlawing and less growth in Britain. Those are the basic economic zero-hours contracts in the social care sector. Can the facts in Wales, and the reason for that is simple: the hon. Gentleman explain why the Labour Government Conservative party set out to create and—let us give it in Wales refused to support that amendment? its due—has succeeded in creating a low-wage, low-security economy in Wales and in the rest of the UK. That has Owen Smith: As the hon. Gentleman will know, the been the Conservative party’s objective—greater flexibility situation is far more complex than he allows, although I but, unfortunately, at the expense of working people. will say straightforwardly that I do not believe that we 209WH Employment in Wales27 JANUARY 2015 Employment in Wales 210WH should have 15-minute calls. One of the areas on which fragility, as the private sector is thriving in terms of we will absolutely need to concentrate when Labour creating employment, but the greater stability and security wins in May is the care sector, in which women are that we can offer such businesses will allow the sector to exploited all the time. More than 60% of the women in be more robust than ever. My hon. Friend the Member Gower, Ogmore and the Vale of Glamorgan who work for Carmarthen West and South Pembrokeshire (Simon part-time contracts, many of them zero-hours, are paid Hart) highlighted a host of contradictions made by less than the living wage. That is the truth for many some Opposition Members and discussed Labour’s tactic people in this country. to grow wealth by swelling the welfare state, which is Equally, House of Commons figures show that areas clearly economically illiterate and does not stack up. of Wales, including the Rhondda and Dwyfor Meirionnydd, My hon. Friend was absolutely right. account for the nearly 40% rise under this Government The hon. Member for Islwyn (Chris Evans) focused in people shifting into working for the minimum wage on welfare reform, and seemed to complain about the or less than the living wage. Those are sea changes in the benefit cap of £23,000 proposed this morning by the nature of the economy experienced by working people. Prime Minister. I remind him that many people in Wales Not all those changes started under this Government; who work hard day in and day out do not earn that much we must be honest about that—the stagnation in wages salary. If he does not support a £23,000 benefit cap, the started around 2007-08—but the unprecedented pace of money saved by such a cap would need to be found in change and the shift to low-wage, high-insecurity work cuts elsewhere, which I hope Labour will outline. has been exacerbated and compounded under this The hon. Member for Pontypridd (Owen Smith) covered Government. In my view, that is scandalous. a range of issues. He seemed to suggest that public The Welsh Labour Government have done their best sector jobs were good and private sector jobs were bad, to mitigate those trends. Initiatives such as Jobs Growth which I absolutely reject. He also highlighted the issue Wales have created 12,000 job opportunities for people of zero-hours contracts. The Government are tackling in Wales, and tuition fees have been capped in order to the abuse of zero-hours contracts, but I remind the hon. hold open the door to advancement and social mobility Gentleman that the Labour party itself, and even Labour through education. The Welsh Government have stood MPs, use zero-hours contracts. He rightly focused on up for the lowest-paid workers against this Government—by the living wage and minimum wage. We encourage as maintaining the Agricultural Wages Board, for instance. many employers as possible to live up to the living wage, However, the truth is that we still have a significant but I point out that a number of Labour-run local problem in Wales, and it will take a Government in authorities in Wales do not pay the living wage, and I Westminster with the right policies—and, frankly, the encourage Labour Members to consider that within right ideology—to change that. That is what we will see their budget plans and affordability measures. in this country when the Labour party wins in May: a The hon. Gentleman closed on the minimum wage rise in the minimum wage, intervention in our markets and said that the Labour Government would increase to freeze consumer prices for people suffering under it; I think that the latest policy to which they are high energy bills and the backing of small business committing is £8 an hour. However, a Labour former through a reduction in tax cuts to large corporations Cabinet member has highlighted how unambitious that and an increase in benefit to smaller companies. is; even under past projections, by 2020 it will not buy Crucially, we will deal with zero-hours contracts and much. If historical increases in the minimum wage were scrap the bedroom tax, which perniciously affects the projected forward, they would go well beyond that. In most vulnerable in our society. That is the sort of reality, Labour is talking about cutting the minimum Government programme that we need to deal with the wage for hard-working people. issues in Wales. It is not what I anticipate we will hear from the Minister, which is why I hope we will see a Guto Bebb: Although I aspire for people to be paid Labour Government preside over Glamorgan, as well more than the minimum wage, it is important when we as the rest of Wales, come 8 May. discuss it not to forget that many of those on the minimum wage pay significantly less tax as a direct 10.45 am result of this Government’s policies to ensure that people The Parliamentary Under-Secretary of State for Wales keep more of the money that they earn. (Alun Cairns): It is a privilege to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Alun Cairns: I am grateful to my hon. Friend for Member for Vale of Clwyd (Chris Ruane) on securing making an extremely important and valid point. Some this important debate. We have heard a range of of the data and statistics highlighted by Opposition contributions. It was certainly interesting to hear that of Members were somewhat selective, and we need to take the hon. Member for Vale of Clwyd, although of course the totality of Government changes into account; doing my hon. Friend the Member for Aberconwy (Guto so highlights the progress that has been made. Bebb) highlighted the impact of the dead hand of It is also important to remember the context in which Labour on the Vale of Clwyd and every other constituency. this debate is taking place. We need to remember that He also reminded us that Labour signed up to the when Labour came to power in 1997, Wales was not public spending commitments set out by the Government the poorest part of the United Kingdom. Since then, for the forthcoming years; whenever the Opposition sadly, there has been a complete shift in culture. That is criticise this Administration’s cuts, they must demonstrate simply illustrated: in a population of 3 million, there are which they would make instead of ours. 200,000 people in Wales who have never worked. The The hon. Member for Arfon (Hywel Williams) Government needed to act. We were simply not prepared highlighted the fragility of the private sector in Wales. I to allow the previous trends to continue, whereby, sadly, challenge some of the points that he made about that the economy of Wales was being compared to those of 211WH Employment in Wales27 JANUARY 2015 Employment in Wales 212WH

[Alun Cairns] mile? One of the major reasons for that is that the jobs being created are low-wage in nature, which means they Romania and Bulgaria; whereby parts of Wales were do not generate the revenues the Treasury was expecting. blighted with worklessness; and whereby a third of the working-age populations of some communities were Alun Cairns: The hon. Gentleman makes an important claiming out-of-work benefits. point; we need to recognise the context in terms of We have taken key steps to deal with that legacy of deficit reduction. Given that we had been so over-dependent worklessness and a welfare system that encouraged on the eurozone as our export market and that the dependency. As a Government, we have put in place a eurozone went into near-meltdown, naturally that hit long-term economic plan to deal with the situation that the Welsh economy disproportionately harder than we we inherited—in 2010, Wales was, sadly, the poorest would have liked. That is why the long-term economic part of the UK. That fact will always come back to plan aims at growing exports, such as those of Clogau haunt Opposition Members. They talk about wealth, Gold in the hon. Member for Vale of Clwyd’s constituency, prosperity and growth, but they left Wales as the poorest well beyond Europe—to the middle east, to the far east part of the UK, despite receiving in 1997 an economy and to the fast-developing economies of Brazil, Russia, that meant Wales was not the poorest part of the UK. India and China. Excellent progress has been made in that regard. We developed a plan to stabilise the country’s economy, to deal with years of financial mismanagement under Would I have liked the deficit to have been cut further? the last Labour Government and to get the people of Of course I would. However, the process is about achieving Wales and Britain back to work. That long-term economic a balance between reducing the deficit and creating plan is paying dividends. It surprises me that during the wealth and employment. The Government’s record is last hour or so I have listened to Opposition Members positive in that respect. We need to remember that last playing down the progress of the labour market in their year the UK was the fastest growing economy in the constituencies. G7, and that Wales is the second fastest growing part of the UK. We are absolutely up there at the top; we need For example, in the hon. Member for Vale of Clwyd’s to recognise and celebrate that, rather than hearing the constituency, unemployment more than doubled between arguments that we have heard from Opposition Members. 2005 and 2010; there was a rise of 105% under the last It is in their interests to talk Wales down, creating more Administration. Since 2010, unemployment in Vale of dependency and trying to create a sort of depth of Clwyd has dropped by a third. Surely he welcomes that Labour voters to look to Labour for help rather than as a positive outcome. looking to the private sector for wealth as well as opportunity creation and generation. Chris Ruane: What about since 1997? Overall, the picture throughout the whole of Wales is positive, just as it is in the Vale of Clwyd. I could Alun Cairns: The hon. Gentleman points back to highlight more statistics about north Wales and the 1997, but I can speak only about the time since 2010, south Wales valleys, but the reality is that long-term when this Administration came to power. However, I unemployment is falling and the Work programme is remind him of what I said before: in 1997, Wales was having a major effect. Jobs Growth Wales has a part to not the poorest part of the UK but, sadly, by 2010 it play, but we must remember that the independent was. That happened under both a Labour UK Government assessment of Jobs Growth Wales highlighted that 73% and a Labour Welsh Assembly Government. Thirteen of the people who found jobs through it would have years of Labour Administrations in Wales between found jobs elsewhere. 1997 and 2010 left Wales as the poorest part of the UK. Let us pool our ideas and resources, to try to get On a positive note, I hope that the hon. Gentleman people off welfare and into work through the positive welcomes the fall in unemployment in his constituency culture of cutting tax, growing the economy and reducing since this Administration came to power. The picture is unemployment, in exactly the way that the Government similar for youth unemployment in the Vale of Clywd; have done. it went up by 82% under Labour, but since 2010 it has come down by a third. Why does he not recognise the positive steps that the Government have taken in that 10.56 am regard, and why is he not congratulating the businesses Chris Ruane: I am grateful, Mr Hollobone, for the in his constituency that are creating these jobs and opportunity to speak again. employment opportunities for his constituents? I will respond to a few points that Conservative It was a privilege to visit Clogau Gold in the hon. Members made. Virtually every Conservative speaker Gentleman’s constituency just a short time ago. It is today spoke only about cuts, but the balanced approach expanding, exporting, and creating wealth and employment to rebalancing the economy means talking about cuts locally in the Vale of Clywd. I regret how the hon. and growth. From 2008, all the indicators up to 2010 Gentleman is talking down his own area; that is hardly were going in a positive direction; when this Government creating the mood to attract investment and to encourage got in, they all went in a negative direction. The cuts are companies such as Clogau Gold to continue to spend ideological, because the Conservatives believe in cuts. money on investing, exporting and creating yet more They want a small state; they do not recognise the value wealth. of the public sector. The hon. Member for Aberconwy (Guto Bebb) again Jonathan Edwards: The Minister talks of the “long-term used divisive language about public sector pensions and economic plan”, but have not the deficit reduction private sector pensions, saying that private sector pensions targets of his Government been missed by a country were minimal. Who was it that promoted and encouraged 213WH Employment in Wales 27 JANUARY 2015 214WH the mis-selling of pensions to the private sector? It was London Bridge Station (Redevelopment) the Conservative Government of the ’80s and ’90s. Why not raise the private sector pensions up to the level of public sector pensions? Why does the law of the lowest 11 am common denominator have to apply? The Minister mentioned the number of people in Heidi Alexander (Lewisham East) (Lab): It is a pleasure Wales who have never worked. We had jobs—quality to serve under your chairmanship, Mr Hollobone. I jobs—in Wales, in the steelworks and the mines, but thank you and the rail Minister for allowing my hon. what happened? Those workers were laid off and put on Friends the Members for Lewisham West and Penge the dole. Then, when the dole queues started to rise, the (Jim Dowd) and for Eltham (Clive Efford) to participate Conservative Government in the 1980s and 1990s got in the debate. I also thank the Minister for organising worried. They altered the figures for calculating statistics the session that we had with Network Rail and Southeastern 30 times, and they encouraged those proud miners to last week—perhaps I should call it a grilling—which get off the dole and go on to incapacity benefit, in order was much appreciated. I expect that she will have some to park up those workers—and, indeed, whole communities idea of my concerns, but I am pleased to have the —for decades to come. After someone spends six months opportunity to put them on record. on the dole or incapacity benefit, something changes The rebuild of London Bridge station is long overdue. inside them; they lose their confidence. That is what It is a poor relation of King’s Cross, Paddington and happened in those communities. No help was put in Waterloo, but no less busy.I fully support the redevelopment place for those proud miners; they were just cut adrift, of the station, but I am concerned about the impact of as political punishment for what they had done. the latest phase of works on rail services and passenger The Minister talks about the success of job creation experiences. I know there has been mayhem on Southern in Wales under his Government. He mentioned Jobs routes—my hon. Friend the Member for Lewisham Growth Wales briefly towards the end of his speech, West and Penge might speak about that—but I will but let me remind him that Jobs Growth Wales is focus my remarks on the Southeastern network, given responsible for an extra 400 young people in my its importance to my constituency. constituency being employed. Also, there is European The new timetable, which has been introduced as funding in my constituency, which I secured for my a result of the 18-month closure of four platforms at county of Denbighshire and the county of Conwy in London Bridge, has caused havoc. With no Charing 2000. We have had a quarter of a billion pounds worth Cross trains stopping at the station, many Cannon of investment in my constituency, and the same in Street services have been dangerously overcrowded. There Conwy as well, as a result of that European funding. have been reports of fights at stations on lines into But what will happen to the remainder of that funding London Bridge because people simply cannot get on to if the Government have their way and pull out of the a train. The remaining operational platforms at the EU? These are big issues for the electorate to face in the station have seen scenes of utter chaos due to the months to come and on 7 May, and I hope that they volume of people and last-minute platform alterations. look carefully at our record and that of this Conservative What has always been a poor and overcrowded service Government. If they do, they will realise which box to is now abysmal and yet, as with every year, fares have put their x in. gone up. How that can be justified when some people cannot even get on a train is beyond me. In my constituency, Mr Philip Hollobone (in the Chair): I thank all Members many trains are full when they arrive at stations and who took part in this important debate on Wales. If people are paying for a service that they can barely they are not staying for the next important debate, I ask access. them to leave Westminster Hall quickly and quietly, What can be done and what do I want the Government because it is time to get all aboard for a train services to do? Commuters in south-east London are crying out debate. for longer trains and better communication from the train operating companies. If we cannot find a way to ease the current problems, the Minister will need to look carefully at next year’s annual fare hike and ask herself whether it is acceptable. At the most basic level, we need extra carriages on the Cannon Street services. Those should not be pinched from other overcrowded services, but if any reasonable adjustment can be made, that should happen. Given that, on the Southeastern network, only Cannon Street services will stop at London Bridge for the next 18 months, every rush hour train into Cannon Street should be a 12-car train. If we cannot get extra carriages immediately, we will desperately need the old Thameslink rolling stock when it becomes available towards the end of the year. Will the Minister guarantee that those old Thameslink carriages will end up on Southeastern services? Is it true that the current plan is to use the Thameslink carriages for services between Manchester and Liverpool? Will she review that, as well as looking at what can be done to source extra carriages in the interim? 215WH London Bridge Station 27 JANUARY 2015 London Bridge Station 216WH (Redevelopment) (Redevelopment) [Heidi Alexander] attend that meeting, but unfortunately did not turn up. Some of the things I feared have come to the fore, but I Southeastern also needs another communications drive. would like to draw the Minister’s attention to the customer Rather than waiting for frustrated passengers to work satisfaction survey that was published today. It shows out alternative routes for themselves, a big communications that Southeastern has the worst customer satisfaction effort is needed that prompts people into changing their of the train operating companies, and that survey was journey patterns. It should set out all alternative travel carried out before the changes. options and ticketing arrangements. My constituents who want to go to London Bridge, especially from Mottingham and New Eltham, are finding Gareth Johnson (Dartford) (Con): I congratulate the the Cannon Street trains to be dangerously overcrowded. hon. Lady on again securing a debate on rail transport It is clear that there was no plan for the extra demand in the south-east. She will agree that the redevelopment for those trains. They are the only trains stopping at is a welcome investment in the infrastructure of our London Bridge, but there was no plan to make them railways that will ultimately benefit her constituents and longer to increase capacity. Will the Minister tell us mine. I am pleased that she mentions communication. what will be done in the short term to address the Does she agree that communication during this work serious overcrowding on those trains? Overcrowding is is crucial? Southeastern has to get that right, but also being experienced by those who are forced to go to communication is something at which Southeastern has Waterloo East and then try to travel back to London often failed in the past. Bridge on the London underground. Southeastern seems to have taken the view that if it sits this out, passengers Heidi Alexander: I share the hon. Gentleman’s view. will be forced to find other forms of transport. My This is difficult, to be fair to Southeastern, but we need constituents have told me that they are getting off at to find a way of raising awareness of the other tube and Lewisham, which is becoming very overcrowded. British bus routes that people can use to travel to and from the Transport police have to be at the station because the London Bridge area. If extra buses are needed on some situation is becoming dangerous. Passengers are starting of those routes, they should be delivered. Transport for to use the docklands light railway as an alternative London has laid on extra buses for the No. 21 route route. It is shocking that the approach seems to be to from Lewisham, but is there a case for some express force passengers to go elsewhere. That is just not good services from south-east London into London Bridge enough. Southeastern has not planned for the capacity further to ease some of the overcrowding? that is necessary to enable passengers to get to London The past few weeks have reinforced my constituents’ Bridge and continue their journeys. long-held view that annual fare hikes are not justified. What will be done in the short term? Like my hon. Will the Minister expect Southeastern customers to pay Friend, I want to find out what will happen about the more for their travel next year, too? If the services Thameslink trains, because we know that we need them. continue to be abysmal, is it not reasonable to consider There should have been 12-car trains on our network freezing Southeastern fares next January to reflect the from January last year, but Southeastern has failed to huge inconvenience that so many are experiencing? The address the problem. current compensation scheme for delays on Southeastern I shall make what will be my final point, because I is almost meaningless to my constituents, as whether or know my hon. Friend the Member for Lewisham West not a train is on time is irrelevant if people cannot get and Penge (Jim Dowd) wants to speak. In response to on it. this morning’s survey results, Mr Statham, the managing I could say much more, but I am conscious that my director of Southeastern, said: hon. Friends wish to speak, so I will draw my remarks “Over the next three years we’re investing more than £70m in to a close. More capacity and better communication the things that our passengers tell us are important to them. This could help to ease the pressures on the Southeastern investment will enable us to provide better information to our network. If that is not possible, fair and reasonable passengers”— compensation should be considered. I look forward to that is fine— the Minister’s response. “improve the interior and cleanliness of our trains”— Several hon. Members rose— that is excellent— “refresh the look of our stations and provide extra staff to deliver Mr Philip Hollobone (in the Chair): Order. I call Clive more face-to-face customer service.” Efford, the second in the trio of south-east London’s That is all wonderful, but if passengers cannot get on finest. the damn trains, what is the point? There is nothing in that statement about increased capacity, extra carriages or 12-car trains, which we have been promised by two 11.6 am successive Governments. The issue is capacity.Southeastern Clive Efford (Eltham) (Lab): It is a pleasure to serve is not addressing the problem, so we want to hear from under your chairmanship, Mr Hollobone. I congratulate the Minister what she will do about it. my hon. Friend the Member for Lewisham East (Heidi Alexander) on securing this important debate and thank 11.10 am the Minister for organising Thursday’s meeting with Southeastern and Network Rail, which gave us an Jim Dowd (Lewisham West and Penge) (Lab): I will opportunity to get some answers to questions following be as brief as possible, although given the volume of the timetable changes. I met Network Rail on 10 December material that I have received from constituents about to talk about the arrangements. I was also in contact this subject, I could take up the rest of the morning, let with Southeastern, and its representatives were due to alone five minutes. I thank my hon. Friend the Member 217WH London Bridge Station 27 JANUARY 2015 London Bridge Station 218WH (Redevelopment) (Redevelopment) for Lewisham East (Heidi Alexander) for sharing her still ran. It has always been a Cinderella station without time with us. The issue is critical for all of us in the kind of impact of the other stations mentioned by south-east London. As she suggested, I will concentrate my hon. Friend the Member for Lewisham East, but it on Southern services. is a critical one. Those pictures of people walking across Rail transport throughout south-east London is London bridge to get to the City are almost invariably particularly important. Of all 32 London boroughs, of people coming from London Bridge station. It is a including the City of London, Lewisham has the highest vital interchange and artery, but at the moment it is proportion of residents who work outside their borough, completely and utterly clogged up. so all public transport, and rail in particular, is evidently As I said, the problems with Southern trains predate important to them. Transport is critical to the well-being the work that is going on. A constituent who lives a few of residents and the community at large. doors from my constituency office carried out a survey Our recent experience includes the shambles that is of 19 journeys between 7 June and 1 August last year on London Bridge station and Southern rail generally, services from Forest Hill to London Bridge. Seven of even predating this disruption. Network Rail states on those 19 trains were on time, while the other 12 were its website that there are two types of disruption at between three minutes and 44 minutes late, and that is London Bridge: “planned disruption” and “unplanned for a journey that should take only 16 minutes. That has disruption”. I am not sure where the overlap lies, but been the standard for quite a long time now. the fact of the matter is that the travelling public pay the price and suffer the consequences. Dr Matthew Offord (Hendon) (Con): I am grateful for the passion that Opposition Members are expressing Like my colleagues, I thank the Minister for her on behalf of their constituents, which I share. Although involvement and interest, right back to our immediate there have been problems at London Bridge, I am return after Christmas, and for organising last week’s pleased to say that, through the Thameslink programme, meeting. I very much look forward to speaking to regular updates and communications have been received Southern Railway on Monday afternoon. Southern’s by the train operating companies. Does the hon. Gentleman performance—certainly subsequent to 5 January, but agree that those companies need to improve their previously as well—has been lamentable and shameful. communications during this difficult time? It predates the problem with the Thameslink work at London Bridge by a number of months. Jim Dowd: Indeed I do, but while communications When deciding what to say in the few moments that I are one thing, people want to rely on performance. If have, I thought that I could do no better than to repeat trains are running properly and with enough capacity, what some of my constituents have told me. A resident they do not need explanations. Communication is needed of Penge said of London Bridge station: when things go wrong, and they are going wrong far too “The works taking place there caused constant delays and often via London Bridge. There is much else that I am cancellations last year, and so far this year the station has pretty tempted to say, but I have gone beyond the time that we much ground to a halt.” agreed, so I will leave it there. A resident of Forest Hill said that on the evening of 5 January they Mr Philip Hollobone (in the Chair): There is only a “left London Bridge in tears having been crushed by the crowds slight delay on the line, Mr Dowd, so I would not worry being kettled into a small part of the concourse. Half empty too much. trains left with us not being allowed access to them by Network Rail staff.” 11.15 am The impact on services into London Bridge is reflected The Parliamentary Under-Secretary of State for Transport in the impact on services out for people travelling south. (Claire Perry): It is a pleasure to have your train-related One constituent said on 7 January: interventions from the Chair, Mr Hollobone. “Today the 8am, 8.30 and 9.30 trains were cancelled” I congratulate the hon. Member for Lewisham East between Brockley and Streatham Hill, with (Heidi Alexander) on securing this important debate. I “no excuses at all so I and my fellow passengers have no idea what also thank the hon. Members for Eltham (Clive Efford) the problem was. I really feel it’s just not good enough and I was and for Lewisham West and Penge (Jim Dowd) and my told today that it’s going to be like this until 2018.” hon. Friends the Members for Dartford (Gareth Johnson) Another constituent from Penge said: and for Hendon (Dr Offord) for participating. I also “We’re only a week or so into the ‘works’ so I guess we need to thank the participants in the important performance see how it settles down but it’s apparent at this stage that the train summit we held last week, at which MPs from across companies, Southern, Southeastern, Thameslink and Overground the House were able to quiz the Southeastern management have not planned adequately for these changes and made additional team and Network Rail, and air concerns on behalf of capacity available.” their constituents. The Minister of State, Ministry of That is the point that my hon. Friends the Members for Justice, the right hon. Member for Bermondsey and Lewisham East and for Eltham (Clive Efford) were Old Southwark (Simon Hughes), in whose constituency making about the rebuilding of London Bridge. London Bridge station lies, has written to me with his I speak as someone who started to commute into concerns; he is attending an engagement to mark Holocaust London Bridge station more than 50 years ago to get to memorial day and apologises for not being here. my school at Stamford street, between Waterloo and As my final bit of preamble, I will say that I really Blackfriars road, so I know it well from the days of welcome this debate and all interactions I have with steam, amazingly enough—I am probably alone in the hon. Members on the issue. The tone of these discussions Chamber in remembering that. Even though there were is not ideological and we are not debating ownership of southern electric services at London Bridge, steam trains the railways; we are trying to work out how to get the 219WH London Bridge Station 27 JANUARY 2015 London Bridge Station 220WH (Redevelopment) (Redevelopment) [Claire Perry] Another element it is vital to address is crowding at stations and on trains. I am aware that, as the hon. best possible service from the current structure and Member for Lewisham West and Penge said, there has investment. All of us are clear that it is passengers who been dangerous overcrowding on platforms 1 and 2 at matter on the railways. We are not moving boxes or London Bridge. That is being addressed right now. units of capacity, but people, who are trying to get to Southeastern and Network Rail are freeing up space for work or get home to see their families. For me, it is vital passengers, trying to move them more dynamically along that their interests are at the heart of this essential the platforms and providing additional “next train” improvement work and, indeed, all investments in the indicators so that people do not lump together in one railways. place before surging at once to get on a train. As we all know—the hon. Member for Lewisham At Lewisham station, in the constituency of the hon. West and Penge alluded to this—we face two problems. Member for Lewisham East, Southeastern and Network One is decades of under-investment in many parts of Rail are also making changes to mitigate the crowding our network, and in particular, in vital transport at peak times as people move between the Cannon infrastructure such as London Bridge station. The other Street and Charing Cross services. They are extending problem, if we can call it that, is the extraordinary public announcement systems along the length of the growth in passenger numbers right across the country platforms so that people can hear what is happening, that has happened since privatisation. As the hon. putting up extra passenger information screens and Gentleman will know from his long history of using generally trying to help passengers to get the information London Bridge, passengers have faced an almost 200- they need so that they can move smoothly through the year-old station, with tangled access tracks and problems station. That work is under way, and it will be complete getting in and out. It is the poor relation to the other by February. Additionally, the operators are moving great London terminals, yet has some of the busiest existing retail units and British Transport police platforms and intersections in Europe. accommodation to make more space for passengers, and that work will be complete by July. I think all Members welcome the decision to proceed with such vital investment even when economic times The key, however, is for the operator and Network were tough. The £800 million invested at London Bridge, Rail to put in place a timetable that delivers capacity and the wider investment of almost £5 billion across the and space when people need them. Since 12 January, a Thameslink network, will unblock the vital north-south new timetable has been in place across the Southeastern bottleneck for our constituents. That investment will network, and that includes the changes at Charing also deliver longer trains to provide more frequent and Cross. The timetable has been designed to maintain reliable services across London and the south-east. journey opportunities. To answer the point from the hon. Member for Eltham, there was planning regarding The prize for London Bridge, in 2018, will be a the likely changes in the timetable, and there were world-class station that handles more trains, with 60% capacity increases for the services being put on to more capacity and all platforms accessible from the Cannon Street. wonderful concourse we have heard about. I am told that the development is the most complex set of works What is happening, however, is that passengers are ever undertaken on an operating station in the UK. In still working out the best way to make their journeys, my view, it was the right decision to keep the station and the situation is very fluid. We know, anecdotally, open during the works, given that 56 million people use that Charing Cross services are quieter than anticipated it each year. and that Cannon Street services are very busy.Southeastern says it is operating the maximum number of trains per With such a mammoth engineering undertaking, some hour into and out of Cannon Street at peak times, and disruption is inevitable, but that disruption must be there is no space for extra services, but it has put in minimised for passengers, who must be kept in the loop longer trains, providing higher capacity into Cannon as to what is happening. No one could say that either Street, with 8,000 additional spaces in the morning aim has been achieved for London Bridge users in the peak and 13,000 in the evening peak. past few weeks, so what is happening? As we heard last week, there are some long-term service changes that were well known and, to pick up the point made by my Heidi Alexander: What percentage of the trains into hon. Friend the Member for Hendon, reasonably well Cannon Street in the rush hour are formed of 12 cars? publicised. Thameslink services are being diverted and Southeastern services to Charing Cross will run through Claire Perry: I will find out for the hon. Lady and let until August 2016. When the Charing Cross services her know. resume calling at London Bridge, the Cannon Street I am told by Southeastern that all its rolling stock is services will stop calling until 2018. in passenger service—that goes back to the hon. Lady’s During those planned changes, everything has to be point about potential new capacity. Lengthening services done to ensure that passengers know about the changes into Cannon Street would therefore require a reduction for their destinations. One part of that is to ensure that in the number of carriages on other routes—for example, passengers can use their tickets on alternative routes. I services to Charing Cross or Victoria. That is possible, am pleased that we have negotiated a £25 million deal but I should emphasise that today is the 12th working with Transport for London to enable that. The hon. day since the new timetable started. Every day, passengers Member for Lewisham East made the sensible suggestion are changing their journeys. The operators have asked—I of running more express buses to try to offer a joined-up think this is sensible—for a month to review what the solution to serve passengers. I will certainly discuss that passenger flow looks like, so that timetabling and service idea with TfL. lengths can, potentially, be amended. 221WH London Bridge Station 27 JANUARY 2015 London Bridge Station 222WH (Redevelopment) (Redevelopment) Clive Efford: The Minister will have heard at our permitted. That has been scrapped, so now passengers meeting on Thursday that Southeastern said it had on this franchise, like passengers right across the country, shifted around some of the carriages, taking them from are benefiting from this Government’s decision to freeze some services and adding them to others. However, my fares in real terms—RPI plus zero for last year and this constituents feel—I certainly feel the same as a user of year—and to scrap the flex, which meant that additional the trains—that those carriages have gone to the longer-haul fares could also go up by 2%. [Interruption.] The hon. services, where people pay higher prices for their season Lady says that that is not enough, but it was a bold tickets. Services from places such as Dartford through decision to take, particularly at a time when family places such as Eltham and New Eltham are the ones budgets are stretched. that have suffered. Those services are not sufficient, and I will make a quick comment, if the hon. Member for my constituents cannot get on them, particularly when Lewisham West and Penge will allow me, about Southern, they are going home in the evenings. We need extra because I know it is important for his constituency. carriages; we do not need Southeastern just to shuffle Southern’s performance currently is inexcusable, and I them around. will make that point, as I expect other hon. Members to make it, at the performance summit we are holding next Claire Perry: I assure the hon. Gentleman that I and week. Network Rail’s infrastructure problems are causing my officials are in constant contact with the operator, many of the difficulties with the timetable along the and we are encouraging it to do whatever it needs to line. I expect Network Rail and Southern to sort that with the rolling stock to try to alleviate the crowding out as soon as possible. that is happening as service patterns change. I would Let me make a couple of general points in conclusion. hate to think, if there is excess crowding on shorter We have to learn lessons, because we are continuing to journeys, that the management was not fully aware of it do this work at London Bridge until 2018. It is vital that and not working actively to alleviate it. whatever went wrong after Christmas—not enough Let me briefly mention the point about new rolling communication and not enough modelling of the platform stock. The hon. Member for Lewisham East is right flows—is addressed, because we will be asking a lot that there is potential in the next couple of years for from passengers. Let me put on the record my thanks to some rolling stock. I have checked, and about 100 class passengers for their tolerance at a time of great disruption. 377 units provide capacity for approximately an additional We are very aware that we are disrupting people’s lives, 10,000 passengers. She is right that some are already but the prize is a much better service and a station that committed to go to other parts of the country—that is is much more fit for purpose. the way, as she knows, the cascade system works—but I am grateful to the hon. Members in the Chamber the stock is potentially available to come on to the and others across the House for ensuring that all parties franchise. We have asked Southeastern to consider all involved in the reinvention of London Bridge remain available opportunities to look at this, demonstrate the really aware of passenger concerns. My officials are in business case and really push on trying to get the daily contact with Southeastern and Southern. We are additional capacity. I agree with all hon. Members that all focused on the need to minimise inconvenience and that is something we would need to do over the medium maximise communication to passengers. There are term. constraints on what we can do, and there are years of work ahead, but I am determined that the unprecedented Heidi Alexander: This is really the key issue because it investment that we are making right across the country is essential, given all the disruption, that there is, if will be seen and felt as benefits for passengers as soon as people will pardon the pun, some light at the end of the possible. tunnel in the form of longer trains. What proportion of that Thameslink rolling stock has not been allocated to Heidi Alexander: On the services that will run on the other parts of the country and is still up for grabs? Thameslink route once the work at London Bridge has been completed, can the Minister guarantee that the Claire Perry: I do not know and I am not sure—I will lines out to south-east London that run through Lewisham need to check whether the information is commercially and onwards will have extra capacity—longer trains? confidential—but, like the hon. Lady and other hon. Members present, I share the aspiration to reward Claire Perry: I will double-check the timing of that; it commuters. As the hon. Member for Eltham pointed is part of the Thameslink programme. It is an addition, out, today we have the results of the passenger satisfaction as the hon. Lady knows, to bring more rolling stock and survey. Commuters are clearly very unhappy with the longer trains right across the network, but I will check. services they are getting. These people are going to and from work and paying for season tickets to do so. They Jim Dowd: This is the point that I wanted to make. expect a better service. The Minister will be aware that Southern has cancelled all the peak-hour evening services from London Bridge May I touch on the point about fares that the hon. to West Croydon and is encouraging people to use Member for Lewisham East made? Overground instead. Actually, it is encouraging them to go on to Norwood Junction and then go back to the Jim Dowd: Will the Minister give way? station that they originally wanted to get to. That is now causing severe overcrowding on the Overground service, Claire Perry: If the hon. Gentleman will forgive me, I so will she look into it? want to make this point, because it is important. The hon. Member for Lewisham East will be aware that, Claire Perry: The hon. Gentleman is aware that that until recently, fares on this franchise were rather inflation is a temporary reduction in the service, designed to let busting and measures of up to RPI plus 3 plus flex were the new timetable, which is more disruptive for Southern 223WH London Bridge Station 27 JANUARY 2015 224WH (Redevelopment) [Claire Perry] Commonwealth Immigration and Visas operations rather than Southeastern, bed in. The hope is that those services will be restored as soon as possible. [MR PETER BONE in the Chair] I am very aware of the concerns. Let me put it on the record that all of us realise that 2.30 pm many people at London Bridge station are working very hard on a daily basis to deal with the disruption. These Andrew Rosindell (Romford) (Con): I am delighted to are people on the front line—operational staff. We be able to introduce the debate. There is no doubt that would all like to pass on our thanks to everyone out immigration is a sensitive and often controversial subject. there who is trying to maximise convenience for passengers. I am pleased to have the opportunity to discuss ways in which we might reshape our immigration system so that Mr Philip Hollobone (in the Chair): The debate has we have control not only over the numbers coming into come in a few seconds early, so it will be my job to the United Kingdom, but over the nature of those suspend the sitting until half-past 2 this afternoon. individuals wishing to work, study and make our country their home. 11.30 am To be absolutely clear, I am not advocating an increase Sitting suspended. in immigration. I am, however, seeking to establish ways in which we can have better immigration. What do I mean by better immigration? I am referring to the re-establishment of the United Kingdom’s ability to be selective about who enters and settles in our country and the ability to favour immigration from countries with which Britain enjoys long-standing cultural and historical links, where English is the common language and with which we share values and principles, the rule of law, and common judicial and parliamentary systems. I am of course talking about the countries of the Commonwealth of nations, most notably the 15 realms with which we have an even closer bond and shared constitutional link in Her Majesty the Queen, who remains as much their Head of State as she does ours. In spite of those special ties, since our accession to what was known at the time as the Common Market, Britain appears to have discarded the potential for trade, immigration and co-operation with the Commonwealth to accommodate the new European political union, which dominates so much of how we are governed today. It is time for a radical rethink. Our immigration system is in need of complete reform and the British people are demanding change. Indeed, the time has surely come to enforce a total overhaul of the way we operate immigration in the United Kingdom, but we can do so only if a British Government, elected by the British people, can decide what British immigration policy is. We have a broken immigration system—a system in which we have neglected the possibility of positive immigration from our wider Commonwealth family to accommodate uncontrolled and indiscriminate immigration from within the EU. As a result, for example, over the past 13 years immigration from Australia and New Zealand—two nations with which we have a shared history and culture like no other, expect perhaps for Canada—has almost halved, whereas immigration from EU continues to rise at a rapid pace. The members of the Commonwealth network of nations and territories are not part of the EU, apart from Malta, Cyprus and Gibraltar, so they have been the losers as our UK Government have sought to reduce immigration. Meanwhile, the citizens of any country that happens to have been accepted into the EU can freely enter our country without restriction. Immigration has always been a feature of Britain’s social and economic development, over many centuries, and it has been without doubt overwhelmingly positive, with the vast majority coming to our country to work 225WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 226WH Visas Visas and contribute as hard-working people. It must surely increasingly becoming a successful organisation that be, however, the absolute right of every nation—especially people want to join? In recent years, Mozambique and a country the size of the United Kingdom, where there Rwanda have joined, and Burundi is very much knocking have to be limits—to control its own national borders on the door and would like to enter. and to determine its own immigration policy. With free movement from the EU, though, we have given up that Andrew Rosindell: Once again, my hon. Friend is right. absolutely correct. The Commonwealth is an organisation of the future. For a time, the FCO tended to feel that Mr Henry Bellingham (North West Norfolk) (Con): the Commonwealth was no longer relevant and that we My hon. Friend is making some strong points. He should focus entirely on the EU, but the world has mentioned the 15 dominions in which the Queen is still changed. Our historical, traditional links with the Head of State. Does he agree that because those countries Commonwealth of nations can provide a way forward have decided to keep the Queen as Head of State, their for Britain, so he is completely correct. Thus, not citizens should be afforded certain privileges on arrival only are former colonies wanting to be part of the at our ports of entry? It is ridiculous that they are Commonwealth, but countries that have never had any confined by those barriers that accommodate the rest of link with the British Crown, such as Rwanda, Mozambique the world. Those people should have special privileges and Cameroon, want to join, which shows that the afforded to them. Commonwealth has a great future. We, as the United Kingdom, need to do more to harness the Commonwealth Andrew Rosindell: My hon. Friend is absolutely correct. and make it stronger if we are to succeed in making it as When he was a Minister in the Foreign and Commonwealth relevant to our future as it has been to our past. Office, he was a champion of Her Majesty’s realms and For so many years, British foreign policy has failed to territories. I feel that it is shameful that subjects of Her grasp that concept, preferring to shun our traditional Majesty arriving at Heathrow airport are treated as if ties and place most of our eggs in the EU basket. Now they were from any other country in the world. There that it is clear that trade with the wider world is becoming are no special privileges, nothing whatever, and that is more important by the day, it is imperative that we wrong. It is time for us to look at things afresh. He will change course and grasp the opportunities that the recall my 2012 United Kingdom Borders Bill, which nations of the Commonwealth represent. highlighted this very issue and asked the Government to take action, which, sadly, they have not done so far. I Alok Sharma (Reading West) (Con): My hon. Friend will come back to that. is a great champion of the Commonwealth and those The truth is that, if we are serious about restoring from the Commonwealth who reside in the UK. He control of immigration and widening the base of potential talks about the Commonwealth’s great past and future. future migrants to our country so that our friends from Does he agree that the Government have done a lot to the Commonwealth may again have opportunities to foster trade links with other Commonwealth countries? live and work in this country, the EU doctrine of free We have seen our bilateral trade with India grow movement without any control or restriction whatever significantly. What more does he think this Government must end. That would not prevent the UK from agreeing or future Governments can do to ensure that that trade bilateral reciprocal arrangements with other EU nations, increases significantly over the next decade? or indeed from continuing to accept EU citizens who Andrew Rosindell: My hon. Friend is completely correct met the criteria decided by Her Majesty’s Government that this Government have done more than any other in and who came here, as the vast majority do, to work my memory to make the Commonwealth more significant and contribute to the economy of our nation. Britain and to develop trade and co-operation with it, but we would, however, have the opportunity to set the rules in can go only so far because, as he will know, as a nation so far as who did and did not come in. Those from Her we can sign up to trade deals with countries only via Majesty’s realms and territories and from the wider the EU—again, the EU is a block to us utilising our Commonwealth would have the greater opportunities Commonwealth network for trade and co-operation. that are reserved now only for citizens of the EU. Until we have a new relationship with our neighbours Surely it makes sense to establish a system with on the continent—one that is less of a political union—and substance and purpose—one that continues to allow again have the freedom to agree trade agreements, deals the brightest and best from Europe to come to Britain, and immigration arrangements, we can go only so far, but no longer alienates or excludes those from places however positive the Conservative-led Government have around the world with which Britain has enjoyed much been in this respect. We need to alter our relationship longer and closer historical links. Being a subject from one with the EU to allow us the freedom to develop greater of Her Majesty’s realms or being from a Commonwealth trade with the Commonwealth. nation should count for something when looking to visit, work, study or live in the United Kingdom. At the Alok Sharma: Does my hon. Friend then feel that if moment, it appears to count for little. That is our fault we are going to renegotiate our relationship with the and we should not be proud of it. EU, we should have similar discussions in parallel with The Commonwealth is an underutilised resource for some Commonwealth countries, particularly on trade, the United Kingdom. It offers vast opportunities outside to see what sort of relationship we can come up with the uncertainty, stagnation and turbulence that we have and what the British people prefer? endured over the past decade. Andrew Rosindell: My hon. Friend makes an excellent Jeremy Lefroy (Stafford) (Con): It is a pleasure to point. As a vice-chairman of the Conservative party, he serve under your chairmanship, Mr Bone. Does my does good work with Commonwealth countries, and I hon. Friend also agree that the Commonwealth is commend his enthusiasm. We need to decide for ourselves, 227WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 228WH Visas Visas [Andrew Rosindell] Commonwealth policy, repair relations and replenish our soft power, so I urge the Minister strongly to as a nation, what we want to do not only with Europe consider such a plan. but with the rest of the world. Part of that process The second policy proposal is the creation of a should perhaps be to consult our Commonwealth friends Commonwealth concession for tourist and business on how our relationship can be developed in tandem visitor visas. Citizens of 21 Commonwealth nations with a renegotiated arrangement with the European need a tourist visa to visit the UK, while citizens of Union. They are two sides of the same coin. We all want 50 need a business visitor visa. Both visas, which last for trade and co-operation with Europe, and good immigration six months, cost £83. That fee is perceived as making it from Europe as well, but sadly we have gone down that more difficult for many Commonwealth citizens to road to the exclusion of developing all those things with enter the UK for tourism or business. A Commonwealth our Commonwealth friends. A reconfiguration is well concession, set at the discretion of the Home Office, overdue. would go a long way towards building UK-Commonwealth The UK has the largest Commonwealth diaspora in relations. the world and many people in all our constituencies Whatever their reason for visiting, Commonwealth come from a Commonwealth background or have tourists are important contributors to the UK economy. Commonwealth ancestry, yet it is much harder for Commonwealth Exchange is a think-tank that promotes someone to come to the United Kingdom if they are a the trading, educational and strategic potential of the citizen of the Commonwealth than if they are a citizen Commonwealth in the UK, and I am proud to serve on of an EU member state. Britain needs a renewed sense its advisory board. It has highlighted that official figures of balance, fairness and opportunity in our immigration for visitors from a number of Commonwealth nations, and visa regime. and for those visitors’ average spends, nearly match, or The Prime Minister has a difficult task. Having pledged else equal or even surpass, the figures for Chinese to cut net immigration numbers, he has discovered tourist visitors. There is certainly a strong economic that although he can reduce immigration from the case for increased Commonwealth tourist and business Commonwealth and wider world, he is unable, under visitor visas, which I hope the Minister will also consider. current treaty obligations, to reduce it from the European However, I put forward that idea against the backdrop Union. That means that the only policy lever left open of a preoccupation with Chinese tourists, the most to him is a reduction in immigration from outside the recent demonstration of which was the Chancellor’s EU—meaning, of course, the Commonwealth. The announcement that the Treasury will refund the first Minister will understand that that has created unintended 25,000 visas for Chinese visitors between 2015 and consequences for Commonwealth nationals. For that 2017—Chinese visitors, but not Commonwealth ones. reason, I call on her to lead a significant review of That policy is wrong-headed, especially at a time when Government immigration policy and to establish a system the Foreign Affairs Committee, of which I am a member, that works for the United Kingdom, not one that is has been refused entry to Hong Kong by China. We imposed on us and over which we have no ultimate should not be awarding China free UK visas when it control. refuses entry to democratically elected parliamentarians Apart from the restoration of British control over and is not acting in the spirit of the joint declaration. immigration, which would require a fundamental Does the Minister agree that there are Commonwealth change in our relationship with the European Union, nations that are far more deserving of favourable visa there are many other things that could be done in the policies? meantime gradually to rebuild our partnership with the In addition, it has been reported to me that Commonwealth and, most especially, Her Majesty’s the British Bangladeshi community has experienced realms. Here are some ideas to get the Minister started. unnecessary delays, lack of communication and inefficiency First, we should look at the UK’s tier 5 youth mobility in the processing of visa applications, among other visa. With over 60% of the Commonwealth population things, since the visa section was transferred from under the age of 30, that visa is of fundamental importance. Bangladesh to New Delhi. Two years ago, the Prime Before 2008, the UK had a youth visa that included all Minister and I attended the British curry awards, which Commonwealth nations and allowed any young person were founded by Enam Ali MBE. Some of the guests in the Commonwealth the chance to apply to visit and who were invited to that event could not obtain their work in the United Kingdom for two years. After 2008 visas in time. A similar thing happened at last year’s that visa was reformed and only four nations were world travel market event in London, when several granted such access: Australia, Canada, Japan and New business delegates could not attend because of the delay Zealand. The scheme has now been extended to Monaco, in processing their visa applications at the New Delhi South Korea, Taiwan and Hong Kong. office. I hope that the Minister will look at that matter I would like the Government to consider a more because Britain is losing business and good people who Commonwealth-oriented view when looking at extending want to come to our country for legitimate reasons are the youth visa. Working towards restoring Commonwealth being preventing from doing so. countries to the visa would make young people see the Commonwealth as something of value rather than an Mr Bellingham: Does my hon. Friend agree that we abstraction. Importantly, the youth visa is based on need an explanation from the Minister about the hub- reciprocal quotas—the numbers of young Britons leaving and-spoke visa issuing system? Certainly in Africa, a the UK should balance the number of people entering, number of smaller Commonwealth countries are now thereby keeping net migration stable. Equally, the visa’s spokes and have to feed through to hubs such as Accra, very nature is transient; it is not a route to remain. The Pretoria or Nairobi. It is obviously incredibly important changes that I propose would rejuvenate the UK’s that that system is as efficient as possible so that people 229WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 230WH Visas Visas from smaller Commonwealth countries who want to that could work on a similar premise as the trans-Tasman come to this country to trade, for a holiday or to do travel arrangement, which exists between Australia and business have their visas dealt with as quickly as possible. New Zealand. That might prove difficult, but I am aware that such a proposal has support from the New Andrew Rosindell: My hon. Friend makes an important Zealand Prime Minster and the tacit backing of Tony point. We have all heard of concerns in that respect. Abbott’s Government in Australia. The UK holds the The creation of hubs in various parts of the world, key to advance such a policy, so will the Minister which are not as accessible for people, has clearly been a undertake to examine the proposition and make a cost-cutting measure by the FCO, but the system makes statement? life very difficult for people who need to get visas I would like the Minister to answer several key questions. quickly so that they can come to our country. I hope Will she meet me and a delegation from Commonwealth that the Home Office, together with the FCO, will try to Exchange to discuss Commonwealth immigration and find a more efficient way of dealing with the problems visas in greater detail? What assessment has been made that we are speaking about. of the tier 5 youth mobility visa, and which nations is The question of business visas is equally important. her Department looking at adding? Will she update the Commonwealth countries often share our language and House on visa developments with Jamaica and South have a similar business culture, with similar legal systems Africa, as those nations have had tourist visa restrictions based on the common law. The Commonwealth has key for 11 and five years respectively? Will her Department developed and emerging economies, so it makes economic consider ways to create a Commonwealth concession and political sense to place a high value on business for the tourist and business visitor visas? Will she conduct visits through a Commonwealth concession. That is a feasibility study for a pilot of a Commonwealth realm another idea for the Minister to take back to her airport queue or smart gate at Heathrow and Gatwick? Department. Has she made an assessment of the London Mayor’s I draw hon. Members’ attention to the United Kingdom labour mobility zone between Australia and New Zealand, Borders Bill, which I introduced in the House in 2012. and will she make a statement? Although the Bill did not progress to Second Reading, I believe that Britain has focused for far too long on there was enormous support for the principles contained the European Union, which I believe is distracting us in it. The idea that there should be more accessibility for from the rest of the world and the opportunities that lie citizens from Her Majesty’s realms received widespread beyond the shores of Europe. In 1973, we in this country support from several political parties. Following the turned our back on our Commonwealth cousins, which Bill’s presentation, I received many messages of support was the most short-sighted act carried out by any from across the UK and the wider Commonwealth. I British Government in my lifetime. Let us begin to end sincerely believe that we must not fall into the trap of that cold shoulder treatment in 2015. I hope that my underestimating the significance of such a relatively hon. Friend the Minister will be the one to lead that simple change. It is a travesty that citizens from Australia, change of direction. Canada, New Zealand and Jamaica, together with those In 2010, the Government said that they were putting from all Her Majesty’s realms, have to queue up in the the “C” back into the FCO, but only with a concerted foreign nationals channel at London Heathrow airport effort across Departments, and particularly the Department and other points of entry into the United Kingdom for Business, Innovation and Skills and the Home Office, while citizens from EU countries that have never had will the UK be able to state proudly that it has any historical connection to the Crown or the United Commonwealth policies fit for the 21st century. We Kingdom are allowed to enter alongside British citizens must remove ourselves from the unhelpful and unfounded simply by virtue of their EU membership. mindset that association with the Commonwealth is Since introducing my Bill, I have become aware of the nothing more than reminiscing about Britain’s colonial SmartGate scheme in Australia and New Zealand, which past and instead recognise that there are huge economic, allows for a separate queue for nationals from Australia, cultural and diplomatic opportunities that are today New Zealand, Singapore, the UK and the US. That being missed. That short-sightedness has done nothing shows that a similar procedure could be adopted in the to help our country or the countries of the Commonwealth, UK in the context of the Commonwealth realm, thus and we must move on from it once and for all. Let us illustrating powerfully the renewed value of being a begin today. subject of Her Majesty’s realms. Interestingly, a citizen of the UK, as a realm, would also have the chance to 2.57 pm choose which airport queue they wanted to go through. It could be the EU/EEA/Switzerland queue, or one for Jeremy Lefroy (Stafford) (Con): I congratulate my Commonwealth realms. It would be nice to have that hon. Friend the Member for Romford (Andrew Rosindell) choice because we are, of course, part of both. I might on his powerful speech and on bringing the subject be pre-empting the Minister by saying that the UK has before the House. I shall make a few remarks on visas, made it easier for Australians, New Zealanders and starting with visitors visas, but want to preface that by Canadians to visit the UK through the registered traveller underlining the importance of the Commonwealth, which scheme, but although that policy is welcome, its scope is my hon. Friend and other contributors have rightly too limited, and we could and should do better. emphasised. If the Government wanted to be bolder, they The population of the Commonwealth far outweighs could consider the London Mayor’s proposals for that of the EU and one Commonwealth nation alone, bilateral mobility zones between economically developed India, has a bigger population than the countries Commonwealth nations—they are now dubbed “Boris of the EU put together. Economic development bilaterals”. Commonwealth Exchange has found that in Commonwealth countries—not only the fantastic 231WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 232WH Visas Visas [Jeremy Lefroy] indeed, school children in my constituency also contributed. The safe house is now in operation, and more than growth in India, but the substantial growth in many 100 girls and women have found help there. countries in sub-Saharan Africa and in Asia—has shown That is just one instance, but I have heard of many that the Commonwealth is, as my hon. Friend said, the others from right hon. and hon. Members in both place of the future. That is why countries have been Houses. People are doing fantastic work for non- queuing up to join. I am talking about countries that governmental organisations or charities, and we want did not have a particular historical connection with the to hear from them first hand. They are invited here, and United Kingdom, such as Rwanda and Mozambique, they will be fully provided for, but the only obstacle which are already part of it, and Cameroon. Part of is a visa. Most of the time, these are people from that country was under British administration, part Commonwealth countries. under German, and at one time, after the first world The second issue I want to bring up is business visas. war, part was under French administration. Burundi is It is vital that visas are made available quickly and also seeking to join the Commonwealth, and I believe easily for those with whom we wish to do business. that other countries have expressed interest. Before coming to this place, I travelled to Tanzania and It is therefore vital that we maintain, and indeed other countries fairly frequently on business. As a British enhance, the links with Commonwealth countries. That citizen, I could send my passport, together with the is not only about history; it is about business opportunities. necessary documents, to the Tanzanian high commission For instance, in Tanzania—I refer Members to my in London, and sometimes I would receive my business business interests in Tanzania, which are in the Register visa back within three days. However, Tanzanian business of Members’ Financial Interests—the United Kingdom people, who are often running businesses that are far is the single biggest investor and trading partner. These bigger and of far more significance to the United Kingdom days, we tend to think that China has taken over everywhere economy than that which I ran, sometimes find it in Africa, but that is not the case at all. In many incredibly difficult to get visas. That cannot help our countries, the United Kingdom is still a major trading trade with Tanzania or, indeed, with other countries. partner and investor, and it is, indeed, growing in importance Finally, there is the issue of family. The Commonwealth in those countries. of nations is a family of nations, but it also contains On the issue of visitor visas, a few months ago, a family members of people in pretty much every constituency Tanzanian lady, Rhodi Samwell, was invited to the in the House. Surely it is important that we facilitate United Kingdom on an extremely important mission. family visits that are done in the proper way—where it She works for the Anglican diocese of Mara on female is clearly shown that these are not visits to seek long-term genital mutilation, and she is building a safe house in admission to the country, but family visits to see nephews, the area for women and girls who do not wish to be nieces, grandparents or grandchildren. That is all about subjected to that practice. The House has debated this humanity. issue many times in the past year, and I know the In those three areas—visits from charities and non- Minister is keenly concerned about it. governmental organisations, visits for businesses and At my invitation, Rhodi Samwell was coming to this visits for family—it is surely possible to organise things country, and indeed to the House, to talk to the all-party in such a way that the cost is reasonable and that group on Tanzania about her work, but she could not applications are dealt with in a matter of days or weeks, get a visa. Her application, which was processed in rather than the months we sometimes hear about. Pretoria, was refused. Only after a large number of I want to give a final example from my own experience Members of the House and the other place wrote to to show what things can be like. My son was born in those involved and pressed her case was she finally able Nairobi about 25 years ago this month. We took the to come here on a visa. birth certificate and one or two other documents to the This lady was in full-time, secure employment with British high commission there, and we were issued with the Anglican diocese of Mara. She had the backing of a British passport pretty much over the counter. A the Tanzania Development Trust, the Britain-Tanzania constituent, whose grandchild was born in Kenya last Society and many other reputable organisations, which year, went through the same process, albeit with one or bore witness to the fact that she would be supported two complications. However, those complications should while she was here and that she was planning to return. not have resulted in it taking several months for that Indeed, the very reason she was coming here was to help child to be issued with a passport. Surely, things should to enable her to return home to fulfil her dream of have gone forwards after 25 years, not backwards, setting up a safe house for women and girls. However, particularly with the access we now have to technology, the United Kingdom was unable to issue her with a visa but it seems that things were a lot easier 25 years ago. without pressure from Members of Parliament and without volunteers across the country putting in a great deal of time and effort. That does the United Kingdom’s 3.6 pm reputation no good. Mr David Hanson (Delyn) (Lab): It is a pleasure to I am glad to say that, ultimately, Rhodi Samwell was serve under your chairmanship, Mr Bone. I thank the able to come here, and she gave an excellent talk in the hon. Members for Romford (Andrew Rosindell) and for House of Commons, alongside my right hon. Friend Stafford (Jeremy Lefroy) for their contributions on this the Member for Hornsey and Wood Green (Lynne important subject, which is worthy of discussion with Featherstone), who was then an International Development the Minister today. Minister. We were delighted to see her. She gave talks all The subject of the debate is the Commonwealth and across the country. As a result of her visit, the remaining visas, and it is important that we begin, as the hon. money needed to build the safe house was collected— Member for Romford did, by recognising the crucial 233WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 234WH Visas Visas importance of the Commonwealth to the history of the political union, and that is different from a simple United Kingdom and our close ties with countries economic partnership. If we were in an economic across the Commonwealth. partnership alone, we could do other things with the Yesterday was Australia day. Today, we celebrate the rest of the world, including the Commonwealth. The 70th anniversary of the liberation of Auschwitz; the fact that we are in a political union and not the economic second world war saw members of armed forces from partnership that was the original intention—or certainly across the Commonwealth join soldiers from the United the British people’s original intention—prevents us from Kingdom in the fight against fascism. Last year, we doing more with the Commonwealth. Does the right celebrated the start of the first world war. My grandfather, hon. Gentleman accept that point? who was from the Lancashire area, fought his first battle in March 1915—almost 100 years ago—alongside Mr Hanson: We have a large trading partnership with thousands of Indian troops at Neuve Chapelle. Europe and political union through the European We have a long history with the Commonwealth, Parliament and other agencies in Europe, and I do not which we need to celebrate and recognise. As a member have a problem with that. We will disagree on this issue. of the executive of the Commonwealth Parliamentary We also have the potential for economic growth in Association for five years now, I know how important Europe. The biggest employer in my constituency is a that link is and how valued our parliamentary democracy company that makes the planes that will probably take is by the 53 nations of the Commonwealth across the the hon. Member for Romford to Australia: Airbus. world. They are made by Britain, France, Germany and Spain, As the hon. Member for Romford said, what is important and free movement means that French people work in is not just historical ties, parliamentary democracy or north Wales, and north Walians work in France, making the history of empire translated into a modern partnership. the biggest plane in the world and our biggest export. The Commonwealth is also a crucial economic driver, That is a positive. The second and third biggest employers which we need to look outwards to. I have been to in my constituency are the car manufacturers Toyota Australia on holiday, and I have been to New Zealand and Vauxhall, and they are probably in that area for with the Commonwealth Parliamentary Association. access to the European market. What struck me on both occasions was that those There are big issues to debate, but perhaps not today, countries are beginning to look towards the east, because because I want to focus on how to encourage more that is where their market is. We need to look at how we aspiration and partnership in the Commonwealth without can cement and develop our ties in a strong, effective throwing out a valuable partnership in Europe. I am way. interested in where the hon. Member for Romford With a combined population of 2.3 billion people, thinks the 1.6 million Britons currently living in France, the Commonwealth is a significant market, and there Germany, Spain and Italy would go if we suddenly are significant transferable skills that we may want to closed our borders to people from those countries. I work with and develop. As the hon. Gentleman also would welcome his thoughts on that—another day, said, there is also the potential for export, tourism, perhaps. business, family and education links, and we should In preparation for the debate I looked at the look at how we can facilitate and build on those, while Commonwealth Exchange report, which is valuable for maintaining the integrity and strength of our borders. this Government and future Governments as a way of The hon. Member for Romford took the route I generating discussion and positive suggestions about expected—of querying why we are cosying up to Europe how to attain the hon. Gentleman’s objectives. It suggests while partly shutting the door on our historical the restoration of the youth mobility visa, and considers Commonwealth links. My view of the European Union the idea of Commonwealth concessions for tourist and is slightly different from his. He can speak for himself, business visas. We have heard the case for “Boris bilaterals”; but I recognise that we are still part of a family of I would not necessarily call them that, but there is nations in Europe, and have historical ties to a range of potential to examine the idea in detail. The idea of a those. Portugal is our oldest ally, for example, never Commonwealth component to exceptional talent visas mind the other countries that we have worked with. is worth considering; another important contribution I mentioned that, 100 years ago next month, my would be to think about how to make it easier for grandfather was fighting in the trenches of France with business people throughout the Commonwealth to get Indian soldiers, against Germans. He would be happy business visas to come to this country. today that we are part of a family of nations in Europe The hon. Gentleman did not focus much on post-study as well as the Commonwealth. Relatives of mine who work visas, but they are also important. Representations lost their relatives in the second world war, when the have been made to the Opposition about them from Commonwealth fought side by side with us, would also people who want to come to the United Kingdom to welcome our present economic partnership with Europe, study and then to work here for a short period in addition to the fact that we look out to the wider afterwards—particularly those who have been sponsored. world. The hon. Member for Romford raised conflicts All those things are worth exploring and reviewing. in talking about tightening our relations with Europe As the potential Minister in 12 weeks’ time, I am and relaxing them with the Commonwealth, but I do particularly drawn to the idea of the youth mobility not share his view. I think there is potential in both visa. It could be very positive. If young people between areas. the ages of 18 and 30 come to the United Kingdom and contribute to the economy and to life here, they should, Andrew Rosindell: The right hon. Gentleman made after leaving to become chief executives of companies the point that we are in an economic partnership with throughout the world, always remember the importance the European Union, but we are not. We are in a of the UK in their development. That is very important. 235WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 236WH Visas Visas [Mr Hanson] they will, at some point in their lives, be senior doctors, senior business people and world leaders who will do It is worth looking at the idea of annually reviewing the business with this country. case for returning more Commonwealth nations to the I happened to see in the Evening Standard that approved youth mobility list, and expanding it. We also 200 Australian paramedics landed in London yesterday, need to think about how, with the immigration department, having been recruited from Sydney, Adelaide, Melbourne to improve our use of technology to achieve greater and Brisbane for the London Ambulance Service. That transparency, so that the public can be better informed shows that, for reasons that are not only historical but on the matters in question. practical, we must look outwards to the rest of the The Commonwealth Exchange report makes it clear world and to the Commonwealth. I support measures that visitors from Nigeria, South Africa and India are to manage migration in the interests of the United more significant contributors to the UK economy than Kingdom, and if that means Australian medics, Indian Chinese tourists, because of relatives, business and historical students or Tanzanian business people, that has to be ties. We make efforts to attract visitors from China to good. The positive contribution that such people make the UK, and we should make significant efforts to make is sometimes lost in the ever-present debate about the visa application process simple for people from the immigration issues. historic Commonwealth countries. I challenge the assertion that we could drop the visa Andrew Rosindell: I do not think that anybody in this price. I do not say it cannot be done, but I should be room would disagree with what the shadow Minister is interested in a proper review of the costings by the hon. saying. The crux of the matter is that Australians have Member for Romford or the Home Office. We need to to jump through lots of hoops to be allowed into the know whether that uncosted proposal would generate a country, but those from EU countries do not jump sufficient increase in visitors to offset the loss of income. through any hoops; they can just walk in. Surely he can Costings are important, and the hon. Gentleman would see the unfairness in how the system has developed. expect no less of me if I were to make such a proposal. We have discarded opportunities with countries with The hon. Member for Stafford made a cogent point which we have the most in common and the closest about making it clear that it is easy to get business visas. connections historically. Successive Governments have It is important that people who want to invest here, or made it harder and harder for citizens of the in whose countries we invest, and who do business with Commonwealth, and particularly those of the realms, us, should be able to get their visas approved speedily. It to come into this country. At the same time, anyone is worth thinking about extending the idea of a faster from any country that happens to join the EU can just track for visas for regular visitors to the UK. Business walk in unrestricted. Surely he can see that that is an demands better, and we should not turn the best and unfair situation and that we need to redress that balance. brightest away. We need to review the matter, as part of a range of measures that we have been considering. Mr Hanson: That is one of the conundrums of I still think that the central problem faced by the membership of the European Union. It goes with the hon. Member for Romford is the Prime Minister’s net club. However, there are probably as many Australians migration target. The Prime Minister said at the last in the United Kingdom now as there are Greeks. We are general election that he would get migration down to not talking about two sides of a coin; we can look the tens of thousands; to try to achieve that—which he outwards to the world while recognising our responsibilities has failed to do—he has had to consider making it more in the European Union. That is a wider debate, and I difficult for people from outside the EU to come to appreciate that the hon. Gentleman has focused us on a the United Kingdom. The target has been missed. The narrower issue. Government have said it will not be met. We should I want to give the Minister the opportunity to contribute consider calibrating it. to the debate, so I will draw my remarks to a close. We For example, under a future Labour Government I must look seriously at possible solutions. I am attracted would not want students to be part of the net migration to some, and I am not attracted to others. In particular, target. The hon. Gentleman made the strong point that I am not attracted to separate airport queues, as the students who come here, who have historically included hon. Member for Romford has proposed. The key those from Australia, New Zealand, India, Pakistan, message that I take from the debate—in the spirit of African countries and the wide range of Commonwealth friendship, I hope that it is one that I can share with the countries, do so because we have some of the best hon. Gentleman—is that we should look at how to universities in the world, and because they feel a historic make it easier for businesses, students and tourists to affinity to the United Kingdom and want to be educated come to the United Kingdom as part of managed and to work here. The net migration target has caused migration. We need to know not only when they come, great difficulties in that market, particularly in India but when they go. We need to know that they are and Pakistan but also elsewhere in the Commonwealth. coming here for the reasons that they have given, and With some general tweaks in policy, even without the we need to encourage historic ties to ensure that we measures that the hon. Gentleman has proposed, we grow our economy for tourists, businesses and students. could and should make it easier for people to come to I still think it is important—here the hon. Gentleman the United Kingdom to study and to learn. We need a and I may part company—that we are part of the general overhaul of a policy that is damaging the United European Union and part of free movement within the Kingdom’s £18 billion-a-year university industry. That European Union. Although we can apply certain restrictions is particularly important because people who come to on benefits such as child benefit and working tax credits, study in the United Kingdom do not simply learn about we still have free movement, which allows Britons to and enjoy our country and receive the best education; work and live in France and Germany, and allows Poles, 237WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 238WH Visas Visas Italians and others to work in Britain and elsewhere. The Commonwealth is unique in having a young, That is part of the deal, but we should not close our vibrant population of more than 2 billion people, nearly eyes to the wider world. half of whom, as my hon. Friend the Member for Stafford (Jeremy Lefroy) pointed out, are in India. It spans every inhabited continent. It is far more than 3.24 pm simply a grouping of Governments, and we see potential in its future. That is why we continue to invest so much The Parliamentary Under-Secretary of State for the in the Commonwealth and we want to welcome people Home Department (Karen Bradley): It is a pleasure to from right across it to the UK. There is much that we serve under your chairmanship, Mr Bone. I congratulate can do together to further the development of our my hon. Friend the Member for Romford (Andrew countries, whether in education, health or trade, and we Rosindell) on securing a debate on this important matter, should take advantage of our shared values to enable us not least because it gives me a welcome opportunity to to do so. It is difficult to think of another organisation provide an update on the progress we have made. that brings together the representatives of 53 diverse The right hon. Member for Delyn (Mr Hanson) sovereign states from each and every continent, and spoke about the links that we have with the Commonwealth, that gives each one, large or small, an equal voice in particularly through world war one. On Holocaust global affairs. memorial day, we should remember the links we need to My hon. Friend also mentioned the attractiveness of have across the world. If we understand each other’s membership of the Commonwealth. He is absolutely way of life, we will see that we all want the same things right, and it is incumbent on us all to send out the clear and we will maintain peace. The Commonwealth and message that membership is a wonderful privilege and the EU both have an important role to play in that that we want to encourage countries to come forward respect. I hate to do this to the right hon. Gentleman, and join with that diverse and exciting group of sovereign whom I respect enormously, but I am sure that he states. meant to say “commemorate” rather than “celebrate” world war one. I am sure that the record will be corrected Business and trade are areas in which the Commonwealth accordingly, because I know that he would not have has great potential. Intra-Commonwealth trade in goods wished to give a false impression. is already worth some £300 billion, built on our inherent advantages of a common language, shared legal principles I will endeavour to address all the questions that my and a commitment to inherent values and rights. Those hon. Friend the Member for Romford has raised. In advantages provide solid foundations for doing business, answer to his first question, which was a request for a and they create a platform for trade, investment, meeting, I am happy to agree and I hope that it can be development and, in turn, prosperity. That leads to organised shortly. what we call the Commonwealth effect, which studies There is much to be gained from promoting the trade, suggest is worth between 20% and 50% in trade advantage. educational and strategic capabilities of the Commonwealth, The United Kingdom has a growing economy and a and we are doing a lot of work on that. My hon. Friend proud history of tolerance and acceptance of those who the Member for Reading West (Alok Sharma) talked genuinely need our protection. It is, therefore, no surprise about the work that the Government have done to forge that we are an attractive destination. With that, however, links with Commonwealth countries, particularly, in his we face particular challenges on all forms of immigration. case, India. I pay tribute to him for his excellent work My hon. Friend the Member for Romford introduced in, for example, leading trade delegations to ensure that the debate by saying that immigration is a sensitive we maximise those opportunities. Businesses in all our issue. He is right, but, despite those challenges, we are constituencies benefit from trade with Europe and with making significant progress on ensuring that our Commonwealth partners. That is incredibly important immigration system works in the national interest. He and should not be forgotten. talked about a broken immigration system, but I do not I believe that our offer to students to stay in the UK believe that we have a broken immigration system today. after their studies is an excellent example of the work We inherited a broken system of open-door immigration, that we are doing. I will talk later about some of the and the right hon. Member for Delyn was a member of things we do with students to ensure that Commonwealth a Government who had an open immigration policy, students benefit. The building of links with the but this Government have taken significant steps—I Commonwealth should never be to the detriment of the will address some of the steps we have taken—to address security of our borders. As the Minister with responsibility the important issues of EU and non-EU immigration. for modern slavery, I am particularly concerned about that. I will talk about how the Commonwealth can Andrew Rosindell: To clarify, I spoke about a broken assist us in the important work of tackling modern immigration system, but I commend what the Government slavery and human trafficking. I know that you have are doing to change the shambles that we inherited five spent many years working on that area, Mr Bone, and I years ago. The system is broken in the sense that we bow to your considerable expertise. have no power to control immigration from the EU. The UK is committed to the Commonwealth and to Whoever is in power after the election, no one can our relationships with all member states. The Minister decide who comes in from the EU because we have of State, Foreign and Commonwealth Office, my right given away that power. In that sense, the system is hon. Friend the Member for East Devon (Mr Swire), broken. We have failed to reduce immigration overall, who has responsibility for the Commonwealth, has which we promised to do, because we cannot control championed the UK’s relationship with the organisation, immigration from Europe; we can control only immigration which we value greatly as a symbol of democratic from outside Europe. That is why I said the system values and prosperity. is broken. 239WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 240WH Visas Visas Karen Bradley: I understand my hon. Friend’s point, regard to foreign offenders. Commonwealth countries and he will forgive me if I indicated that I understood it feature in the top 10 nationalities of foreign national differently. The Government have taken significant steps offenders and, sadly, the top two nationalities are to address that matter, and if we form the next Government, Commonwealth countries: Jamaica and Nigeria. We as I fully intend—I apologise to the right hon. Member are working closely with those countries to ensure that for Delyn, but I fully intend to be sitting in this seat in we have upstream work to deal with foreign national 12 weeks’ time—the excellent measures that the Prime offending so that it does not hit our streets, but I want Minister set out in his speech close to my constituency to ensure that people in Romford, Stafford, Staffordshire in Staffordshire just before Christmas will enable us to Moorlands, Delyn, Tamworth and Wellingborough can take even further steps to ensure that free movement walk the streets knowing that foreign national offenders within the EU comes with responsibilities and that we are not coming to the UK without our knowledge. We do not have free movement of criminals, which I particularly should all recognise that that is incredibly important. care about, or for welfare benefits. There is agreement Economic factors are a big part of the decision on on both sides of the House that access to welfare whether to impose a visa on a country, as they can be a payments for non-UK nationals should not come without big pull factor on illegal migration. Nevertheless, because the responsibility of having contributed to the system. of the traditional ties that we have with the Commonwealth, The immigration system plays a strong part in supporting the UK is arguably more generous in that regard. Eighteen growth and meeting the needs of UK businesses. Migrant of the 31 Commonwealth countries with visa-free access workers can fill skills gaps in our labour market and to the UK, which is more than half, are classed as help to boost our economy. However, as the economic developing nations by the World Bank, which shows recovery continues, we are clear that employers should that there is occasionally a different approach to look first to recruit people who are already in the UK Commonwealth countries. The EU economies, in contrast, and are already UK nationals. are more on the same economic level as the UK, with The Government are aware of the Commonwealth the majority being in the world’s 50 richest countries Exchange report “How to Solve a Problem like a Visa”—I based on gross national income per capita per year. commend the Commonwealth Exchange for its engaging Economic criteria are one area of assessment for countries title—and we are working with other Commonwealth that want EU membership under the accession criteria. countries to consider options to improve migration I always think of immigration as being like the movement opportunities within the Commonwealth. Although the of air: it moves from high pressure to low. Wind is UK is happy to work with and consider ideas proposed created when high pressure moves to fill a low-pressure by Commonwealth partners, the UK maintains that gap. If we consider that high pressure for immigration is immigration and visa controls are a matter for the UK poverty, lack of opportunity and lack of education and Government. It is important to remind the House—I that countries such as the UK represent low-pressure know this has been mentioned already—that citizens of areas where there are opportunities, jobs and the potential the majority of Commonwealth countries, 31 out of 53, to achieve wealth, it is understandable why people want do not require a visit visa to come to the UK. to move from one to the other. Our job is to ensure that, My hon. Friend the Member for Romford made the when we look at the movement of people, we do not get point that visas are an effective tool for the UK in to the point where, continuing the analogy, the low reducing illegal immigration, tackling organised crime pressure in the UK becomes the high pressure that and protecting national security. The visit visa regime is means we are overburdened—that is a strange analogy, an important tool in reducing the national security but I hope it makes sense. I like to perceive immigration threat to the UK, allowing us to intervene in a number as being like the movement of air around the world. of ways before someone arrives in the country. We can Even within the EU, as the Prime Minister has made prevent someone from coming to the UK by refusing a clear, disparities in income per head, as well as disparities visa or, where appropriate, we can allow travel while in labour markets and work opportunities, create incentives setting up an operational response when someone in for migration—let us remember that in the past four whom we are interested arrives in the UK. The information and a half years the UK has created more jobs than the provided in the application process also allows us to rest of the EU put together. That is why the Government identify links about which we would not otherwise have have started a debate within Europe on future accessions, known. The backflow of data can be vital to new such as linking freedom of movement to relative wealth investigations, and the security and intelligence agencies and, of course, limiting the access of EU nationals to require a biometric visa regime for all visa nationals. welfare and other services. Visas have a role to play in reducing crime. We can Visa regimes for some Commonwealth countries are use the application to check whether someone is known an effective tool for the UK in reducing illegal immigration, to international partners, and we can check a range of tackling organised crime and protecting national security. databases to see whether someone has a criminal The visa process enables us to check whether an applicant background here in the UK. has a genuine reason for coming to the UK and enough Finally, the process helps to tackle illegal immigration. money to support themselves. We take our duty to The visa process enables us to check whether the applicant protect the public extremely seriously and, where foreign has a genuine reason for coming to the UK and enough national offenders commit serious crimes in the UK, it money to support themselves. The use of biometrics is right that they are brought to justice and removed enables us to lock an individual securely to their identity from the UK at the earliest opportunity. Since April so that we know who we are dealing with. 2010, we have removed more than 22,000 foreign national As the Minister with responsibility for serious and offenders. Where a Commonwealth national commits organised crime, I know it is incredibly important that an offence in the UK, we will pursue deportation, we keep in mind the security of British nationals with unless they were resident in the UK before the 241WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 242WH Visas Visas commencement of the Immigration Act 1971. Visa information from colleagues and seeing how the system regimes are an important part of the UK’s immigration can be improved? Clearly, if this is a new system, we will system, which is fair to British citizens and legitimate want to ensure that it works as efficiently as possible. migrants, and tough on those who flout the rules. The UK has a flexible policy for visitors that enables Karen Bradley: I assure my hon. Friend that we in the people to come for a range of purposes. Work is under Home Office take seriously all comments and feedback way to streamline the policy further and consolidate the from fellow Members of Parliament on all aspects of routes that will make the system even more accessible our work. He makes an important point about ensuring and provide greater flexibility. I acknowledge, however, that we take seriously our colleagues’ feedback when that obtaining a visit visa for the UK is an inconvenience their constituents experience new systems, because that for some, which is why the UK has invested heavily in feedback gives us on-the-ground evidence about what is ensuring that applying for a UK visa is as easy as happening and how it is working. I welcome comments possible. from all Members about how the system affects their My hon. Friend the Member for Stafford spoke about constituents and those constituents’ families. I have said a specific visa case, although I cannot comment on the that all the changes are working, and I hope that we individual circumstances of that case. It is important have proved that they are. They provide greater flexibility that Members of Parliament always raise such cases and choice, and we know that they have been welcomed because, no matter how good the system, there will by many travellers and tour operators. always be the odd occasion when something does not On longer stays, the UK views the Commonwealth as quite work as it should. I am glad that the lady in an important partner in helping the UK to grow. A question was able to visit the UK, and that my hon. number of routes are open to Commonwealth citizens Friend could help her in that regard. who want to work in the UK. There are further provisions We have upgraded our entire network of visa application specifically for Commonwealth citizens, such as the centres to increase capacity. We have made our processes UK ancestry route. My hon. Friend said that the less bureaucratic, and we ensure fast turn-around times Commonwealth was a family, and he is right. When I and offer appointments out of working hours. We have visited Pakistan last year, it was extraordinary how extended our three-to-five-day priority service, which is familiar it looked, given how Pakistani culture has now available in more than 100 countries, and we have become so commonplace within UK culture. The introduced a passport pass-back service in a number of furnishings, the look and the things that we talked countries so that customers can retain their passport about—cricket, for instance—are common across the while their UK visa application is being processed. A Commonwealth. In fact, during my visit to Islamabad, new super-priority 24-hour visa service, building on the I do not think I met anybody who did not have family in popularity of the three-to-five-day service, has been Britain. introduced in India and China and will be extended to The UK ancestry route is for Commonwealth citizens New York, Abu Dhabi, Dubai, Manila, Istanbul, Bangkok with a UK-born grandparent who intend to work in the and Pretoria by April 2015. UK. Applicants do not need to come for a specific job My hon. Friend the Member for North West Norfolk and are not restricted to graduate-level occupations. (Mr Bellingham) mentioned the hub-and-spoke model They may be accompanied by dependants and can for visa applications. We have more than 300 visa application apply for indefinite leave to remain after five years’ points around the world, connected to a network of residence. In 2013, a total of 4,100 UK ancestry visas decision-making hubs. They are in similar places to the were issued, including 1,600 to Australians, 500 to ones I just mentioned: Beijing, Manila, Abu Dhabi, Canadians, 1,000 to New Zealanders and 870 to South Shanghai, New Delhi, Riyadh, New York, Istanbul, Africans. Chennai, Bangkok, Mumbai and Pretoria. My hon. Friend the Member for Romford mentioned The next generation of the outsourced visa project the UK’s youth mobility scheme which, as he rightly has delivered the next set of outsourcing contracts for said, operates in eight countries, three of which are the visa application process, including biometric enrolment, Commonwealth countries: Australia, Canada and New courier services and interviewing facilitation. The new Zealand. It enables young people to come to the UK for contracts have allowed us to increase the number of up to two years to experience UK culture. The UK is application points globally, offer improved customer happy to engage in discussions with any country meeting services including increased access to premium priority the YMS eligibility criteria, which include presenting a services and deliver efficiencies in the visa application low immigration risk to the UK, having satisfactory process. To increase access to our visa services overseas, returns arrangements and offering a reciprocal arrangement we have considered how best to support our operation for young UK nationals. My message to those countries and our customers, including by extending opening is, “Please come forward and talk to us.” We are open to hours in some locations and trialling new “user pays” talking to countries that want to be part of the arrangement services in developing markets. to see whether the eligibility requirements and reciprocal arrangements can be put in place to enable young Jeremy Lefroy: As for all such important new projects, people from the UK and Commonwealth countries to will the Minister undertake to get a bit of customer enjoy each other’s culture by living in each other’s feedback, particularly from Members of Parliament, to countries. whom constituents often come as a matter of last resort The right hon. Member for Delyn wanted to remove when, for instance, a business partner, relative or non- students from the immigration target. That might seem governmental organisation worker whom they are like a quick fix for reducing immigration levels, but it is supporting has spent weeks or even months trying important that we understand how many students are unsuccessfully to get a visa? Will she consider collecting here in Britain and ensure that they are leaving, as we 243WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 244WH Visas Visas [Karen Bradley] New Zealand, have been approved to join it. Keeping the UK’s borders secure is our priority but, at the same will be able to do much more effectively when exit time, we want to welcome legitimate visitors and trade checks are introduced this spring, because we know that that contribute to the UK economy and to show that we the student visa route was being exploited. This Government value our links with other countries. Using the latest have clamped down on nearly 800 bogus colleges, slashed technology helps us to do both, and the scheme is 45,000 visas from the further education route and cut proving popular with regular travellers. family visas by nearly one third since we came to power. My hon. Friends the Members for North West Norfolk Our reforms have reduced net migration from outside and for Romford talked about separate entry as a the EU and, importantly, ensured that our higher and possibility for Commonwealth citizens, or for citizens further education systems are not being abused. I caution of those Commonwealth realm countries for which Her the right hon. Gentleman against removing student Majesty the Queen is Head of State. Any policy or numbers from the net migration figures. Although that operational decision to create an additional line for might give a short-term boost to the figures, it would Commonwealth nationals at ports must be taken with not enable the Government to manage the situation, due regard to the wider operational impact—the likelihood thus leaving the potential for that important route to be of placing an additional burden on port operators—and abused, as has been the case in the past. the impact on other passengers. That is key to ensuring We have an excellent offer for students to stay in the that any benefits to a limited number of individuals are UK after their studies. In April 2012 we closed the old not outweighed by a negative impact on border security tier 1 post-study work route, which gave two years’ operations more generally by constraining UK Border unconditional access to the UK labour market, allowing Force’s flexibility to respond dynamically to fluctuations many students to stay on in low-skilled work. We have in passenger flow. replaced it with a more selective system. Graduates who Having visited UK Border Force and seen its work, I get a graduate job that pays a graduate-level salary can can say that there is very careful management of the stay in the UK, and there is no limit on their numbers. lines at the borders. We have a registered traveller scheme Also, we have created a scheme for graduate entrepreneurs that enables people who have gone through pre-clearance and doubled the number of places on it to 2,000, as well to go through e-gates, which is the quickest and easiest as creating a new visa for graduates wishing to undertake way to access the UK, and such people include those a corporate internship or professional training related from Australia, Canada and New Zealand. However, to their degree. having a separate route for those travellers from We are continuing to ensure that the scheme for the Commonwealth countries who do not have registered exceptionally talented attracts those who are already traveller status would, in many cases, hamper UK Border internationally recognised at the highest level as world Force’s ability to deal with fluctuations in arrival flows. leaders in their particular field, or who have already Let me give an example of that. If a flight arrives demonstrated exceptional promise. We wish to encourage from Jamaica, it would be highly likely that many of its more take-up of that route, and we are working with the passengers will be UK nationals who have visited Jamaica, endorsing bodies to do so, but the number of places but many other passengers would be Jamaican nationals. available—1,000—is a limit, not a target. We wish to Due to the prevalence of foreign national offenders attract exceptional talent, wherever it comes from. from Jamaica, we need to check those people and On 1 December 2014, the UK introduced new “transit ensure that they go through the proper immigration and without a visa” provisions that make it easier and border gates, as would be the case for people coming clearer to transit through the UK. Commonwealth from places such as Albania, or perhaps south-east citizens who hold valid exemption documents, including Asia. We want to ensure that those travellers have the visas for Australia, New Zealand, Canada and the US, right security checks at the border. It would create a which is a close partner, although it is not in the problem if we had a separate Commonwealth gate Commonwealth, can transit through the UK without a when all the passengers being dealt with had arrived visa, regardless of where they are travelling. The UK from Commonwealth countries, meaning that there was has also reduced the cost of the direct airside transit only a limited number of gates through which those visa to £30, making it cheaper than the Schengen alternative passengers could pass although there were many other for the citizens of the 21 Commonwealth countries who gates available for passengers whose flights had not yet need to apply for one. arrived. Also, after a successful pilot, on 17 November last To give UK Border Force the flexibility it needs, if it year we launched our new registered traveller scheme. felt that it would be appropriate to have specific gates in The scheme permits approved members who undergo operation to help its staff, that would be entirely down advanced security checks access to our e-passport gates to the Border Force itself. However, we should not try at Heathrow and Gatwick, or the option to use the EEA to restrict it, given how its staff have to manage flows of queue at Heathrow or a special RT lane at Gatwick, arriving passengers. It does not want to keep people expediting their clearance through the border. The scheme waiting for longer than the 40-minute target that we is open only to a select number of countries but, crucially, have set. travellers from Canada, Australia and New Zealand who are aged 18 or over, meet the criteria for the scheme Andrew Rosindell: The Minister seems to be saying and travel to the UK at least four times a year are that people from countries in which the Queen is Head eligible to apply. Applicants pay an average membership of State—the realms—must go through security checks fee of £50, and since the scheme’s formal launch in that are perhaps more stringent than those for an EU November, more than 5,000 regular travellers, almost a citizen. I find that strange, because Australia, New quarter of whom come from Canada, Australia and Zealand, and Jamaica, which she mentioned, are countries 245WH Commonwealth Immigration and 27 JANUARY 2015 Commonwealth Immigration and 246WH Visas Visas that have fought for King, Queen and country and system might come across as slightly offensive because stood behind us. They have the Queen as their Head of it suggests that we are worried about criminals coming State, yet we treat people from those countries differently from in Canada, and that while we can have arrangements from individuals from European countries with which with Slovakia and Portugal, we cannot have those same we have had this new partnership for only a few years—since arrangements with New Zealand, Canada and the they joined the EU. I understand why people in the Bahamas, for example? Surely we can find a way to deal Commonwealth countries feel that we have let them with this situation. She seems to be saying that she is down badly over this issue. Surely this should be about not against the idea in principle, but that it is just a not just operational convenience, but our cousins question of getting the practicalities right. Is that the throughout the world with whom we have so much in case? common and to whom we owe so much. Karen Bradley: I thank my hon. Friend for his comments. Karen Bradley: I thank my hon. Friend for his comments, I do not want to dwell on this issue for too long, because but perhaps I can clarify the situation. This is about we are running out of time and I would like to cover having information and knowledge about people who modern slavery, but I reiterate that an enhanced criminal come into the UK to ensure that they will not hurt our information exchange is available to us with regard to citizens. Within the EU, there are information exchanges EU nationals, and that provides information over and for criminal records, such as the European criminal above that which we have about non-EU nationals. I records information system, and data are available about want to reach a point at which we have such exchange of criminals’ past activities. As the Minister with responsibility criminal information across the board, because that for serious and organised crime, I am determined that would be a very good thing to keep all of us safe. While we have that same level of information exchange with we do not have that, however, I am not prepared to put other countries. Actually, I would like that same level of the security of the British people at risk by opening our information exchange across the world. borders in a way that might create a problem. I hope I have attended meetings with Caribbean Community that he understands that point. countries in which I have encouraged them to adopt the Let me conclude by saying something about the work kind of criminal information exchange that we have in that we are doing on modern slavery, which we all agree the EU. If they had that, we could start to have some is an international problem. We are committed to working certainty about how we deal with people travelling to with other countries to prevent individuals from being the UK from those countries because we would then exploited. Commonwealth countries are often source have any relevant information about criminals’ past countries for modern slavery, so we are committed to activities. working with them to tackle the problem. The modern This process is about the practicalities of how we slavery strategy, which was published on 29 November, ensure that people coming into this country are not commits us to raising the profile of modern slavery coming here to do us harm, but so long as we do not through the institutions of the Commonwealth and the have such information about travellers from certain EU, and to working with partner Governments to countries—I do not wish to single out Jamaica, but it is implement positive changes in law and practices. It the largest source country for foreign national offenders—we also commits us to identify annually between 20 and must put the security of the British people before anything 25 priority countries, which will include a number of else. However, if countries meet the eligibility criteria Commonwealth countries. for the registered traveller scheme, travellers from those Through our links with the Commonwealth and civic countries are welcome to join that scheme, as travellers organisations such as Rotary, we are trying to ensure from Australia, New Zealand and Canada have already that we have on-the-ground information so that we can done, which means that they can access the e-gates that tackle this issue upstream, so that people are not trafficked are available to people from members of the European and do not become victims of slavery in the UK, and so economic area. that we can deal with slavery on the ground. The UK Having seen the e-gates in action, I know that they Government are committed to stamping out that abhorrent are a good tool for finding any EEA national who is crime by building on our strong track record in supporting marked as being wanted, a criminal and so on, meaning victims and fighting perpetrators. Promoting links with that UK Border Force can stop them at the border and the Commonwealth should not be to the detriment of go through the necessary checks. We are stopping many maintaining the security of our borders, which is what EEA nationals who try to come through the border via allows us to tackle problems such as modern slavery. e-gates because those e-gates have great technology that Let me reiterate our commitment to the allows digital information to be used to find criminals. Commonwealth. We want to welcome citizens from across the Commonwealth to the UK. Britain is open Andrew Rosindell: The Minister is absolutely right for business. We welcome legitimate students, tourists, that the security of the British people has to come first business people and others who want to come to this and that we need to know who is coming into our country to contribute. The changes that we have put in country. If people have a propensity to commit crimes, place ensure that Britain remains an attractive destination of course we need to take action to prevent them from while maintaining the security of our borders. Britain is coming in. However, does she understand that if someone a place that people want to visit so that they can work is a New Zealander, a Jamaican, or from another one of hard, study, and enjoy our historic buildings and beautiful these countries with such close links with the UK, the countryside. 247WH 27 JANUARY 2015 British Nationals in Goa 248WH

British Nationals in Goa On 2 September, the company accountant acting for Mr and Mrs Medcroft was approached by the special director of appeals in Mumbai, who said he would [MR PHILIP HOLLOBONE in the Chair] make a judgment in their favour if they gave him 10 lakh rupees. That is 1 million rupees, which equates 4pm to £10,800. There is a certain irony, not missed here, Tim Loughton (East Worthing and Shoreham) (Con): that the origin of the word “lakh”in the Indian numbering I am grateful for the opportunity to raise a slightly system is the amount of money that can be stuffed into obscure and rather distant subject. It is, however, a a small suitcase, as no doubt those proceeds would have subject that has the potential to ruin the parents of one been, had they been forthcoming. It would appear that of my constituents and apparently affects many hundreds the request was made for the money not to be paid to of western expatriates who have also invested in property the court, the legal system or a Government department, in Goa. I am delighted that the Minister is responding but directly into the pocket of said official. It was a to the debate in the absence of the Minister of State, thinly veiled threat that failure to comply with the my right hon. Friend the Member for East Devon demand for a bribe would result in a ruling against (Mr Swire), who I know is abroad. Mr and Mrs Medcroft and, ultimately, their property being confiscated. Many other Members have been involved in this issue and frustrated at the lack of action by Indian and Goan My constituent’s parents were left in something of a Government officials when some fairly blatant corrupt dilemma, as we can imagine. Should they pay up, perhaps practices are at work. That is why I am raising the issue then getting recognition that they own the property and putting it firmly on the radar. I hope that something they knew they already owned and had bought legitimately, will come from it. and thereby condone corruption? Alternatively, should they pay up and risk the case not actually being resolved? I want to give a brief background on this particular As we know, blackmailers usually come back for more. case, which came to me from my constituent. Just over Would they be charged as participants in corrupt practices 13 years ago, Mr Leslie Medcroft and his wife purchased for ostensibly bribing an Indian official? Should they a hotel in Canacona, Goa. They were at pains to not pay up and risk the confiscation that has been ensure—they had done extensive research—that they looming over them for some years? Whichever way we complied with all the rules and regulations. They complied look at it, it appears that they cannot win. with the money laundering laws. The funds came from legitimate sources and banks in the UK. They complied My constituent’s parents were unable to raise the with all the residency conditions, which can be strict, amount of money in the short term in any case, so they and bought the business through a local company that did not really have a choice: they did not pay the money. was properly registered. They were buying an investment They were also unable to return to India—they were in an ongoing hotel business, with appropriate Government in the UK at the time, renewing their visas—before of Goa licences. They paid all the taxes due and had all 17 September, but the appeal went ahead in their absence. the licences that were needed. Those licences were kept The ruling from that appeal was that the argument they up over many years as they ran that hotel business. put forward was incomplete, despite their having provided Subsequently, it was claimed that the property had comprehensive documentation in support. A further been purchased illegally because, among other things, hearing date was set for 26 September, and they were the area was designated for agricultural usage, but no subsequently told that on top of the bribe, they might evidence for that was produced. In contrast, my constituent’s have to pay an additional sum of £6,000. parents produced a forest of documentation to show “Where does it end?” you may well ask, Mr Hollobone. that everything had been complied with and that the The case went to a further hearing and the presiding purchase and the running of the business were entirely judge, Ajit Kumar, the additional income tax commissioner, proper and above board. very much expected my constituent’s parents to pay. In A couple of years ago, they became the subject of an the absence of that, he deferred a ruling and apparently investigation by the enforcement directorate. The ruling threatened to have them arrested in the meantime. Tape given on 12 February 2013—almost two years ago—by recordings of that conversation were taken as evidence. Mr Lotlikar, the deputy director of the enforcement They were advised by their advocate that this process directorate, was that the property of the Hotel Oceanic will go on indefinitely until they pay up and that they should be confiscated. He claimed that it had not been will have constant doubt and worry overhanging their properly acquired, despite all the evidence produced to business. the contrary. My constituent’s parents understandably My constituent’s parents have invested their life savings. appealed the decision, but had a long wait, which They were running a legitimate business that helps the caused them huge stress. They had given up their life Goan economy—tourism, in particular, on which Goa savings and their jobs in the UK to start the business in greatly depends. They have had to spend a lot of their India and spend their retirement years there. money on lawyers, accountants and other professionals, Eventually, on 26 August 2014, my constituent’s parents first to ensure that they acquired the business legitimately received a letter stating that their appeal hearing was at and maintained all the licences and secondly to maintain last to be held on 22 August—four days before they their innocence against corrupt officials. If this case received the letter. Fortunately, the advocate they had goes against them and their hotel is confiscated, they retained in Goa saw a copy of the letter in time to face ruin and a great deal more stress. They would attend the appeal hearing. That was quite coincidental; probably have to return to the UK. his office happens to be next door to the enforcement I gather, however, that my constituent’s parents are directorate. The appeal hearing was further postponed not an isolated case, and that is why I am raising the to 4 September 2014. issue today.The hon. Member for Birmingham, Edgbaston 249WH British Nationals in Goa27 JANUARY 2015 British Nationals in Goa 250WH

(Ms Stuart) wanted to be here today, but she is receiving It is surely entirely inappropriate for a fast-growing an honorary doctorate from the university of democracy such as India, which attracts, and needs to Birmingham—I am delighted to point that out, as she attract, large amounts of foreign investment as an important wanted me to. She was approached by some of her UK trading partner, to allow such practices to go on constituents who were lecturers. They took early retirement under its nose. The Indian Government should be keen and invested through a direct foreign investment channel to find out what is going on and to intervene. In the past in a dilapidated old colonial mansion on the coast in few months, however, I have written to the Indian law southern Goa in 2005. They spent a fortune renovating Minister, Shri Ravi Shankar Prasad, and to the Chief it. It was originally set up as a business to cater for Minister of Goa, Shri Manohar Parrikar. The latter convalescing foreigners undergoing medical and dental responded and diverted my attention instead to Dr Rajan treatment. Katoch, the director of the enforcement directorate, The project was successful and has become a general who has also not responded. I have written to the guesthouse business. In 2009, on having acquired the Minister of Finance, Arun Jaitley, who is responsible business, the hon. Lady’s constituents were summoned for the tax commissioners, including the judge Ajit Kumar to Panjim to give assurances, initially on money laundering. who I mentioned earlier. In 2011, they received notices from the enforcement I also wrote to the high commissioner in London, His directorate claiming that they had illegally purchased Excellency Ranjan Mathai, no fewer than three times, agricultural land and that their business was illegitimate— and chased up with several calls and e-mails. I had no similar circumstances to the case against my constituent’s reply until yesterday—after I had secured this debate, parents. Yet they had documents to prove categorically coincidentally. The response came from the first consular that the land they had acquired was in a settlement secretary to the high commissioner, Mr P. K. Patel, and zone, was listed in the Portuguese book of descriptions merely stated: in 1905 as an urban dwelling and has absolutely no “Youwill appreciate that the High Commission cannot intervene history of crop growth. Clearly, the charge of agricultural in administrative judicial proceedings in India. If your constituent’s usage is entirely bogus. The business is properly owned parents are aggrieved by Directorate of Enforcement actions, by an Indian private limited company, regarded as they may seek appropriate legal redressal of their grievances.” resident in India for the purposes of FEMA, the Foreign They have been trying that, and they have not been Exchange Management Act 1999. It complies with all getting anywhere. Clearly, they will not get anywhere the regulations, but the parents of my constituent are with the high commission in London either, which is a facing a lengthy and costly court action and the threat great pity. of confiscation. The British high commission in Delhi is aware of the problem and the Business Secretary, on a visit to the Only today, I received an e-mail from a member of Indian subcontinent, raised it with Ministers. A high the British nationals’ working party in Goa, who has commission official has been dealing with British cases, been dealing with a number of other expats in similar but cannot get individually involved in them. I was also situations. She told me that in the past two years she has able to collar the British high commissioner James been working on a number of cases and has knowledge Bevan when he was about to appear before the Foreign of four in which confiscation orders have already been Affairs Committee on 15 October. He has been helpful served on people. In one case, a confiscation order has and entirely sympathetic, saying that the high commission been issued against a British couple aged 80 and 77 in is aware of the problem. Action needs to happen, however, relation to their studio flat. Another confiscation order and things cannot be allowed to go on unchecked. was issued two years ago against a single British woman in her 70s who owns a small flat in a purpose-built The Government need to use their good offices to complex in north Goa. impress on their Indian counterparts that that sort of practice does the reputation of Goa and India at large In addition, hundreds of British subjects have been no service at all. It stands in the way of legitimate prevented from registering their properties in Goa, having investment. It would be a great problem if that investment previously fulfilled the requisite legal processes, primarily were deterred by obviously corrupt practices. because of restrictions on visas. In some cases, that has I hope that the Minister will be able to give assurances led to criminality and harm against foreigners when today, to my constituent’s parents and to the affected they have tried to obtain the properties, causing loss of constituents of other hon. Members, that this matter investment. Some cases have involved extreme violence. will be looked into properly and further pressure will be Other people affected include those who came together brought to bear on the Indian Government. I also hope to invest in Indian tourism and who have been prevented that His Excellency the high commissioner to London from trading due to altered interpretations of the law is listening intently; I am sure he would not want such and, in tandem, prevented from registering their properties. practices to besmirch the reputation of the Indian The problem seems to be quite widespread, with a Government. They are clearly doing so at the moment. number of British expats suffering such consequences. It has been suggested that there are in excess of 300 similar Mr Philip Hollobone (in the Chair): I commend the cases that we know about. Huge stress is being caused hon. Gentleman on the interesting way in which he has to people who legitimately went out to invest in businesses presented this complex and important case. To respond, in Goa. In most cases, they are not wealthy, but have we have a Minister who is responsible for about half the invested their life savings. The situation is proving to be world, I think. a nice little earner for the Government in Goa, and various Government officials are pretty brazen in 4.15 pm demanding money to make the problem, which is of The Parliamentary Under-Secretary of State for their making, supposedly go away. We seem to have the Foreign and Commonwealth Affairs (Mr Tobias Ellwood): Goan equivalent of the mafia. Unfortunately, I am not specifically responsible for 251WH British Nationals in Goa27 JANUARY 2015 British Nationals in Goa 252WH

[Mr Tobias Ellwood] The authorities do not want to confiscate property and will act sympathetically where possible, especially India and I begin by extending apologies that the Minister where it is obvious someone has made Goa their permanent of State, my right hon. Friend the Member for East home, or when dealing with sick or elderly owners. Devon (Mr Swire), is unable to reply to the debate. I However, they have made it clear that they cannot know that he is aware of the issue, whether or not he is ignore cases where individuals have built properties on not able to watch the debate on the internet, and he will agricultural land or wilfully flouted rules on transferring certainly want to follow the matter up with my hon. funds or on visa regulations. We recognise that position. Friend the Member for East Worthing and Shoreham In January 2013, we encouraged British property (Tim Loughton). owners in Goa to start a working group. They have I thank my hon. Friend for initiating the debate. He undertaken to lobby on individual cases, and we have has been and remains an advocate for British nationals facilitated meetings between them, the Chief Minister facing difficulties in property disputes in India. As hon. and local authorities, with some success. Members will be aware, until 2007—my hon. Friend alluded to this—the rules governing purchases of property Tim Loughton: I am grateful for what the Minister by foreigners in Goa were open to misinterpretation. has said thus far, and I entirely appreciate, as the Many foreign buyers fell prey to unscrupulous lawyers Foreign Office has told me, that it cannot involve itself and property developers who took advantage of the in individual cases. However, could we not do more ambiguity of the laws. where there is systematic or systemic abuse, as he mentioned? Although the purchases of properties were made We are talking about British citizens being denied justice. in good faith by foreign buyers, in 2008, the Indian The rulings against them are not specifically saying enforcement directorate served notices to about what they have done and then proving it; they are 400 foreigners who had been found to have violated constantly saying there is not enough information, so foreign exchange and immigration regulations. the case is deferred and deferred. In the meantime, Simultaneously, the Goa Government sent a notice to money is, effectively, being demanded with menaces. If all registrars instructing them to close the registry to such corruption were happening in the United Kingdom, foreigners. There are about 750 British property owners on the part of British officials dealing with Indian in Goa, many of whom have been under investigation nationals, we would absolutely want to do something for six years and are still unable to register ownership of about it and to liaise with the Indian authorities. their properties or to sell legally. Our policy on dealing with property disputes worldwide Mr Ellwood: I will certainly relay that to the Minister is clear: we cannot get involved in private disputes, as of State. Perhaps I can put him on the spot in his we are in no position to judge the facts of the cases and absence and suggest that he and my hon. Friend meet so have no overseas jurisdiction to resolve such matters. It that, rather than the issue lying dormant after the is the responsibility of the Indian authorities to regulate debate, we can move the process forward. property laws and Her Majesty’s Government have no Consular staff are dealing with the property issue at a authority to intervene in matters concerning domestic wider policy level, engaging with the Goa Government legislation. We do not become involved in individual and local authorities directly, and that must fit in with cases, nor do we take steps to recover any capital outlay what my hon. Friend said about the difference between in individual property deals that might have gone wrong. taking a systemic approach and looking at individual That said, we do consider raising systemic issues by cases. That approach, which I hope will be joined up, lobbying national and local Governments. I reassure has been effective, with approximately 40 cases being the House that we take this matter seriously, as my hon. cleared of investigation over the last year. However, as Friend can attest. We are assisting groups of British has been reiterated today, many more outstanding cases nationals who have been genuinely cheated by lobbying need to be looked at. the Indian Government to seek settlement or a reasonable We are aware of corruption allegations against local solution. I am pleased to say that, through our sustained authorities in Goa. However, the matter must be dealt lobbying of a range of interlocutors, the Indian enforcement with by the Indian authorities. We have always advised directorate has cleared for registration a number of British nationals to report corruption complaints to the cases involving British nationals. The high commissioner Indian law enforcement system. in New Delhi and the deputy high commissioner for Although there has been some progress, I recognise western India have discussed with the former Goa Chief that the issue continues to cause distress to British Minister the problems faced by groups of British property nationals. We will continue to lobby the Goa Government owners and asked that the cases be considered carefully. and local authorities on systemic issues relating to The Chief Minister was receptive to finding a solution expatriate property disputes and to work with those to the problems faced by British nationals and as a who have been affected to find an appropriate solution. result set up a special committee to assess all outstanding cases. Mr Philip Hollobone (in the Chair): I shall now suspend In addition, during a meeting with the deputy high the sitting until 4.30 pm or until the next Minister commissioner just last week, the new Chief Minister arrives. I thank all those who took part in this important renewed the Goa Government’s commitment to finding debate. a resolution to the issue. Consular officials regularly meet with all local authorities—the enforcement directorate, the property committee and the state registrar—that are 4.23 pm assessing the cases of British nationals. Sitting suspended. 253WH 27 JANUARY 2015 SportsDirect (USC Dundonald) 254WH

SportsDirect (USC Dundonald) even further out of kilter with what staff were told at the time. I seek clarification from the Minister on that point. 4.28 pm No information was given to staff about the future of Mr Brian H. Donohoe (Central Ayrshire) (Lab): It is Dundonald and their jobs until Wednesday 14 January, good to see you in the Chair, Mr Hollobone, and the when Philip Norvell from Gallaghers dismissed all the Minister in her place. Of course, Mr Hollobone, you staff, telling them that they would not receive any and I served in the same police force for 10 years, and I money at all from SportsDirect and that anything owed think that you still serve in the police, so it is good to see to them would have to be claimed from the Government you here—after this debate, we might need your services. via the administrator. I would like to make a few remarks by way of On Friday 16 January, Republic, a wholly-owned background to the reason why I asked for the debate. subsidiary company of SportsDirect, bought the USC This year is the celebration of the 800th anniversary of business, apart from the Dundonald warehouse and the sealing of Magna Carta, one provision of which operation, from the administrators. At the same time, was that no free man should unreasonably be deprived billionaire Mike Ashley is well known for his love of of his livelihood. I am speaking on behalf of 245 workers football—he owns Newcastle United—and his company, in my constituency who question whether they are the very same SportsDirect, has just bought a 26% treated as free men and women. stake in Rangers Retail Ltd, in return for £10 million of credit, adding to his previous 49% stake and making a USC is a clothing distribution company providing total of 75%. Rangers football club gets a very small goods to retail distribution outlets. It opened in 1989 in percentage of the profits from that retail activity. The Edinburgh. The company was worth £43 million by worrying thing is that that is very much the pattern that 2004, when it was purchased by Sir Tom Hunter, a he adopted in buying USC: he built up a majority stake constituent of mine, but it went into administration in in stages before finally assuming control of the company. 2008, after which 43 of the 58 stores were bought by Sir Tom. That happened through something called pre- Of course, there are rules governing the ownership of packaged administration, whereby a deal is struck to football clubs, especially as there have been some notorious sell parts of the business before it is put into administration, multiple owners such as the pensions robber Robert minimising losses and cherry-picking the most profitable Maxwell. There must be a question whether Ashley’s part of the business. At the time, MPs, through the activities are a precursor to a greater involvement in Commons Select Committee on Business and Enterprise, Rangers football club itself. Is it right for an individual raised serious concerns about that practice. In particular, to have a serious financial stake in more than one side? the hon. Member for Mid Worcestershire (Sir Peter Luff) Is this man more than just a shareholder? Has he said: become the banker of the club? “The principle of administration is sound but you’ve got to Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) make sure that the administration process is working in a way that (SNP): Does the hon. Gentleman feel, as I do, that the doesn’t disadvantage people and impose other costs on the economy”. behaviour of Mike Ashley is damaging to him, and that In 2011, SportsDirect bought 80% of USC, and it the contrast between his wealth and the way the workers completed the purchase of the remaining 20% in 2012. were treated is appalling? In 2013, SportsDirect bought the company Republic—more of that later—out of administration and merged it with Mr Donohoe: I am coming to that, but he does not USC. USC’s headquarters have long been in Dundonald care a damn. That is clear, given what I am about to say. in central Ayrshire. On 28 December last year, 245 people The USC Dundonald situation is a murky affair. It —79 permanent employees and 166 agency or zero- leaves unanswered a lot of questions about the way hours contract workers—were employed at the Dundonald some businesses are allowed to operate. For instance, site. did Diesel seek a winding-up notice on USC as a result On Wednesday 7 January, senior managers arrived at of unpaid bills, as claimed in some reports? That is an the site early in the morning and informed staff that the answer that I need this afternoon. If so, what alternative business was not making money and was going into courses of action were considered by SportsDirect—such administration, and that all the stock would be removed as, for example, paying the bill to its loyal workers at to SportsDirect’s central depot in Shirebrook. There Dundonald? Was USC/SportsDirect’s action in seeking then followed a pantomime: staff were not told that administration a response to the claim made by Diesel they were being made redundant and were asked, would or was it initiated by the company separately? Was there you believe, to assist with the removal of the goods. I a delay in the timetable for granting administration am told that some 100 journeys were made by heavy and, if so, what was the impact on the work force and goods vehicles between then and when the process was the potential timetables for redundancy and required completed, on Sunday 11 January. consultation on both redundancy and business plans? Was that brought to the notice of the Department for It is not clear whether USC/SportsDirect’s actions Business, Innovation and Skills? What will the cost to were initiated by the companies themselves or as a the public purse be of supporting the 245 people who result of creditors, a clothing company called Diesel, are out of work without back pay, holiday or redundancy seeking a winding-up order because of unpaid bills, to payments and who have bonuses of as much as £12,000 which USC/SportsDirect responded by moving the outstanding? company towards administration, presumably resulting in Diesel joining the list of creditors that would have to Sandra Osborne (Ayr, Carrick and Cumnock) (Lab): wait for payment. I have heard it said that there was a I congratulate my hon. Friend on obtaining the debate. one-week delay in the court process, which I am told He is working hard on the issue, and he knows that means that the timetable followed by the company is many of my constituents were also employed in the 255WH SportsDirect (USC Dundonald)27 JANUARY 2015 SportsDirect (USC Dundonald) 256WH

[Sandra Osborne] a fit and proper person to buy shares and give loans to Glasgow Rangers football club, and to appoint his men business, and have lost their jobs because of this debacle. to the board? Should not the Scottish Football Association Yet again, a company in Ayrshire has behaved disgracefully look more closely at this person’s credentials for involvement —my hon. Friend knows what happened with the former in a team that is not just a business venture, but a coalfield sites. Is there a need to look at the way companies Scottish—indeed, a UK—institution? His track record, are allowed to do such things, treating employees so particularly his treatment of USC workers, shows that despicably, and to hold them accountable? he has scant regard for anything but balancing the books and maximising profits, even if loyal staff are Mr Donohoe: I am grateful to my hon. Friend, whose thrown on the scrap heap as a result. constituency neighbours mine, as does that of my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Mr Iain McKenzie (Inverclyde) (Lab): I congratulate Jamieson). I thank them for their support. I do not see my hon. Friend on securing this important debate. any difference between the cases referred to, which is Does he agree that it is wholly worrying that someone why there is a need to examine the law to protect of Mr Ashley’s background, employment and business workers in such circumstances. It is blatantly obvious practice is moving into the highly delicate area of Scottish that that does not happen now. football, especially with a football team that is having How long is it likely to take for the employees to difficulties at the moment? receive payments from the administrators? Will employees get 100% of the money due to them? I doubt it. What Mr Donohoe: I agree. Glasgow Rangers is an institution, sanctions can be imposed on the company for failing to and some 25% of the population of Scotland follow consult employees about the future of their roles at the that team. It is wrong that that individual should be Dundonald site, or about redundancy? Given that all allowed anywhere close to the team. As I will request of the companies in the exercise are owned by SportsDirect, the Minister in a moment, I hope that the SFA gets to is not it just a scam to let SportsDirect off its financial the bottom of this and does not allow him further into responsibilities to a less successful part of Ashley’s the club’s business. estimated £3.3 billion fortune? Will the Minister set up an inquiry into the affairs of Mike Ashley in relation to the USC Dundonald situation Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co- affecting my constituents and his interest in Glasgow op): I thank my hon. Friend for securing the debate; Rangers? Such a move would be welcome to the former people in my constituency are, as he mentioned, also employees of USC Dundonald and, I am sure, to the affected. Does he agree that it is particularly disgraceful great bulk of Glasgow Rangers supporters. We need to that everything he described was happening over Christmas bring some transparency to the affairs of Mike Ashley and the new year, when it was almost impossible for and of Glasgow Rangers. I look forward to the Minister’s employees to get the advice and support they needed, response. which they might have been able to get in other circumstances? 4.42 pm The Parliamentary Under-Secretary of State for Business, Mr Donohoe: I agree with my hon. Friend wholeheartedly. Innovation and Skills (Jo Swinson): I congratulate the I spent most of the Christmas period attempting to hon. Member for Central Ayrshire (Mr Donohoe) on contact the company, and I was treated with total and securing this timely but unfortunately necessary debate. absolute contempt. I do not think that any of us wish the situation to be as it is—particularly those who have, sadly, lost their jobs. Mr Jim Cunningham (Coventry South) (Lab): I The concerns about the events leading up to and congratulate my hon. Friend on getting the debate. We surrounding USC’s failure, particularly some of the had a similar one last Thursday, about City Link. He allegations made about the company’s treatment of its has spoken about changes to the law, and with City creditors and employees, are valid and genuine, and I Link the pattern was the same. Workers were told over assure the hon. Gentleman that they are shared across the Christmas holiday period that their jobs had gone. the House. It is important that answers are found. As More than 1,000 men contracted to it could not take with any company failure, it is important to establish their jobs, because of the law. We have been pressing the the facts of the case: what occurred in the lead-up to the Minister on those points. This is very similar. administration of USC, the reasons for the failure and whether the company has been a victim of circumstance, Mr Donohoe: I am grateful to my hon. Friend for that as sometimes happens with companies, or whether the intervention. The Scottish Affairs Committee is about conduct of its directors has fallen below the standards to call that company to book, or has already done so, that we rightly and reasonably expect. Those standards and has approached me to ask whether to call Mr Ashley include treating creditors and employees of the company to the Committee for what he has done to the company fairly and in accordance with the law. for which he is responsible. Do we agree with the BBC’s Based on the information that we have been given, 2009 quote from a self-confessed asset stripper that the USC’s administration seems to have been due to the law in such circumstances is a pirates’ charter? I wonder company’s failure to pay its rent and suppliers when whether that description could apply to Mr Ashley. they came due. On the specific questions asked by the Has the Magna Carta principle that no citizen should hon. Gentleman about the winding-up orders and so unreasonably be deprived of their livelihood been breached on, I understand that, according to the administrators, by Mike Ashley and SportsDirect? Given how he has a statutory demand had been issued to USC by a key behaved on the issue, is Ashley, SportsDirect’s supremo, supplier on 17 December 2014, payable by 31 December. 257WH SportsDirect (USC Dundonald)27 JANUARY 2015 SportsDirect (USC Dundonald) 258WH

That would have allowed the creditor to seek a winding-up to fail to notify the Secretary of State of proposed order if the debt was not paid. On 6 January, the redundancies. Tribunals can make protective awards company gave notice of entering administration, and it where employees are not properly consulted. did so on 13 January, but I am not aware that a petition for a winding-up order was made. Mr Donohoe: Will the Minister and her Department do that through the criminal courts in this case? Mr Donohoe: As a local MP, the Minister knows Jo Swinson: I am not going to give the hon. Gentleman something about Glasgow Rangers, but she might not that assurance in the Chamber today, but I reiterate that know as much about USC. Is there an urgent need for a we will be looking very carefully at all the facts that change in the law if, on the one hand, a creditor can emerge and at the picture created from the information seek a winding-up notice and, on the other hand, the that comes from the administrators. There is a wide company can frustrate that by making an application to range of both investigation and enforcement powers, the courts for administration? and it is important that they are used wherever it is Jo Swinson: This case raises many questions. We are found that companies have not behaved properly, and making several changes to insolvency law, and particularly particularly when directors have not behaved properly. to the pre-pack regime, where there are particular concerns. Mr Gregory Campbell (East Londonderry) (DUP): The hon. Gentleman is right to say that I have some The Minister refers to wanting to look at the issue very familiarity with Glasgow Rangers—indeed, Murray park, closely without giving any commitments in this Chamber. their training ground, is in my constituency. I confess Will she also give a commitment to refer Glasgow that I am not a football fan, but my late grandfather Rangers football club, and the potential issues there, to was a very proud and longstanding season ticket holder the sports Minister—particularly in respect of the and supporter of Rangers. He enjoyed many trips to constituency issue that has been raised? matches on the supporters’ bus. We all have to think about the context. USC was not Jo Swinson: I will happily talk to the sports Minister just a small company on its own; it was just one part of about those issues, and obviously there are specific a large retail group. The events are particularly concerning issues for the Scottish Football Association to consider. in that context. Insolvency Service investigators are already in contact with the joint administrators of USC. That is at an early Mr MacNeil: Given what the Minister is saying, does stage because the administration is fairly new, which she feel that USC, and perhaps Mike Ashley, too, have affects the information that can be provided, but there been guilty of using loopholes to get round certain is a legal duty to provide a confidential return to the situations and to create part of these problems quite Secretary of State about the directors’ conduct. Although deliberately? Could employment law be tightened so the administrators’ view about that is certainly relevant, that workers are not victims, as they have been in this ultimately their assessment of whether there are grounds case? for disqualification is based on the Insolvency Service’s independent view and conclusions. Jo Swinson: There are a couple of different issues Directors can be disqualified for anything between within that question. We will need to wait to see the two and 15 years. It is also worth noting that, in specific facts that come out of the investigation. Obviously, addition to director disqualification proceedings, the the administrators will provide information to the Insolvency Service can exercise its powers to investigate Insolvency Service, and they have to file a report within any UK company where it suspects misconduct. We are six months, although the general practice is to file such making it easier for disqualification proceedings to be reports much more quickly. Indeed, we will be shortening brought where other laws have been broken—it is currently that time to three months. possible, but we want to make it crystal clear that it On whether there are loopholes, action has been should be easier. Measures in the Small Business, Enterprise taken on the pre-packs issue, which I will address in a and Employment Bill explicitly state that, in deciding moment. The hon. Gentleman is absolutely right that whether someone should be disqualified, the criteria employment law is not negotiable. Employment law is that courts will be required to consider will be extended not something that is optional or that a company can to include breaches of legislation. That could include decide to take or leave; it is the law, and it needs to be health and safety law, immigration law or employment followed. Enforcement is particularly important. A range law. of issues have been raised, including some of the issues surrounding zero-hours contracts, which I will also Sandra Osborne: I have been listening to what the address. Minister has said. In my constituency, directors walked away from coal mines leaving £140 million of damage. I One of the key questions is why USC, which was have been pursuing that matter with the insolvency wholly owned by SportsDirect, was allowed to reach people for two years and nothing has happened, so she the point at which its key suppliers and landlords were will forgive me if I am slightly cynical about what she is not just threatening but taking enforcement action. saying. SportsDirect purchased USC’s business through another company, Republic. We have been told that USC’s key Jo Swinson: I will be happy to look into the specific suppliers have been left out of pocket, so it seems odd issues that the hon. Lady raises. Although the powers that they would continue to supply Republic. There are, already exist, we recognise that making it more explicit therefore, a lot of unanswered questions. that breaches of law can be considered in the disqualification The law is clear that employees should be consulted process will make such cases easier. That is why we are where 20 or more people are being made redundant at changing the law. I will happily look separately at the the same establishment, and it can be a criminal offence specific case that she is pursuing. 259WH SportsDirect (USC Dundonald)27 JANUARY 2015 SportsDirect (USC Dundonald) 260WH

[Jo Swinson] accurate to say that somebody on a zero-hours contract has no right to a redundancy payment. The calculation I turn now to pre-packaged administrations, or pre-packs. for the payment tends to be made on the basis of an They have been discussed in this House on many occasions, average of, I think, the 12-week period running up to because there are understandable concerns about them. when they were made redundant. I hope that will provide In a pre-pack, the sale of the viable parts of an insolvent some reassurance to the hon. Lady’s constituents who company’s business is arranged before the administration may find themselves in that position. Guidance on starts and concludes shortly after the administrator is redundancy pay for any employer affected is available appointed. In the case we are debating, the administration on gov.uk. has allowed the majority of the business, including Hon. Members have raised significant concerns about more than 600 jobs across the UK, to be transferred to the behaviour of Mike Ashley, and I share those concerns. the purchaser, Republic, although unfortunately another He seems determined to show that rules are for other 84 employees have lost their jobs. people. We know that he bought nearly 10% of Rangers It is important that we establish whether the pre-pack football club, and in doing so rather skirted the edges of represented a necessary step to save an insolvent business, the SFA’s rules on owning two clubs. Despite being or if, as has been suggested, it was an abuse of the blocked by the SFA from increasing his shareholding insolvency process. I reassure hon. Members that officials further, he appears to be looking to expand his influence. are looking at that as a matter of urgency. The changes The rules that prevent the same person from owning that we are making, following the review of pre-packs two clubs are there for a good reason: to prevent conflicts by Teresa Graham, will mean that by spring there will of interest and to safeguard the integrity of the sport. be new checks and balances on pre-pack administrations where the sale is to a connected party, so that there is We are talking about a man who, according to media independent evaluation of whether that party is a viable reports, forced through a £200 million bonus scheme at business with a viable underlying business model that SportsDirect and subsequently withdrew his own will not simply run into the same problems as the participation amid speculation that he introduced the business in administration; there will also be evaluation scheme simply to show his investors who was in charge. of whether the sale represents the best value. Some 90% of SportsDirect employees are reported to have zero-hours contracts, so they would not be eligible Mr Donohoe: May I ask to be kept posted, within for the scheme. At least one worker was allegedly told reason, on anything that happens in the Department that a zero-hours contract meant that she would not and whatever action or otherwise is taken by BIS? receive holiday pay. I cannot emphasise enough that that is against employment law. Jo Swinson: I happily give that assurance. Obviously, There are serious questions to be answered about certain elements remain confidential because of specific USC and many of its practices. I have outlined that the legislative requirements, but I am happy to keep the Insolvency Service has the power to receive information hon. Gentleman updated on the issue. from the administrators and to investigate any company I will touch on the important matter of the employees that it believes has questions to answer. I welcome the and support for them, before coming to some of the suggestion that Select Committees may also wish to ask specific issues raised about Mike Ashley. Obviously, questions. whenever people are made redundant, support is crucial. I believe that zero-hours contracts have a place in a That is why the Jobcentre Plus rapid response service is flexible labour market, but they are not a substitute for available and can provide everything from information proper business planning. I fail to understand how a to help with job search, identifying skills gaps and, retailer can get away with employing the majority of ultimately, training to update skills or learn new ones to its staff—up to 90% of the work force of 20,000 at ensure that people can move back into employment. SportsDirect—on zero-hours contracts. Apparently, That is particularly important for those individuals. SportsDirect operates some 420 stores, but it has a In terms of redundancy payments, employees are permanent work force of perhaps only a couple of guaranteed to receive their wages and other payments thousand people. I do not see how a retailer can reliably owed, subject to certain limits. That money comes from open its stores every day if the workers on zero-hours the national insurance fund. contracts genuinely have the power to say that they will not take any given shift. A zero-hours contract should Cathy Jamieson: Will the Minister say something mean that the employer is free to offer work or not to about the position of those who are on zero-hours offer work, and the employee is free to accept or decline contracts and the particular difficulties that they will that work. face? I am at a loss to see how such use of zero-hours contracts can be deemed to be in any way responsible, Jo Swinson: I will certainly come to that issue. The and I think there are even questions about whether it is redundancy payments service has begun processing in line with employment law. Certainly, exclusivity clauses, claims—I understand something in the region of 30 claims which must be part of the way in which SportsDirect have already been put in. It aims to pay 80% within operates zero-hours contracts, will soon not be legal in three weeks of receiving the claim form and 93% within such contracts as a result of the action we are taking in six weeks of receipt of the form. the Small Business, Enterprise and Employment Bill, Obviously, within the group of people who have been and rightly so. Using zero-hours contracts to fill the made redundant, there is a mix of those who were on gaps by requiring people to turn up for work but not fixed-hours permanent contracts and those who were giving them guaranteed hours is not a responsible use on zero-hours contracts. However, it would not be of such contracts. 261WH SportsDirect (USC Dundonald)27 JANUARY 2015 SportsDirect (USC Dundonald) 262WH

Cases have been brought against SportsDirect by receiving their proper rights to contact ACAS or the people such as Zahera Gabriel-Abraham. That case was pay and work rights helpline on 0800 917 2368. Breaking settled out of court, but some of the media reports were employment law is absolutely unacceptable, and compliance concerning. The Guardian reported that will be properly enforced. “the retailer will have to make clear in job adverts, contracts and There are certainly questions to be answered about staff rooms that it does not guarantee work, sick pay or holiday the matters in the USC administration and pre-pack pay”. sale, and the Insolvency Service will be looking at the I do not believe that that is the full story, because it is information that it has received. The hon. Member for not for an employer to decide whether their employees Central Ayrshire asked a wide variety of questions, and get sick pay or holiday pay; it cannot simply opt workers I appreciate that time is short— out of their statutory rights. One of the barristers from Leigh Day summed it up well: Mr Donohoe: Will the Minister write to me? “Zero hours workers are not second class workers. They have the right to be treated fairly and with respect. They have the right Jo Swinson: I will happily write to the hon. Gentleman to take holidays and to be paid when they take them. They have in full to pick up on any points that I have not addressed, the right to statutory sick pay. They have a right to request and I will write further to keep him updated. I thank guaranteed hours. Sports Direct will now have to make that him for giving us the opportunity to debate these important crystal clear to staff.” issues. I hope that the reports do not suggest that those staff Question put and agreed to. have not been getting sick pay, holiday pay or their other statutory rights. I encourage anyone at SportsDirect 4.59 pm or anywhere else who thinks that they have not been Sitting adjourned.

17WS Written Statements27 JANUARY 2015 Written Statements 18WS Written Statements FOREIGN AND COMMONWEALTH OFFICE

Tuesday 27 January 2015 Non-lethal Equipment: Jordanian Armed Forces

TREASURY The Secretary of State for Foreign and Commonwealth ECOFIN Affairs (Mr Philip Hammond): I have today laid a departmental minute proposing the gifting of non-lethal equipment to the Jordanian armed forces. The Chancellor of the Exchequer (Mr George Osborne): My right hon. Friend the former Secretary of State A meeting of the Economic and Financial Affairs Council for Foreign and Commonwealth Affairs (Mr William will be held in Brussels on 27 January 2015. Ministers Hague) informed the House on 6 March 2013, Official are due to discuss the following items: Report, column 961, that he intended to provide additional Investment plan for Europe non-lethal equipment to the Syrian opposition in order The Commission will present its proposal on the to help save lives. He then laid a departmental minute European fund for strategic investment, a key element on 15 April 2013 and issued a written ministerial statement, of the investment plan for Europe, followed by a first Official Report, column 16WS, containing details of exchange of views. that gift which included, among other equipment, five Current legislative proposals 4x4 vehicles with ballistic protection. The equipment was due to be donated to the Syrian opposition National The Council will receive an update from the presidency Coalition’s Assistance Coordination Unit based in Turkey. on ongoing work on financial services dossiers. Although we have been able to deliver some of the Presentation of the presidency work programme equipment, regrettably, we have been unable to deliver The new Latvian presidency will present to Council the five 4x4 vehicles as planned. its six-month work programme in the ECOFIN area. There are two reasons for this: Presentation of the Commission work programme 1—only the US government and United Nations have been The new Commission will present its work programme granted permission by the Turkish Government to use such for 2015, focusing on the economic and financial agenda. vehicles in Turkey; and Economic governance 2—the Assistance Coordination Unit (ACU) was not a registered The Council will hold an exchange of views on two entity at the time and therefore the ACU would have only been Commission communications on economic governance: permitted to store and use the vehicles within Syria. first, on the economic governance review and secondly, Our assessment is that delivering the vehicles to Syria on clarifying the existing flexibility in the stability and carries too much of a risk of them ending up in the growth pact. wrong hands. For example, on 7 December 2013 the Preparation of the G20 meeting of Finance Ministers Islamic Front raided the Syrian Military Council’s and governors on 9-10 February 2015 in Istanbul headquarters in Bab al-Hawa and took some of their The Council will adopt terms of reference in view of equipment. We therefore now consider that the best the G20 meeting of Finance Ministers and governors in option is to gift the vehicles to the Jordanian armed February in Istanbul. forces (JAF). The JAF would use them in their efforts to manage current insecurity on their border with Syria, [HCWS225] including cross-border smuggling activity. This option represents the least risk of the vehicles falling into the ENERGY AND CLIMATE CHANGE wrong hands and is most cost-effective to the taxpayer given that the vehicles are already stored in Jordan. Committee on Radioactive Waste Management This gift has been scrutinised to ensure that the provision of this equipment is consistent with export controls and complies with our international obligations. The Minister for Business and Enterprise (Matthew Recipients have been carefully selected to prevent equipment Hancock): My noble Friend the Under-Secretary of being given to those involved in extremist activities or State for Energy and Climate Change (Baroness Verma) human rights violations. has made the following written ministerial statement The value of these vehicles is £386,375.70 which will today. be met by the Government’s conflict pool fund. Triennial reviews are part of the Government’s commitment to ensuring that non-departmental public bodies continue to have The Treasury has approved the proposal in principle. regular independent challenge. If, during the period of 14 parliamentary sitting days The review will examine whether there is a continuing need for beginning on the date on which this minute was laid CoRWM’s function and its form and whether it should continue before the House of Commons, a Member signifies an to exist at arm’s length from Government. objection by giving notice of a parliamentary question If there is evidence of a continued need for the body, the review or a motion relating to the minute, or by otherwise will also examine whether CoRWM’s control and governance raising the matter in the House, final approval of the arrangements continue to meet the recognised principles of good gift will be withheld pending an examination of the corporate governance. objection. I will inform the House of the outcome of the review when it is completed. [HCWS224] [HCWS222] 19WS Written Statements27 JANUARY 2015 Written Statements 20WS

HOUSE OF COMMONS COMMISSION context, information or opportunity to learn more. The strength of feeling on this was very clear, particularly House of Commons—Governance from many of Britain’s Holocaust survivors. The Commission drew on emerging findings from the world’s largest study of young people’s knowledge and John Thurso (Representing the House of Commons understanding of the Holocaust—conducted by UCL’s Commission): On 22 January the House of Commons Institute of Education. This found that the majority of agreed a motion supporting the recommendations in our young people do not know some of the most the report of the Select Committee on House of Commons fundamental facts that explain how and why the Holocaust Governance. The House of Commons Commission happened, even after studying it at school. The Commission held an additional meeting on 26 January to ensure a also reported inadequate support for regional projects, speedy start to implementation of the Committee’s compounded by a lack of long-term funding for Holocaust recommendations. education. And it identified the urgent need for the At its meeting, the Commission agreed a specification recording and appropriate preservation of the testimony for the position of Clerk of the House that incorporates of survivors and liberators. the job description set out in annex A to the Governance Committee’s report. The Commission also agreed So the Commission made four main recommendations. a recruitment process in line with the Committee’s First, Britain should have a striking and prominent new recommendations. Details will be published in the brief national memorial in central London, to make a bold for candidates when the recruitment is launched. The statement about the importance our country places on intention is that the recruitment process should be preserving the memory of the Holocaust and to stand completed before the dissolution of Parliament on as a permanent affirmation of the values of our society. 30 March. Second, there should be a world-class learning centre The Commission has also taken two other initial to accompany the national memorial. This would be a decisions: must-see destination that would draw on the latest It has agreed that implementation of the Committee’s technology to engage and inspire vast numbers of visitors. recommendations will assume no change to the membership of The new learning centre would also bring together a the Members Estimate Committee (option “A” in paragraph nationwide network of Holocaust organisations and 152 of the Committee’s report). support head teachers to champion Holocaust education It has agreed to write to the House Committee to propose a throughout the country. first joint meeting of the Commission and the House Committee in October 2015. This will provide time for the Commission to Third, there should be an endowment fund to secure be established in its new form and for an appointment to the the long-term future of Holocaust education for ever. new post of Director General of the House of Commons. (See This would cover the running costs of the learning paragraph 128 of the committee’s report.) centre and also support Holocaust education around The Commission is next meeting on 9 February when, the country, including through local projects and travelling among other matters, it expects to consider the job exhibitions. specification and recruitment process for the position of Fourth, the Commission recommends an urgent Director General of the House of Commons. programme to complete the task of recording and [HCWS223] preserving the first-hand testimony of British Holocaust survivors and liberators. The Commission proposes a new independent body to deliver all these recommendations PRIME MINISTER and wants to see testimony work completed this year, the creation of the national memorial in 2016-17, and the learning centre within the next Parliament. Holocaust Commission With the support of the Deputy Prime Minister and the Leader of the Opposition I am accepting these The Prime Minister (Mr David Cameron): Today I am recommendations. I am today setting up the United publishing the report of the Holocaust Commission Kingdom Holocaust Memorial Foundation, under the and copies of the report have been placed in the Libraries leadership of Sir Peter Bazalgette, to get on with this of both Houses. urgent work. In support of this, and to kick-start a On this poignant Holocaust memorial day, 70 years society-wide fundraising effort, the Government will on from the liberation of Auschwitz, “Britain’s Promise commit £50 million towards the delivery of the new to Remember” sets out the steps this country will take national memorial, learning centre and endowment fund. to ensure that the memory of the Holocaust is preserved I would like to express my thanks to Mick Davis and and its lessons are never forgotten. to all the Commissioners— including the Parliamentary The Commission’s work was informed by a call for Secretary to the Treasury, my right hon. Friend the evidence which received nearly 2,500 responses. This Member for Surrey Heath (Michael Gove), the right included one of the largest ever gatherings of British hon. Member for Morley and Outwood (Ed Balls) and Holocaust survivors at Wembley stadium; a youth essay the Minister of State, Ministry of Justice, the right hon. competition with more than 700 entries; and a wide Member for Bermondsey and Old Southwark (Simon range of consultation events and meetings, including at Hughes) who have given this work the cross-party status the White House and United Nations. it so profoundly deserves. The Commission found widespread dissatisfaction Today we stand together—whatever our faith, whatever with the existing Holocaust memorial in Hyde park, our creed, whatever our politics. We stand in remembrance which was felt to be hidden out of sight and offer no of those who were murdered in the darkest hour of human 21WS Written Statements27 JANUARY 2015 Written Statements 22WS history. We stand in admiration of what our Holocaust The Holocaust Commission report can be viewed as survivors have given to our country. And we stand an attachment online at: http://www.parliament.uk/ united in our resolve to fight prejudice and discrimination writtenstatements in all its forms. [HCWS226] We will keep Britain’s promise to remember. Today, tomorrow and for every generation to come. ORAL ANSWERS

Tuesday 27 January 2015

Col. No. Col. No. TREASURY ...... 707 TREASURY—continued Bank Bonuses ...... 709 Northern Powerhouse ...... 718 Business Support ...... 714 Oil Prices...... 710 Defined Contribution Pensions...... 715 Tax Credits and Employment...... 720 Fiscal Consolidation ...... 717 Topical Questions ...... 722 Household Budgets...... 721 Uncollected Tax ...... 707 National Insurance ...... 712 Unemployment ...... 716 WRITTEN STATEMENTS

Tuesday 27 January 2015

Col. No. Col. No. ENERGY AND CLIMATE CHANGE ...... 17WS PRIME MINISTER ...... 19WS Committee on Radioactive Waste Management..... 17WS Holocaust Commission...... 19WS FOREIGN AND COMMONWEALTH OFFICE..... 18WS Non-lethal Equipment: Jordanian Armed Forces .. 18WS HOUSE OF COMMONS COMMISSION...... 19WS TREASURY ...... 17WS House of Commons—Governance ...... 19WS ECOFIN...... 17WS Members who wish to have the Daily Report of the Debates forwarded to them should give notice at the Vote Office. No proofs of the Daily Reports can be supplied. Corrections which Members suggest for the Bound Volume should be clearly marked in the Daily Report, but not telephoned, and the copy containing the Corrections must be received at the Editor’s Room, House of Commons,

not later than Tuesday 3 February 2015

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CONTENTS

Tuesday 27 January 2015

Oral Answers to Questions [Col. 707] [see index inside back page] Chancellor of the Exchequer

On-the-Runs Scheme [Col. 729] Answer to urgent question—(Mrs Villiers)

Voter Registration [Col. 738] Motion for leave to bring in Bill—(Chris Ruane)—agreed to Bill presented, and read the First time

Corporation Tax (Northern Ireland) Bill [Col. 740] Motion for Second Reading—(Mrs Villiers)—agreed to Programme motion—(Dr Thérèse Coffey)—agreed to Ways and Means motion—(Dr Thérèse Coffey)—agreed to

Insurance Bill [Lords] [Col. 798] Read a Second time

Backbench Business Young People in Care [Col. 799] Motion—(Mr Graham Stuart)—agreed to

Durham Free School [Col. 830] Debate on motion for Adjournment

Westminster Hall Employment in Wales [Col. 189WH] London Bridge Station (Redevelopment) [Col. 214WH] Commonwealth Immigration and Visas [Col. 224WH] British Nationals in Goa [Col. 247WH] SportsDirect (USC Dundonald) [Col. 253WH] Debates on motion for Adjournment

Written Statements [Col. 17WS]

Written Answers to Questions [The written answers can now be found at http//www.parliament.uk/writtenanswers]