House of Commons
Tuesday 29 April 2008
The House met at half-past Two o’clock
[Mr. Speaker in the Chair]
St. Austell Market Bill
Read the Third time, and passed.
Transport for London Bill [Lords]
Considered; to be read the Third time.
Oral Answers to Questions
The Secretary of State was asked—
Crime Reduction (Small Businesses)
My right hon. Friend the Home Secretary and I take very seriously the need for the whole criminal justice system to be as effective as possible in tackling crime against shopkeepers and small businesses. The number of people convicted of theft from shops and sentenced to prison immediately has doubled in all courts in the past decade, while the average sentence length for all theft and handling cases tried at Crown court has increased from 11 months to 13 months. The Government will soon respond to the Sentencing Guidelines Council regarding its draft guidelines on theft and burglary from non-dwellings.
Shoplifting, theft, graffiti and vandalism and violence against small businesses and shopkeepers hasten business closures and are leading to the wider decline of our town centres and greater communities. The threat of jail for shoplifters and yobs must remain, but will the Secretary of State work with the Home Secretary to ensure that police forces, including that in Northamptonshire, use the powers that are already available to them to issue fixed penalty notices to offenders aged under 16?
I entirely share the hon. Gentleman’s concern about levels of shop theft, burglary and robbery. He will be aware that in Northamptonshire there has, fortunately, been a decline in all those crimes in the past five years, particularly recently, as there has across the country. However, the levels are still too high. In answer to his specific question, yes I will work with the Home Secretary to encourage forces to issue fixed penalty notices to under-16s in appropriate circumstances, because the experience in my area, in Lancashire, is that FPNs work effectively.
I welcome my right hon. Friend’s comments that he will not treat this subject lightly and that there will be stricter sentencing. At least, I hope that that is what he is saying. Currently, small businesses and shopkeepers are suffering attacks, violence and robberies, whereas companies such as Tesco can get protection from Securicor and other security companies. Attacks on small businesses are also attacks on the people who work in them and the customers who use those shops, and simply lead to further closures.
Small shops are a vital part of local communities in urban and rural areas, so we take very seriously the need to ensure that the whole criminal justice system—from the police through to the courts—works effectively. As I have spelled out, we have been encouraging the courts to be tougher, as they have been, on theft from and burglaries of shops and other small businesses as well as large businesses. That is why the number of people sentenced to immediate imprisonment has more than doubled in recent years, and why sentence lengths at Crown court for more serious offences are rising.
Sentencing is extremely important to my constituents. Indeed, they like to read about the sentences that have been given by the local magistrates court, which is why I am disappointed to hear from my local newspaper, The Herts Advertiser, that for the past seven months the St. Albans magistrates court has not been providing the lists of offences to be considered in the court. What offices could the Secretary of State use to encourage the practice of making those lists more public? We have been assured that there is no data protection conflict issue, but the current situation means that local reporters cannot cover those cases and draw attention to the offences that are blighting the community.
Has the Justice Secretary seen early-day motion 1358, tabled in my name and that of other hon. Members, about crime against small businesses? If so, he will know that it praises the campaign of the Federation of Small Businesses, which is extremely concerned that the under-reporting of crime might be leading local police forces to take it less seriously than they should. Given that less than 40 per cent. of crimes against small businesses are reported, what measures will the Secretary of State take to encourage businesses into full reporting? Every crime should be reported.
I have seen the early-day motion to which my hon. Friend draws the House’s attention. It is vital that small businesses report crimes against them; in fairness to the police, they are likely to be aware of crimes only if they are reported. I think that levels of reporting are pretty consistent. The better news is that, across the country, crime against businesses, particularly shops, is going down. However, we need to do more. Along with reporting specific crimes, I encourage small business federations, at a local level, along with larger retailers, to work through community and crime reduction partnerships to ensure that there is more effective policing and that other work is undertaken to reduce crime in their areas.
The Havering chamber of commerce and industry has long been concerned about the level of crimes against Upminster’s many small businesses and it would like to see these statistics recorded separately. Will the Minister agree to record crime against business separately so that its real level can be acknowledged and greater steps can be taken to combat it?
I am very keen on ensuring that the data are not only accurate, but much more specific. I am not passing the buck, but this is the direct responsibility of my right hon. Friend the Home Secretary, and I will certainly raise the matter with her. Some specific business crimes are separately recorded—for example, robbery of business properties, shoplifting and burglary in other buildings, which in practice refers to businesses. I will certainly follow up the hon. Lady’s point.
Youth Referral Orders
The referral order at 44 per cent. has the lowest reconviction rate of any court sentence for under-18s. It is the primary community sentence for young offenders appearing in court for the first time who plead guilty and comprises about a quarter of all juvenile community sentences.
I am very grateful for my right hon. Friend’s response and for the good record in respect of youth referral orders. Is he satisfied that there are sufficient resources on the ground to ensure that these quite complex orders can be properly managed and that young people can get the services they need to become constructive and functioning adults?
I am grateful to my hon. Friend for her comments. She will know that these orders have been successful and that some 28,722 were made in 2006-07. The question of resources is indeed important. Following some challenges in my hon. Friend’s own area of Northamptonshire, the local authority has reversed funding cuts to youth offending teams recently—indeed, it provided £165,000 of additional funds to support the referral order process. As I say, the issue of resourcing is very important and there is a priority for youth crime prevention. In our forthcoming youth crime action plan, we will be looking to see what further steps we can take to support youth offending teams and their disposal at local level.
My constituents on the Swinemoor estate in Beverley want more effective action taken against the tiny minority of hooligans on that estate. I congratulate Inspector Alan Farrow and his team on their efforts to protect the public, but what assessment has the Secretary of State made of extending penalty notices for disorder to the under-16s?
We are looking into that issue. The question refers specifically to the youth referral order. I commend the work of the police in such areas as Beverley. I was in Humberside only a few weeks ago, looking into how the probation service was working with the Prison Service and other community agencies to tackle antisocial behaviour and other related issues. I think that it is important to look into what further support we can give, and we are currently looking into extending prevention notices. The youth referral order has been a success with a 44 per cent. reconviction rate, which is a good figure for the Government, showing the performance in respect of this particular order.
It gives me no pleasure to say that right across the country, thousands of communities—especially the parishes of Downton and Redlynch in my constituency—are dreading the onset of summer. During warm, light summer nights, a minority of young people—many drunk and on drugs—will cause low-level crime, intimidation and harassment and use bad language across these communities. When people talk to the police, the league tables on the wall are pointed out and they are told that crime is dropping. When will someone get the point that people are no longer reporting low-level crime and are not bothering to tell the police because the police do not have the resources to respond? It is no good anyone in this House trying to convince my constituents that crime, particularly among young people, is falling, with or without the youth referral orders. The problem really must be tackled if there is to be continuity of confidence in our local police and justice system.
I think the hon. Gentleman does a disservice to the work of the police in his own community. He will know that the police actually take these issues very seriously. Over the past 10 years, we have had a 30 per cent. reduction in crime and we have more police on the streets than ever before. I am happy to receive representations from the hon. Gentleman on these important issues. Such low-level crime is significant because it damages the quality of life of people not only in villages but throughout the community. The referral order is successful in bringing individuals to court. If the hon. Gentleman looks at the range of disposals we have introduced in the past 10 years, including antisocial behaviour orders and the power for police to take young people to their parents, he will see that a number of significant measures are in place. As I said, I am happy to receive representations from the hon. Gentleman, but if he looks at the facts he will see that the Government have done a tremendous amount of work in reducing the levels of such crime.
Civil Legal Aid
My noble Friend Lord Hunt of Kings Heath has regular meetings with representative bodies and individual providers, including the Law Society, with whom my Department and the Legal Services Commission have recently reached an agreement over legal aid contracts. That agreement will give stability and certainty for civil legal aid providers, and heralds a strong commitment to a new collaborative working approach.
I am grateful for that answer. The Minister will know that the Ministry, along with the Legal Services Commission, has just settled a damaging dispute with the legal profession about civil legal aid contracts. Can she confirm that as a result of settling that dispute there will be sufficient numbers of lawyers taking up civil law contracts for legal aid and there will be sufficient money to pay them for the contracts, and that we will not have more court disputes between the sides over the adequacy of the scheme for the future?
I am happy to be able to say to my hon. Friend that I think I can with confidence state that those things will happen. As he will know, increasing provision is going into legal aid. The reaching of an agreement on these contracts has, obviously, been difficult at times, but it is very important that we have done so. That shows that we can work together and achieve an agreement that makes sure that the most vulnerable will receive the access to justice that they deserve.
What steps can the Minister take to ensure that legal aid and other legal costs that will come about as a result of public inquiries that are currently under way in Northern Ireland do not spiral out of control as they have done in the Saville inquiry?
The hon. Gentleman makes an important point, and we are very conscious of the effect that some past inquiries have had on the whole system. We monitor this very carefully, and we will ensure that we get proper value for money in every aspect of our legal aid budget.
I welcome what my hon. Friend the Minister said about the agreement that has been reached. However, will she agree to monitor the provision of legal advice, particularly on immigration and family law issues, under the new financial arrangements, because there is a fear in my constituency that there will be an increasing shortage of that provision?
My hon. Friend makes an important and serious point. Expertise and sensitivity are required in the two areas he mentions, and it is important that we make sure they are properly covered by legal aid provision. I welcome the support we get, particularly from the not-for-profit sector, in dealing with many such cases, and I will ensure that my noble Friend Lord Hunt monitors provision in those areas.
May I put it to the Minister that her replies so far have been incredibly complacent? Is she aware that law firms up and down the country are giving up legal aid work on housing, immigration, mental health and family law cases? All of that was predicted in a Select Committee report of last year, which the Government completely ignored. Does she agree that the end result will be legal aid deserts and some of the most vulnerable people in society being denied justice?
No, I do not agree at all with the hon. Gentleman, and I am disappointed that he felt he had to ask that question in the way he did. He will know that the increase in spend from the Legal Services Commission has gone up by 73 per cent. in the six years to 2006-07. We have looked into legal aid deserts in the past, and the new way of commissioning and the new contracts are in place particularly to make sure that legal aid deserts do not occur.
The third thing to mention is that we want to ensure that legal aid gets to those most in need—those who are dealing with mental health or housing issues, or with the immigration or family law matters that my hon. Friend the Member for Brighton, Pavilion (David Lepper) mentioned. This Government’s approach to this series of reforms has aimed to protect those most in need.
Again, my hon. Friend raises a very important issue. I want to be able to tell her and the House that yes, young people will be able to access legal aid in those circumstances. It is vital that we ensure that everyone is aware of the provisions of the 2007 Act, that people feel able to access aid, whether through the not-for-profit sector or through women’s or youth organisations, and that, come September, young people will be able to get the protection that they deserve and need.
Court Buildings (Wales)
The former Lord Chancellor and Secretary of State for Justice Lord Falconer made a statement on 25 June 2007 about a £400 million investment in new courts in England and Wales. My hon. Friend might be interested to learn that Her Majesty’s Courts Service asset management committee considered a strategic outline case for a new courthouse in Newport on 23 April 2008. Further work is now required before a final funding decision can be reached.
Newport has needed a new courthouse for 25 years, and an inspection in 2002 deemed the current facilities unfit for purpose. Please could the Minister talk to the Treasury about speeding up the financial approval for this project, as it is the No. 1 priority in terms of new court buildings in Wales?
I am very happy to discuss with my hon. Friend the details of the stage that we have reached in examining potential investment in that courthouse. I accept that Her Majesty’s Courts Service, regionally and nationally, has decided that the magistrates court in Newport is the most pressing priority in that area. I am happy to discuss the matter further with her, should she wish to do so.
I congratulate the Government on changing their mind on the Llandrindod Wells magistrates court, which appears to be continuing. I believe there are plans for a new court, as an area that is almost the size of Greater London is being served—although rather fewer people live there. The criminal justice system is still not well served because the custody cells have been deemed unfit for purpose, so prisoners have to be taken 30 miles to Brecon or Newtown. While the new magistrates court is being built, can we also be given a new police station, because the area would then be well served by the criminal justice system? Will the Minister visit the area so that she can understand the situation?
I am happy to take up the hon. Gentleman’s offer to visit his part of the world and to look at service provision across the criminal justice system. I congratulate him on his attempt to join up government from the Opposition Benches—that is not an easy thing to do even from the Government Benches. I would be happy to talk to my right hon. Friend the Home Secretary to see what plans there are to deal with the issues that he raises.
I do not measure the figures in the way in which the hon. Gentleman has requested, but I can tell him that provisional data for 2007-08 indicate that, on average, per prisoner, 7.7 hours of education and 12.5 hours of work activity were undertaken each week.
Obviously that sounds absolutely marvellous, but the Minister will be aware that one of his colleagues said in a written answer that I believe was given yesterday that the average prisoner does 36 minutes a day of vocational training. We all know that prisoners are half to a third less likely to reoffend if they can get a job afterwards. How much more productively could the remaining 23 hours 24 minutes be used?
On average, each prisoner will undertake more than 25 hours of purposeful activity each week. That does not include just work or education; it could include issues related to preparation for release or a range of matters concerned with assessment of their offending behaviour. A considerable amount of work is being carried out at local level. We are looking strongly at the idea of working wings and at working with private sector partners such as Cisco and Bovis to help to support employment.
As the hon. Gentleman recognises, employment, skill levels and training are key to helping people to get back into work on their eventual release from prison. Last year, we undertook some 12 million hours of work in prison industries, producing £30 million of goods, and thousands upon thousands of prisoners underwent vocational training to learn important skills for their release.
Does my hon. Friend agree that finding opportunities to improve education and creativity in unique ways is essential? Will he join me in welcoming the opening on 22 May of the Hay literary festival in Parc prison? A 10-day literary festival will be launched, with two books written by past and present prisoners in Parc, so the Hay literary festival will be in the prison as an outreach. Is that not a unique opportunity to promote reading and writing among prisoners and to give them the chance to enjoy new literature?
I am grateful to my hon. Friend for drawing that to my attention. As she knows, I visited Parc prison last year and found it to be an effective centre in addressing literacy, numeracy and vocational training. She will know the importance of community outreach: representing outside events in prison is an important way to maintain links between prisoners and the community. I commend the fact that some prisoners are using their time productively to learn new skills and to contribute to things that they may do when they leave prison. I hope to visit my hon. Friend’s constituency again later this year.
I pay tribute to the Minister and to the Under-Secretary of State for Innovation, Universities and Skills, the hon. Member for Tottenham (Mr. Lammy), for their commitment to helping to enhance the education of prisoners who suffer from dyslexia and dyspraxia. Will the Minister work with other Departments to seek to spread to other prisons the pilot scheme that has been going on in Chelmsford prison, from within the prison system, to reduce levels of illiteracy and to enhance the ability of those suffering from dyslexia to learn to read and write so that when they leave prison their enhanced educational capacity means that they are less likely to reoffend?
I am grateful to the hon. Gentleman for raising that point in that way. He will know that I visited Chelmsford prison in July last year and met here in the House later in the year some of his constituents who are involved in schemes in the prison to help to raise literacy and numeracy levels. The work that is undertaken in Chelmsford, often by voluntary organisations, is key to helping the prison service to raise the basic level of literacy and numeracy for individuals in prison. The House will know that many prisoners enter prison with low levels of literacy and numeracy, and low levels of self-esteem as a result. One way to help prevent them reoffending is to ensure that we raise their skill levels, especially if they have conditions such as dyslexia. We focus especially on how to raise their skill levels to help them to obtain employment in the community.
Many constituents who write to me in support of longer jail sentences also favour effective forms of prison-based rehabilitation through work and education. However, while the problem with drug supply in prisons persists, the presence and menace of highly addictive narcotics militates against such provision. What role does the Minister think that the zero-tolerance approach to drugs in prison, advocated by the Prison Officers Association, has in offering all prisoners the real chance of rehabilitation and recovery from addiction and of benefiting from the sort of work and education programmes to which the main question refers?
We have to do two things. The first is to try to prevent drugs from entering prison, and we have had great success with mandatory drug tests. Secondly, we must help prisoners to get off drugs while they are with us. Some 70 per cent. of prisoners enter prison with a drug problem, and there are always challenges with individuals trying to get drugs into prison. We have dogs, CCTV and the help and co-operation of the police, but we need to control it more, which is why we have recently commissioned a review to consider what else we can do.
Is the Minister aware that in Dartmoor recently a considerable number of prisoners who were undertaking education and rehabilitation programmes or who were out on work placements were summarily removed with virtually no notice and were moved to another prison hundreds of miles away? That undermined all the work that the prison officers had been doing and decreased the support of the outside companies that had been prepared to take people on work placements.
The hon. Gentleman will know that that issue was raised at the previous Question Time by the hon. and learned Member for Torridge and West Devon (Mr. Cox) and another hon. Member whose name escapes me at the moment. I have written to them both recently, and will send the hon. Gentleman a copy of that letter. It explains the circumstances and what we are trying to do to compensate Dartmoor and to re-sort the arrangements.
Prison Work Programmes
Since the launch of the Corporate Alliance for Reducing Re-offending, we have established links with many employers and, as was noted in the Ministry of Justice’s prison policy update published in January, we want to expand and further develop these links. I will undertake a ministerial-led forum with the private, public and third sectors in May to discuss how we can further work together.
That is indeed good news. I am glad to hear of the work that my right hon. Friend is doing. Does he agree that it is a concern that the Prison Service might have to impose a core day on all closed prisons? That would mean less time for prisoners to carry out such activities, which are so vital to their rehabilitation. Will my right hon. Friend look into the matter and ensure that there is sufficient time for those excellent activities to take place?
The proposals for the core day to which my hon. Friend refers try to reorganise the operation of the Prison Service to meet the needs of the prison and the needs caused by challenging financial circumstances. We are looking at how to ensure that the same amount of time is invested in prisoners’ rehabilitation and employment and in developing their other skills, but in a different time frame during the course of the week. I do not expect that prisoners will lose out as a result of the changes.
Is the Minister aware that City livery companies—not least my own, the Worshipful Company of Weavers—provide considerable assistance to Her Majesty’s prisons, particularly in the purchase of equipment that enables meaningful training and other work to go on in prison? Will the Minister further encourage the work of the livery companies of this country? They often do work in prisons, which is unheralded but worthwhile, to help those who need help.
I pay tribute to the work of the livery companies and the many private sector companies that consider what help they can give to support the work of prison industries and to help with employment and training opportunities outside prison. I want to make links with livery companies, businesses, small businesses, local government and national Government to ensure that we can try to match skills acquired in prison with placements for employment outside prison. Employment is key to preventing reoffending.
Is the Minister aware of the work of Safe Ground, a voluntary organisation that works with prisoners’ families to help them to plan their future after incarceration? Will he consider how families can be involved in helping rehabilitation and reducing reoffending?
I would be grateful to learn more about that organisation from my hon. Friend. Her point is vital. Having links and maintaining contact with families, as well as hopefully maintaining that contact after people are released from prison, are extremely important. It is a sad fact that many children of prisoners go on to a life of crime. We need to do a tremendous amount of intensive work to maintain family links and to support families’ contact with prisoners.
Is it not the reality that the chief inspector of prisons has said that there is insufficient purposeful activity in prisons and that she assessed no closed male prison as performing well? Could the Minister provide or put in the Library the statistics on the amount of purposeful activity in each of our prisons so that we can see which prisons are performing well and which are not? These questions have a sort of “Groundhog Day” quality about them. Until we try to work out who is doing well and who is not, we will continue to go around this track.
That is a very helpful suggestion, and I will certainly look at whether we can produce those figures for individual prisons. As I mentioned in an earlier answer, prisoners in the system in England and Wales spend 25.3 hours a week on average in purposeful activity, including education, training, work, preparation for release, effective courses and community work on a range of matters. I will look at the hon. Gentleman’s suggestion, and if possible, I will take up his very helpful idea.
Criminal Justice System
Between March 2003 and December 2007, public confidence that the criminal justice system is effective in bringing offenders to justice rose by 5 percentage points. Other measures of confidence have also increased: respect for the rights of the accused is up by 3 percentage points; witnesses being treated well, up 4 percentage points; victims’ needs are met, up 6 percentage points; and effectiveness in tackling youth crime, up 3 percentage points.
I thank the Minister for that answer. He knows, because I gave this information to the Secretary of State’s office, that my late constituent, Mr. Kevin Davies—a young man with learning disabilities and epilepsy—was imprisoned and tortured by criminals in a chain of events that ended in his death. As a result of the Criminal Justice Act 2003, passed by this Government, his three captors will be released from prison in just three years’ time, after having served just half their sentence. Kevin’s family feel very badly let down by the justice system. What can the Minister say today to help to start restoring their confidence in that system?
I start by expressing my sympathy for the tragic loss suffered by the hon. Gentleman’s constituents. I am sure that I speak for the entire House in extending my condolences. We recognise that the criminal justice system cannot put right all the hurt caused to the victims of such tragic crimes and their loved ones. Of course, we must be sensitive, and we are. That is why we keep sentencing and offences under review, so that we can ensure the best possible outcomes and strive to seek to secure justice for all.
The changes that the hon. Gentleman referred to—I can understand the hurt and anger felt by his constituents—took place in 2003 and did not introduce the system of licensed release. For many years, long before that Act and long before this Government came to power, prisoners were eligible for release on licence from halfway through their sentences. I point out that, under a Conservative Government, prisoners were eligible from a third of the way through their sentence. We have tightened up procedures for supervision on licence. We continue to keep them under review. If offenders—
Is not an even greater threat to public confidence the way that the system is administered? In the report on the appalling death of Richard Whelan, inspectors identified
“a lackadaisical or nonchalant approach within the criminal justice system”
to things such as enforcing bail conditions, communication between parts of the system and bailing to non-existent addresses. What is going to be done about that?
We recognise that the criminal justice system has failed in certain areas. We are setting up a working party to look at that, and I understand that the Solicitor-General will take charge of it. I am sure that we will report to the House in due course on the lessons to be learned.
In evidence to the Select Committee on Home Affairs, Helen Newlove and Paul Carne—both of whose very close relatives have been killed; they are therefore the relatives of the victims of crime—mentioned in particular their concern about the rights of victims and their relatives in respect of the granting of bail and even their position in courts, as there are no designated places for victims to sit in courts. Can something be done to address those concerns?
We recognise that, in the light of those cases, we need to look at the system again. Both the Prime Minister and my right hon. Friend the Lord Chancellor have expressed their determination to do that. The Lord Chancellor is carrying out a report at the moment, and I am sure that he will bring that report to the attention of the House shortly.
The need for public confidence cannot be greater than when sentencing terrorists. Is it not therefore totally unacceptable that convicted terrorists who are serving determinate sentences under the 2003 Act are still eligible for automatic release at the halfway point of their sentences? How many more dangerous terrorists, such as Yassin Nassari, may not now be released up to 18 days early but will still be released automatically when only half their term of sentence has been served?
I point out that a gamut of offences are covered by the term terrorism; I am sure that the hon. Gentleman appreciates that. The most serious terrorists are generally sentenced to indeterminate sentences, so his concerns do not apply.
In my capacity within the Labour party—I lead on party funding—I have had, and continue to have, periodic meetings with the trade unions and, of course, all others, including the hon. Gentleman’s party, whenever it wishes to meet me.
During the Secretary of State’s friendly chats with the trade unions, did he point out that it would be inconsistent to cap donations to political parties from individuals and businesses while allowing the trade unions to pour money into Labour party coffers through the device of the political levy?
I have been well aware of the complexities of the situation. Not least of the matters that made it much more complex is the way in which the Conservative party has dramatically shifted its position on the issue. Originally—just a year ago—it fully welcomed Hayden Phillips’s proposals as the basis for agreement, but as was said by the hon. Member for Somerton and Frome (Mr. Heath), who used to speak on the subject for the Liberal Democrats, the Conservatives then “walked away” from those talks without any justification whatever. [Interruption.] It is a little bit of education for the Conservative party, which has a very short memory.
My position in respect of trade union funding is that which the Conservative party set out in its evidence to the Neill committee some years ago. It said:
“The question of trade union funding of parties is not a matter of direct concern to the Conservative Party. We recognise the historic ties that bind the trade union movement with the Labour Party.”
What I would like to know is what exactly has changed since then.
Does my right hon. Friend agree that the concerns of the hon. Member for Croydon, South (Richard Ottaway) are perhaps a bit misplaced? The system for trade union money is, of course, very well regulated and very open. By contrast, a recent Rowntree report said in respect of the 20 most marginal Tory and Labour constituencies in the 2005 election that £53,000 was put into Labour coffers by six trade unions, while a quarter of a million pounds was given by the shadowy, shady organisations of Lord Ashcroft and Lord Steinberg, and by the Midlands Industrial Council. Who is fooling whom on this one?
My hon. Friend is correct, and I hope that the Conservative party is taking serious notice of the Rowntree report, which includes the following rather stark conclusion:
“Although the approach taken by the Conservatives in 2005 was fully within the law, it may be argued that it represents a challenge to the principles on which spending limits are based”.
We want what was proposed by Hayden Phillips—an all-party agreement so that we deal with the issue across the piece. It remains a matter of great regret to me that at the eleventh hour the Conservative party walked away from the talks, and from the basis of a draft agreement that had been brokered with it in the months leading up to those talks.
There were 73 apparent self-inflicted deaths in prisons in England and Wales in the 12 months between 1 April 2006 and 31 March 2007.
Does the Minister recognise that from Leeds to Lewes and from Cardiff to Chelmsford the number of prison suicides continues to rise? In 2007, there were 92 such deaths—an increase of 37 per cent. When will the Government take action to ensure that our prisons are appropriately staffed and that there are enough suicide-watch cells available, so that we can reduce that increasing figure?
Of course I take careful note of the trends that develop over time in respect of that issue. The hon. Gentleman will know that random fluctuations occur, and that year-on-year figures are not the best way of following underlying trends, whereas three-yearly figures are. However, one suicide in prison is one too many. All the staff in the Prison Service—everybody working on the issue—and I are doing our utmost to improve the capacity that we all have to defend and protect the people concerned, many of whom are extremely vulnerable, from the impulse to do themselves harm.
It should be remembered that good care and support from staff save many, many lives, but such instances are under-reported or unreported. Prison staff are at the front line in trying to make sure that we reduce the number of suicides and self-inflicted deaths in prison. They go a good job generally, but we deal with a difficult and vulnerable population, many of whom wish to do themselves harm. We must redouble our efforts, and that is my intention.
The Secretary of State for Justice famously said recently that he was not losing any sleep over the parlous state of overcrowding in the prison estate. It is in the most overcrowded prisons that the suicides tend to happen. There were 800 suicides between 1997 and 2007. While the Secretary of State was not losing his sleep, individual prisoners were losing their lives. Will the Minister please apply her mind to breaking the back of overcrowding? Although prisoners deserve to be in prison, they should not be placed in such circumstances—about 75 per cent. of them have at least two mental illnesses—that they are driven to take their own lives or self-harm in huge numbers. It is no good this complacent Government displaying a complacent attitude while the criminal justice system is in the state that they have presided over.
I absolutely reject the charge that any complacency whatever is displayed by the Government or by Ministers in the Ministry of Justice in respect of prison suicide and self-harm. We are working extremely hard with the Prison Service staff and those in safer custody units across the prison estate to try to minimise the impact of self-harm, suicide and self-inflicted deaths on individuals, many of whom are extremely vulnerable and go into prison with risk factors. It is a complex area. I do not believe that there is any direct evidence that overcrowding in itself leads to increased numbers of deaths, although clearly some aspects of overcrowding can lead to increased distress in individual circumstances. These are individual matters, but it is absolutely not the case, and I reject the suggestion, that the Government or the ministerial team are complacent about the matter.
My principal responsibilities are to help to protect victims and the public, to secure a reduction in offending and reoffending, and to promote a rigorous democracy. I am delighted about the contribution that the agencies for which my Department is responsible have made towards a further significant reduction in crime, which was announced last Thursday. We are the first Government since the war to have secured a significant reduction in crime, rather than the continual increases in crime that took place under previous Administrations.
With increasing public concern and frustration about the leniency of many custodial sentences handed down to those convicted of murder, does the Secretary of State believe the time is right to review the minimum tariff for conviction of murder, which currently stands at only 15 years and which, as we all know, is decreased by so-called good behaviour? Is it not time that life meant life?
I am always happy to receive representations about sentences, including those for the most terrible crimes. However, I point out to the hon. Gentleman that where a tariff is set, as there is for life sentences, there is no remission for good behaviour. The prisoner must serve the full period of that tariff—15 years in the case that the hon. Gentleman quotes, and in many cases very much longer—before he or she is eligible for any application for parole.
As my hon. Friend knows, I took over a new Ministry last June and it has been all very good since then. I should also say to my hon. Friend that I want the maximum of information to be brought out, including about private entertainment by officials. Earlier, I had an endorsement from the hon. Member for Lewes (Norman Baker) for the fact that, in general, my Ministers and I always seek to provide the maximum of information, whether in parliamentary answers or responses to freedom of information requests.
Next week marks the first anniversary of the Ministry of Justice. Yesterday, one independent report condemned a culture of complacency in the criminal justice system; another warned that our electoral system is at “breaking point”. Apart from releasing 25,000 prisoners early, what does the Secretary of State think his Ministry has achieved in the past year?
My Ministry has achieved a considerable amount in the past year, including a dramatic reduction in crime, as I mentioned just a few minutes ago—if Conservative Members paid attention, such nugatory questions would not have to be put by their Front Benchers. There has been a one-third reduction in crime, including a one-third reduction in violent crime—[Interruption.] I am asked what contribution we have made, and I have mentioned exactly that contribution, because we are responsible for about half the criminal justice system.
I am delighted to say that at long last the Leader of the Opposition has accepted, under questioning, that that reduction in crime, which he had been denying, has happened. He was asked in a BBC interview whether overall crime figures were falling and finally he said, “Yes—absolutely, absolutely.” On that occasion, if on no others, he was dead right.
Back in 2004, the Government said that they were sympathetic to individual voter registration. Yesterday, the Under-Secretary of State for Justice, the hon. Member for Lewisham, East (Bridget Prentice), said that she was still considering the issue. The Government have waited four years, but we still have local elections this week under an electoral system that, as the Rowntree report said yesterday, is “vulnerable to fraud”. Will there be individual voter registration in time for the next general election—yes or no?
The hon. Gentleman knows that establishing individual registration and ensuring that it works effectively will go beyond 2010. That is the truth of it, and it would be the truth for any political party. In any case, as he knows, if the next election is fought in 2010, it will be based on registers that will be completed this October through to December.
As far as postal votes are concerned, I remind the hon. Gentleman that the decision to extend postal voting was made on an all-party basis in about 2000-01. I accept, as does my hon. Friend the Member for Lewisham, East (Bridget Prentice), who is in direct charge of the issue, that we have to tighten the system further. It has already been tightened, but it needs to be tightened further. However, that is not directly germane to the issue of individual registration. We need to deal with postal voting—in my view, as soon as we can—to introduce individual registration as well.
In the past 10 years, there has been a quiet revolution in how victims and witnesses—particularly those for the prosecution—are treated within the criminal justice system. We are anxious to build on that experience and extend it. Becoming a witness in court, particularly if the person has also been a victim of the crime, is a frightening and sometimes terrifying experience. The more assistance that the victims and other witnesses for the prosecution are given all the way through the system, the better—to ensure that those guilty of the crimes are convicted.
I have indeed replied to the hon. Gentleman on this matter very recently but, although I have some sympathy for his concerns, I repeat that two important points need to be made. First, we have already extended the time from six to 11 days, because the administrators also felt that more time was needed. Secondly, after candidates have been nominated, the administrators need time to make sure that the nominations are valid and to order and produce the ballot papers. There is a balance that we have to get right. People living abroad who retain the right to vote in this country can opt to use a proxy vote if the postal vote is not suitable.
The Select Committee on which I have the honour to serve under the right hon. Member for Berwick-upon-Tweed (Mr. Beith) is currently looking at the costs and benefits of alternative forms of punishment. In view of the deterrent effect that the confiscation of criminal assets in connection with drug dealing has had, does the Secretary of State feel that it is time to consider charging the costs, or part of the costs, of imprisonment or other punishment to the criminal rather than to the taxpayer?
The Prison Act 1952 provides that the costs of running prisons have to be met from the public purse. If my hon. Friend were to think about the consequences of trying to charge prisoners for prison, he would see that they could be very difficult. Indeed, Charles Dickens made it clear that, even in the early 19th century, felons in criminal prisons did not have to pay the costs of their prison accommodation—although, as it happens, debtors did. We want to ensure that criminals pay for the crimes that they commit through compensation measures, and we also want compensation orders to be better enforced.
May I return to the report on Anthony Joseph, which my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) raised earlier? Does the Secretary of State agree with the report’s conclusion that there was nothing to suggest that Joseph was suffering from a severe mental illness? After all, serious concerns had been raised about Joseph’s mental state since he was 15, and he had reported self-harm to the prison authorities—itself a warning sign. Moreover, the fact that prisoners are 10 times more likely to suffer from severe mental illnesses than members of the general public means that simply being in the system is another warning sign. Does not the case show that there is an urgent need to ensure that resources are directed not to massive prison building programmes, but to mental health screening and treatment?
There was a failure in this case, and it is a matter of huge sorrow to everyone involved. There has been a thorough inspection of what happened, with the aim of ensuring, as far as is humanly possible, that such things do not happen again. The hon. Gentleman asks about mental health provision, but we do need to provide more prison places. One result of our getting on top of crime and criminality is that more people are prosecuted for serious offences and are being sentenced to jail for longer. That is fundamental if, having got crime down by a third in the past 10 years, we are to get it down even further. That said, however, we have greatly improved mental health provision in prison, and Lord Bradley is looking at how we can improve it further. We are also looking at more effective ways to improve mental health facilities outside prison.
My hon. Friend referred to the concerns of the president of the family division. I have met some of the judges in the family division to discuss these issues. We are trying to gather together some evidence from their experience and elsewhere to see whether this concern has to be urgently addressed. Since the introduction of the special domestic violence courts, we have a far higher success rate in convictions, with over 70 per cent. of convictions as a result of those courts.
The introduction of independent advisers has been hugely helpful in encouraging women to come forward to get protection and to take the case through the justice system. We are concerned about these issues and we are in discussions with the judiciary about them. However, following the Act and the work that this Government have done in trying to protect vulnerable women from domestic violence, we should be grateful that this happening. We should not only monitor the concerns that are being outlined but ensure that more women come forward in order to stop this heinous crime.
I am now aware of the extent of these missing documents. I will certainly look into it. The hon. Gentleman will understand the quite intense difficulty sometimes of proving that something is missing until someone is looking for it, but I will do my best and inform the House.
The answer to both my hon. Friend’s questions is yes. Ensuring that there is adequate sharing of information between the different criminal justice agencies and that each agency thinks across the piece is fundamental to ensuring that the kind of tragedy that has occurred in this case does not occur again.
Points of Order
On a point of order, Mr. Speaker. On 13 March, I received a written ministerial reply on the important issue of animal experiments. In the reply, the Minister referred to pygmy gorillas. I have conducted searches and spoken to zoologists throughout the world, and there is no such creature or species as a pygmy gorilla. I do not expect the Minister to be a zoologist, but I do expect accurate and up-to-date ministerial replies. I seek your guidance, Mr. Speaker.
On a point of order, Mr. Speaker. I seek your advice. Column 111 of yesterday’s Official Report shows the deeply respected right hon. Member for Birkenhead (Mr. Field) complimenting my work in the House, and inadvertently mentioning that I was expelled from the Conservative party. As those on the Tory Front Bench know very well, and as the letters, e-mail exchanges and record show, I resigned from the Conservative party. A day later, the Tory Whip was withdrawn. How can I ensure that the record is corrected? We have enough spin in this place.
Further to the point of order raised by the hon. Member for The Wrekin (Mark Pritchard), may I say that the new Ministry of Justice is responsible for many things, but not for pygmy gorillas, whether they exist or not? The matter is the responsibility of the Home Office, but I am happy to pass on the message.
On a point of order, Mr. Speaker. Department for Transport written answers relating to Network Rail tell the Member who asked the question to write to Network Rail. As a consequence, the answer subsequently provided does not appear in official records, whereas other external bodies provide answers through Ministers, which are therefore recorded officially. Will you, Mr. Speaker, take the matter up with the Department for Transport to ensure that the record is available to all, not simply to the Member who asked the question?
Butler and Tanner
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 24, to debate a specific and important matter that requires specific and urgent attention, namely,
job losses at Butler and Tanner in Frome, a book printing company of national and international reputation.
Over the weekend, 287 employees of Butler and Tanner were sent letters, informing them that they had been made redundant with immediate effect and that the company would go into liquidation. In a town the size of Frome, the loss of 300 jobs is a serious blow, and it is not the only factory closure in the west country in recent days. Butler and Tanner is a highly respected firm that is more than 150 years old. It does the highest quality colour book printing, was awarded the title “Book Printer of the Year” last year, and in recent years it has printed books by Delia Smith, Nigella Lawson and the BBC “Planet Earth” series. A year ago, it was taken over by a venture capital company, Media and Print Investments. Mr. Mike Dolan, the chairman of MPI, in an extraordinarily intemperate press release, blamed the closure entirely on the threat by the trade union Unite, which represents two thirds of the work force, to take strike action in response to new contracts.
We need a debate to ensure that, first, staff receive their due pay and pension entitlements. Mr. Dolan says that suppliers will be paid, but that workers
“will be paid by the government.”
Secondly, we need a debate to ensure that all the appropriate agencies work together to find new opportunities for re-employment, and, thirdly, we need to investigate the circumstances of the closure. I do not know the details of the impasse between the management and the unions, but I know that ACAS talks were continuing in good faith. Meanwhile, Mr. Nolan was preparing to issue redundancy notices and, earlier in the week, he had already warned security staff that they would be needed over the weekend.
The staff of Butler and Tanner have been notably loyal for many years. They have made sacrifices: they took an 8 per cent. pay cut last year, and offered a 5 per cent. cut this year to keep the company going. They have been treated shabbily. I am also alarmed by the conjecture that, having closed the company, MPI might create a phoenix company using Butler and Tanner assets, but a non-unionised work force. That is more redolent of a Victorian mill owner than a modern industry, and I deplore the suggestion.
I listened carefully to the hon. Gentleman, and I have to give my decision without stating any reasons. I am afraid that I do not consider the matter that he has raised as appropriate for discussion under Standing Order No. 24 and I cannot, therefore, submit the application to the House.
Right to Roam (Mobile Phones)
I beg to move,
That leave be given to bring in a Bill to make provision about roaming by mobile phone users between telephone networks within the United Kingdom; to make provision about the sharing of transmission masts; and for connected purposes.
Mr. Deputy Speaker, think back to the last time you went overseas. The chances are that you took your mobile phone. Think of the number of times you lost coverage as you went from one spot to another. That happens infrequently on the continent of Europe because one is transferred seamlessly from one network to another whenever the signal from the home network seems to falter. However, if you think of the last time you made a significant journey in the United Kingdom, whether by rail or road, how many times was a conversation cut off outside London?
In this country, mobile phone companies restrict people to their networks without transferring them to where signals are strongest and best. It is not as if we have blanket mobile phone coverage in this country—only 65 per cent. of the population is currently covered by all four 2G mobile phone companies. That figure drops to 28 per cent. in Wales, an area that several of my hon. Friends represent. Given that we do not have blanket coverage, it is worrying that we do not allow people to access the optimal coverage to which they should be entitled.
The Bill is simple and would achieve two things. First, it would allow mobile phone subscribers in this country the right to roam. If their home network did not offer a strong signal, they would be flipped automatically to the next strongest available signal. Secondly, it would encourage mobile phone operators to share masts throughout the country so that they had the same equipment.
The Bill’s benefits are firmly and unashamedly in the interests of consumers, and would transform mobile phone reception overnight. Gone would be the interrupted conversations, such as those that I experienced when travelling the 15 miles between Tunbridge Wells and the county town of Maidstone last Friday. Both towns are less than 40 miles from London and only 15 miles apart, yet I was cut off five times. There is no reason for the existence of five black spots. The Bill would correct that and we would move overnight from having 65 per cent. to 98 per cent. coverage of the population because 98 per cent. of the United Kingdom has at least one mobile phone company serving it.
The figures would be even more dramatic in rural areas. In Wales, the coverage would increase from 28 per cent. to 90 per cent. I daresay that coverage in Scotland, too, would increase. That would mean a transformation in the services enjoyed by rural communities throughout Britain.
The Bill would benefit people throughout the United Kingdom, especially those in rural areas, not only because of immediate uptake but because it would provide a strong return on the investment in new masts in areas of sparse population. If a mobile phone mast has to be erected to serve the subscribers of only one network, it may not be worth it. However, if all four network subscribers can benefit, the economics are transformed.
The Bill also has advantages for urban and suburban areas because, rather than having four separate masts, often side by side, thus blighting the landscape of our towns, cities and suburbs, mast sharing and roaming would allow mobile phone operators to share a single mast and reduce the environmental impact.
Last but not least is the important effect on safety. It is important, in the event of an accident or if people feel vulnerable, especially if they are in remote areas, that they can make a call home or to a loved one if a signal is available. Scandalously, save for 999 calls—this shows that it is technologically possible—it is not possible for subscribers to one mobile phone company to use the signal of another, even when incidents occur that create insecurity. That is especially threatening to women, and we should give greater protection to women travelling in remote areas.
In the past 24 hours, I discovered that the problem can be even more significant. I have been contacted by someone with responsibility for disaster and emergency control who pointed out that, when incidents such as catastrophic storms occur, engineers and rescue teams can be reliant on a mobile phone network that has been put out of action. I have been told of a rescue team having to buy SIM cards from an overseas phone operator in order to get the roaming in this country that it would expect in order to have that degree of resilience. Indeed, the minutes of a West Sussex county council safety committee record that a
“key lesson…from the train derailment at Grayrigg in February 2007”
was that the
“train company’s communication system was dependent upon the Orange network, but this network was disrupted because its cables ran alongside the railway line where the accident had occurred. This highlighted the need to have broader mobile phone coverage”.
It is time to act before further tragedies are made worse by poor communications.
What are the arguments against my proposal? They cannot be technical arguments, because the fact that we can roam whenever we take our phones to the continent or make 999 calls shows that my suggestion is perfectly possible. It could be argued that companies want to compete on the basis of their extensive network coverage. However, 3G companies are obliged to offer at least 80 per cent. network coverage, so we have already made a public policy decision that broad coverage is in the interests of consumers. Why should rural communities be the only ones to lose out?
It could be argued that it is important that phone companies should make a return on their investment in masts. However, roaming and the use of masts would not be free of charge; rather, a fee would be paid for the use of competitors’ masts. Those companies that had invested most extensively in masts throughout the country would therefore enjoy the greatest returns.
The argument against my proposal is nothing to do with constraints in competition law, either. In fact, T-Mobile and O2 proposed precisely such a roaming agreement in 2003, to cover those parts of Wales that suffered reduced coverage. That was cleared as being pro-competitive by the European Commission. The arguments against my proposal therefore fall away.
There is nothing to stop my proposal being taken up. In fact, there is already a precedent, in ATMs. It is no longer the case that someone who wants to use a Barclays ATM in a village needs to be a Barclays customer. NatWest customers can use it, too. We have interoperability of ATMs; we should have exactly the same for mobile phones.
My Bill would not compel mobile phone companies to operate in that way; it would encourage them to do so. Sometimes we need to stop immediately short of legislative solutions that rely on compulsion. However, if the Bill enjoys the support of the House today, I hope that it will send a signal to the mobile phone operators, the regulators and the Government that the House favours that direction.
A former Chancellor of the Exchequer once told the House that mobile phones were a scourge of modern life. I am not sure about that, but we can at least accept that they are a fact of modern life. Customers should not be prevented from having the best possible network coverage, and they should be allowed to move into the modern world.
Question put and agreed to.
Bill ordered to be brought in by Greg Clark, Mr. Stephen Crabb, Mrs. Maria Miller, Nick Herbert, Mark Pritchard, Gregory Barker, Mr. Robert Goodwill, Mr. Tobias Ellwood, Michael Fabricant, Mr. Ian Liddell-Grainger, Mr. David Ruffley and Dr. Andrew Murrison.
Right to Roam (Mobile Phones)
Greg Clark accordingly presented a Bill to make provision about roaming by mobile phone users between telephone networks within the United Kingdom; to make provision about the sharing of transmission masts; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 6 June, and to be printed [Bill 101].
On a point of order, Mr. Deputy Speaker. Yesterday, during Defence questions, Ministers were asked directly whether we would be deploying extra troops to Kosovo, and no clear answer was given to the House. Today, it has been announced through a written statement that 600 troops will be sent. It is inconceivable that Ministers did not know that when they came to the House yesterday, and it was a disgrace that they were not frank with the House, and with our armed forces and their families. We have questions to ask about how much this will cost, who will pay, and how we will find the strategic airlift capability to make the deployment possible without undermining our air bridge to Iraq and Afghanistan. While we do not oppose the deployment, it is unfortunate, to say the least, that our part-time Defence Secretary did not come to House to make the announcement, and that while Ministers deploy our brave servicemen and women abroad, they do not have the courage to tell us to our faces.
I hope that the hon. Gentleman understands that despite his exasperation over this apparent sequence of events, it is up to Ministers to decide the method by which they inform the House of matters. I note that the Minister of State referred to the imminent conveyance of information. The Chair cannot be expected to comment on the adequacy of a response in a particular case. I can only say to the hon. Gentleman that he has put his strength of feeling on record and that there will, of course, be other opportunities for him to pursue the matter.
Orders of the Day
(Clauses Nos. 3, 5, 6, 15, 21, 49, 90 and 117 and new Clauses amending section 74 of the Finance Act 2003.)
Further considered in Committee [Progress, 28 April].
[Sir Alan Haselhurst in the Chair]
Greater London Authority: severance payments
I beg to move amendment No. 17, page 25, line 21, leave out ‘2008’ and insert ‘2009.’.
I suspect that the debate will be relatively short—the Committee has a heavy agenda—but it is timely. Hon. Members will agree that we could not let the opportunity pass of discussing something that touches on arrangements for the Mayor of London and the Greater London assembly when that is very much in the public eye.
There is much activity ahead of Thursday’s London mayoral election. One blog that I read this morning even reported that shredders working overtime in the basement of City Hall were responsible for blowing its electrical system and causing the basement to flood. Whatever is going on in City Hall—it will be interesting to discover just how many documents have been shredded and how many computer hard discs have been crushed—it is clear that as the Livingstone regime draws to an end, the Labour party is determined to look after the soon to be ex-Mayor, which is as clear a demonstration as we could ask for that it has written off his chances on Thursday.
Amendment No. 17 is probing. It gives us the opportunity to raise important issues and, hopefully, to gain an understanding of the Government’s thinking on this specific measure and, perhaps, slightly wider issues. Unless the Financial Secretary sorely provokes me when answering my questions, I do not expect that I will press it to a Division.
Essentially, four separate questions arise out of clause 49 and the amendment, the first of which is whether severance payments should be made to the outgoing Mayor of London. I understand that that is not the practice for other elected mayors. The Government have come under pressure from representatives of councillors throughout the country—I think that the body is called the Councillors Convention—to extend arrangements for severance payments to elected members of local authorities. Do the Government have any plans to extend the availability of such payments, or is this a Ken special and what Brian Paddick has referred to as
“Labour looking after its own”?
This House granted powers to the Greater London authority, in the Greater London Authority Act 2007, to set up a scheme for termination payments. In the spirit of devolution, therefore, we have to accept that the decision is no longer ours, but one for the assembly. The assembly must account for that decision to its electorate, who were promised, when the assembly was set up in 2000, that the cost of the Mayor and assembly together would be 3p a week to each council tax payer. Under the Livingstone regime, the spin doctors, publicity, staffing, jollies, jaunts and left-wing jamborees have spiralled out of control, so that the non-borough council tax element in London is now three times higher than it was in 1997-98. A £70,000 payment to the ex-Mayor on his departure will make his going entirely in keeping with the manner of his occupation of the office.
The second question to be addressed, which is more directly relevant to this Committee, is whether the payment should be given tax-privileged status. The measure brings the treatment of a severance payment to the Mayor into line with that of termination payments to Members of Parliament. However, I note that a Mayor aged between 55 and 64, with three years of service, will get rather more than twice as much as an MP of a similar age who has completed a similar length of service.
When I looked into the statute underlying this issue and the arrangements for Members of Parliament, I was surprised to discover that the resettlement grant is payable to Members whether or not they achieve office. As I understand it, a Member who retires is treated in the same way as one who offers himself for election but fails to be elected. I understand that a similar arrangement will be in place for the GLA. The payment is not so much the equivalent of a redundancy payment in the private sector, but a payment that will be made in all cases to a Mayor when standing down. If I am wrong, I am sure that the Minister will correct me, but that is what I have gleaned from the papers published by the House authorities and from my understanding of the GLA scheme.
The general rule is that redundancy payments of up to £30,000 are not taxable if they are ex gratia—if they are not provided under the terms of the contract of employment. Interestingly, Her Majesty’s Revenue and Customs has been seeking to widen the definition of what is provided under a contract of employment to include not only what is provided for in the specific terms of a contract, but benefits that are provided on a routine or customary basis upon termination. Employees have long been able to argue at tribunal that something has been customary in their employment, so it is understandable that HMRC now seeks to extend that logic to attack payments that are non-contractual, but customary, on termination of employment. Given that the Treasury controls HMRC, it is unclear to me why, on the one hand, it seeks to limit the scope of the £30,000 exemption while, on the other, it proposes to extend it in this Bill.
I am certainly not arguing that Members of Parliament should have special treatment which should not then be available to others. Indeed, as I have said, I was surprised to discover that the practice of granting tax-free status extended to payments irrespective of whether the Member had suffered an involuntary redundancy, as it were. Why are payments like this given favourable statutory tax treatment when any other termination payment has to be defended on a case-by-case basis against the Revenue? It is not clear to me why Members of Parliament and Mayors of London should be offered statutory protection from such a challenge.
If we believe that this discrimination between the treatment of politicians and that of everyone else is indefensible—and having now studied it, I think it is—why on earth are we extending it? Surely two wrongs do not make a right. If we are uncomfortable with the current regime, should we really seek to extend it to include the Mayor of London? Perhaps there is a specific reason for defining the tax treatment for MPs in statute, and then a specific reason for extending such treatment to an outgoing Mayor of London. If so, I look forward to hearing the Minister’s explanation of the thinking behind that logic.
The third question is a matter of the timing—hence amendment No. 17 to change the commencement date of this provision from April 2008 to April 2009. I have assumed that the measure before us is not technically hybrid, but there is something uncomfortable—this is not specific to the current, about-to-be former, Mayor of London, but a more general point—about dealing with public legislation that specifically benefits a defined individual or small group of individuals. It means that the merits of the measure inevitably cannot be considered in isolation from the debate about the merits or demerits of the individual or individuals concerned or the manner and circumstances of that individual’s going. I thus ask the Minister whether we should put this change clearly beyond any hint that it could benefit any specific individual currently at risk of receiving a termination payment.
The fourth question is whether there should be a rethink about what is or is not tax-free on termination. I understand that the Liberal Democrats have tabled a broader amendment that looks at the tax treatment of termination payments more generally, rather than just how to deal with Members of Parliament or Mayors of London, so the House will have an opportunity to reflect in further detail when that amendment is debated. It raises the interesting issue of the Government’s general view on this area of taxation of income.
I look forward to hearing the Minister’s explanation of the thinking behind this clause, particularly of why the Government are proposing to extend the statutory tax relief. I look forward to hearing clarification of whether the Government have any plans to extend it further to any other parts of local government, clarification of the Government’s view on the tax treatment of MPs’ resettlement grant payments, and perhaps clarification of the wider issue of the taxation of termination payments.
That is a fair comment. It has many of the characteristics of one of the devolved Assemblies, but not all of them. It would also be fair to ask whether elected executive mayors, taking on a full-time role in managing a big city, could reasonably argue that they should be treated in the same way as the Mayor of London is apparently to be treated. That is why I put the question to the Minister. She is a Treasury Minister, so I assume that her instinct will be to resist all pleas for tax-preferential treatment. As I have said, however, pressure is being put on the Government by organisations representing other elected members, and I would be interested to hear the Government’s take on this issue.
As I have made my points reasonably, I should also like to hear whether the Minister agrees that there is a problem when such a provision, which is perhaps intended to have a general and continuing effect, clearly becomes entwined with the fate and fortunes of an individual. We in this Chamber cannot in honesty claim to be able to debate a termination payment for the Mayor of London and its tax treatment without considering the individual who is most likely to benefit from that provision. However, that is a bad way for us to make legislation.
An important issue is at stake. If the current Mayor benefits from this provision, it may well be, as one tax expert was reported as saying, the best £30,000 of public money ever spent, but it is none the less important that we understand the underlying reason for doing this and have some clarification, so that we address any lingering suspicion that the Government might merely be seeking to offer a golden parachute to an old political crony as he comes to the end of his political career.
I shall speak for a far shorter time than I did when you allowed me to continue for longer yesterday evening, Sir Alan.
I think it is rather touching that we in this House believe that our debates that take place a few days before elections will shift large numbers of votes. I am sure that that is why this particular aspect of the Bill has been brought to the fore in the Chamber this afternoon. I fear, however, that our conversation is not being as closely watched by people across the capital city as we might wish. I share the distaste expressed from the Conservative Front Bench for some of the more extravagant spending priorities that the current Mayor of London has indulged in during his period in office, although I do not share the Conservatives’ enthusiasm for their candidate, who has failed to put forward a persuasive case for his election.
Let me, however, return to the topic of severance payments. We think it is reasonable for there to be a package in place for a person who has served a period as an elected politician in this country—that rule also applies to Members of this House. There is a lack of clarity, however, on the wider point of the taxation of severance payments, where a distinction is made between the treatment when that is a one-off redundancy payment that does not attract tax below the £30,000 level, and the contractual payments when there is a tax liability.
A concern has been expressed to my colleagues and me that Her Majesty’s Revenue and Customs does not always act within the spirit of the rules. This is meant to be a one-off payment that softens the burden of redundancy, allowing people to make some provisions for seeking alternative employment and to pay the bills during that transition period. However, it is said that HMRC looks at it as an opportunity to raise revenue—and just at the point when people often require a bit of breathing space to get their financial affairs and working lives back on track. That is a rather aggressive way of trying to raise what is a fairly small amount of money.
May I draw the hon. Gentleman on the specific point? Does he think it generally a good idea to have statutory provisions that exempt politicians from the hazards facing the rest of the population? He makes a good argument about the challenges facing an individual who is in receipt of a payment and needs to defend it against HMRC, but should politicians, be they Members of Parliament or Mayors of London, be exempted by statute from having to go through that process?
The general principle that I would adopt is that politicians should not seek to apply to themselves rules that do not apply to the population as a whole. I add the small caveat that every job and type of occupation has different requirements and contains different contractual elements, and that the circumstances in which politicians find themselves redundant are different, in some ways, from those that sometimes face other people. I appreciate that lots of people in other walks of life can also make such a claim, but people across the country will recognise that it is helpful not to have the Revenue breathing down their neck just when they are trying to get themselves back on their feet again—some people will be in that situation.
Obviously there must be a point where such people are eligible to attract tax, and this situation should not be used as a device to try to circumvent the normal taxation rules. That is why our amendment No. 15 seeks to ask the Treasury to re-examine whether the rules can be more evenly and fairly applied, and to provide that HMRC falls within a tighter set of restrictions than those under which it appears to feel it operates at present.
I notice that the debate on this amendment is so riveting that not a single London Member is in the Chamber, although the hon. Member for Putney (Justine Greening), who is a Front-Bench spokesperson for the Opposition, was present until recently. I have a simple question for the Minister on amendment No. 15: will she tell us what the budgets are for the Welsh Assembly, the Scottish Parliament, the Northern Ireland Assembly and the Greater London authority?
I do not wish to use this opportunity to refer to the present Mayor and to try to exert last-minute influence over an election in which many of our colleagues are probably participating on the streets as we speak. I wish to raise the issue of principle. We face a public expenditure crisis in this country; the Government have overspent, and they are borrowing too much, taxing too much and spending too much money on purposes with which the public do not agree. The proposal before us today is another small example; it is an extension of payment in tax relief to former Mayors should they lose office, one way or another. It legislates not only for one Mayor or one particular payment, but for all future Mayors of London.
I do see the mayoralty of London as a mayoralty; it is the mayoralty of by far and away the biggest city in the United Kingdom. However, the Mayor of London is only one of many mayors of London, because there is a mayor of the City of London and a mayor of the city of Westminster, and there are many borough mayors. Most important local government in London is still carried out by the boroughs, rather than by the rather grand Mayor that was created more recently. It is difficult to see how one can sustain the argument that if it is fair to have severance payment for the grand Mayor of London, no severance payment is offered to the mayors of the individual cities in London, who are, in many ways, responsible for bigger budgets and more important services: they are responsible for education and social services, unlike the overall Mayor of London. As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) has said from the Front Bench, it would be difficult to say that the mayor of Manchester or the mayor of Birmingham should not be given something similar.
I have a challenge for the Government: why do they think that, in the middle of this crisis of over-taxing, overspending and over-borrowing, this is a worthy clause on which to spend more public money? Why do they think that they can hold the line at saying yes to the Mayor of London, but no to the other mayors in London and to the mayors of other great UK cities? They will find it extremely difficult to hold that line.
Let us examine the question of justice and the contrast with the arrangements for Members of Parliament. We live in world in which people often come into the House of Commons at a much earlier age than they would expect to become an elected mayor, and they might be a Member of Parliament for 20 or 30 years. If they suddenly and abruptly lose their seat—perhaps in circumstances outwith the control of individual Back Benchers, because of the performance of their party or Government—one can see how that could prove a dreadful disruption to their lives. They may not be especially well known or have alternative skills, because they have put everything into their life as politicians. That is why that rule, which is unpopular with the public, was introduced, and people stood for election knowing that it was the rule.
It is very different with the Mayor of London. Again, I do not wish to personalise the debate, but I point out that anyone who stood last time round knew that that was not the rule. Why is it fair to change the rules after the election? If such a rule were thought necessary, it should have been introduced at the time that the mayoralty was established and before we had any idea of who would be the first or subsequent Mayor of London.
The other difference is that the mayoralty of London has turned into a celebrity activity, certainly as conducted by the first Mayor. We have already heard from the current Mayor that were he to lose, he thinks that he could have a good life appearing on chat shows and writing articles. I do not think that anyone who has an exciting enough personality to become Mayor of London would be short of a penny or two, should the electorate terminate their contract. They would become famous—
Is not the right hon. Gentleman focusing too narrowly on the Labour and Conservative candidates, who I acknowledge are driven entirely by a love of being on television and the celebrity culture, and overlooking the Liberal Democrat candidate, who has a powerful and persuasive record of reducing crime and tackling the serious threat of criminal behaviour in our capital city?
I do not think that we need to have such petty political debate when I am trying to discuss the principles of the matter. However, if I may be slightly partisan for a minute, I would say that in the totally unreal world in which there could be a Liberal Democrat Mayor—that is not what the polls and the public are saying—he too would become a celebrity and would, in due course, be in exactly the same position as the existing Mayor. Should the electorate tire of such a Mayor, he would be able to command good fees on the speaking circuit.
Given that the length of time that someone is Mayor is likely to be rather different from the length of time for which people may have the privilege of being a Member of Parliament, and because an ex-Mayor would be far better known and have more earning power when the job leaves them or they leave the job, I do not think that the same case can be made as is made even for Members of Parliament. The proposal also has to be set in the context that any payment to any politician is questionable and unpopular. We should not extend such privileges, but seek to cut them back.
When my officials drew to my attention the fact that this Finance Bill would have to contain these measures, I knew that it was not the best time for us to consider them. I know also with absolute certainty that were I in the position of the hon. Member for Runnymede and Weybridge (Mr. Hammond)—I hope that that will not happen for many years—I would not have been able to resist tabling an amendment for discussion on the Floor of the House today.
The hon. Gentleman has taken the opportunity to make one or two light-hearted comments about the contest that is taking place elsewhere, but he has also asked some genuine questions, as have other hon. Members. It is worth noting that this issue was debated in the GLA and, interestingly, Conservative GLA members supported it. The proposal will also benefit some Conservative GLA members who are standing down soon.
The power to establish and administer a severance scheme for the GLA arrived only following Royal Assent to the Greater London Authority Act 2007, in October last year. That is why we have had to include the provisions in this Bill, rather than in the Finance Bill last year.
No, I have not had any such indication. I genuinely believe that we should avoid personalising debates too much, even when they are as light-hearted as this. Perhaps it is more proper for me as a Minister not to respond in too much detail to points on personality; it is for colleagues to make their points in their own way.
The Greater London authority severance pay scheme is similar to those for MPs and Members of the devolved Assemblies. For the sake of consistency and fairness, it is right that the same tax treatment should apply to all those schemes. Severance payments are taxable only to the extent that they exceed £30,000 when they are made to MPs and Members of the devolved Assemblies. It is right that the same rule should apply to payments to the London Mayor and London assembly members in the event that they cease to hold office at the time of elections.
It is not the case that every member of the London assembly, the Welsh Assembly, the Scottish Parliament or this Parliament works in another capacity. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) pointed out that some work as journalists. Others work as lawyers. That is not necessarily something to be decried. That fact adds to the quality of debate that we have in this place and enables Members to bring with them wider experience and skills that enrich our ability to debate subjects in Parliament. There is no prohibition on people having such work, but not everybody is in that situation.
It is worth noting that many members of all the public authorities that I just mentioned are full-time assembly members. It is assumed that they will commit a large part of their working time to the job that they do. Most Members of the House these days regard themselves as full-time Members of Parliament and that is why the House has made these arrangements for Members. Although the right hon. Member for Wokingham (Mr. Redwood) said that he did not believe that the Mayor of London should receive the benefits of such schemes, I believe that it is better if we step back from the subject, treat it coolly and calmly and take the personalities out of it so that we look at the broad fairness of the proposal that we are considering.
The hon. Member for Runnymede and Weybridge made me do a double-take. He mentioned the severance scheme—it is a slight diversion, Sir Alan, but he asked me a question. He should look at the review of Members’ allowances that was brought forward in March. He is right; it is proposed that the severance scheme would no longer be payable to Members who chose to retire. However, a number of concerns have been expressed and the matter is subject to further consultation. I am sure that the comments that he has made today and any further comments that he might want to make to the review would be welcome.
I am grateful to the Financial Secretary, as she has genuinely given me a piece of information—that is probably a first in this Committee. I had not looked at that review. She tells me that it is proposed that Members of Parliament who retire voluntarily would cease to be eligible for these payments, but my understanding of the GLA arrangement is that members who retired voluntarily as well as those who lost their places as a result of an election would be eligible for the termination payments. That would put the GLA arrangements out of line with those being proposed for Parliament.
I am grateful for this opportunity to consider the subject. The developments occurred after I considered the proposals for the Bill and after Parliament debated the subject in relation to the Greater London Authority Act 2007. The changes that are being proposed came after our original consideration of the subject. If we are to keep everything in line, the developments will clearly affect other assemblies and Parliaments. It is therefore very sensible that the Senior Salaries Review Body recommendations should be given further consideration and should be considered on their merits. I have my own views and shall be making them known to the Speaker’s review as a result of the fact that the hon. Gentleman has brought the subject to the attention of the Committee—I am grateful that he did so. The proposals in the clause, not those in the amendment, will present no cost to the Exchequer. The costs will be met from the existing GLA settlement.
I ask the Financial Secretary to clarify that statement. Surely we are extending a statutory tax privilege to such payments that would not be available but for this measure; otherwise, there would be no point in clause 49. HMRC would have to test the payment against the usual criteria that it applies, and the Mayor would have to convince it that he had not received the payment as of right and that it was an ex gratia payment. That would be difficult to do when the GLA has made a scheme that makes the payment available to him.
The hon. Gentleman is, of course, right. However, the proposals have been known of for some time, and the settlement for the GLA would therefore necessarily take account of the fact that the proposals were made. Therefore, it would be accepted in the normal course of events that the GLA should budget for such an eventuality.
I probably should have that detail with me. I have not got it, but I will write to the hon. Gentleman. Not a great deal of money is involved, but it is a fair question, and I will provide that information to him—the first of many times, I hope, that I will share information with him during the next few weeks.
I believe that there is no comparison with local government. Unlike the London Mayor and assembly members, MPs and Members of the devolved Assemblies, the expectation is that councillors can pursue their duties alongside their normal professions. We do not see councillors as full-time councillors in local government—certainly in England, although things may be different elsewhere. Executive mayors are slightly different, but I do not want to get drawn too far into comparisons with them, because they are not in place everywhere. We are dealing today with an extension to the London assembly of the same provisions that apply to the Welsh Assembly, the Scottish Parliament and, indeed, to Members of Parliament.
I wonder whether the Financial Secretary follows the Conservative spokesman’s argument, which appears to be that, if people want to reduce the overall tax burden to the Exchequer, they should not vote for the Conservative alternative on Thursday, because of the severance payment cost of getting rid of Mr. Livingstone as Mayor of London. [Interruption.]
My hon. Friend the Exchequer Secretary says from a sedentary position that the hon. Gentleman makes a fair point. I will not be drawn down that route.
It is important to make it clear that the proposal does not apply to all those who face a sudden and unexpected interruption of their employment. Tax exemption was first introduced in relation to redundancy or severance payments in 1960, when the limit was set at £5,000. The tax exempt limit was increased to £10,000 in 1978. It was increased again to £25,000 in 1981, and then to its present level of £30,000 in 1988. We keep that limit under review, but we have no current plans to change it.
I am grateful to the hon. Member for Runnymede and Weybridge for moving the amendment. Its sole purpose is to delay the coming into effect of the clause until 6 April 2009. I cannot agree to its enactment. We are bound by an earlier Act of Parliament to introduce the measure. The GLA severance pay scheme took effect from 1 March 2008 and follows the implementation of the power that the GLA was given under the 2007 Act to set up and administer such a scheme. The scheme is based on the same model as the severance pay schemes that affect hon. Members and Members of the devolved Assemblies, and the purpose of the clause is to put the tax treatment of payments under the new scheme on the same footing, as I have said, as those that are made under the longer-established schemes.
The severance scheme was set up under the GLA Act. Extending tax exemption to the scheme in the way that is envisaged would keep the scheme in line with others that we have mentioned. That was always the intention of the Act. The hon. Gentleman picks me up on a slightly loose use of the word “bound”, and I take his point.
The hon. Gentleman asked about the cost to the Exchequer. The cost is so small that, under usual budgetary cost accounting procedures, it is counted as zero in the Finance Bill, hence my earlier point. The total cost this year for six members standing down is about £151,700. My hon. Friend the Member for Wolverhampton, South-West asked whether I had details of the budget; I do not have those details to hand, but I will write to him on the subject when I have had the chance to consider his comments in detail in Hansard.
The clause is designed to settle the tax treatment of the resettlement grants that may be paid to the Mayor or members of the London assembly if they cease to hold office at the time of an election. The amendment would mean that the clause could have no practical effect until the 2012 elections. It would also mean that the first payments under the scheme were wholly taxable as earnings, rather than treated as termination payments, the first £30,000 of which are tax-exempt. That would be unfair and churlish, given the treatment of Westminster MPs and Members of the devolved Assemblies. I hope that the current Mayor of London continues in his post for many years and has no need to avail himself of the measures, but I do believe that the Committee should put the measures in place. I therefore ask the hon. Member for Runnymede and Weybridge to withdraw his amendment.
If the Minister really believed that the current Mayor would stay in post for many years, she would not have any problem accepting the amendment. She said that she wanted to depersonalise the discussion; the point of the amendment, which delays implementation until 2009, is to depersonalise it. It would mean that that discussion was not about Ken Livingstone, but about the principle of the tax treatment of severance payments for Mayors of London.
The central point that has come out of the discussion—from the Minister’s remarks about the parliamentary scheme, I think that it is a point in which she is interested—is that we have a curious arrangement whereby there are payments that, in the hands of any person other than a Member of Parliament, a Member of the devolved Assemblies, or a member of the GLA, would have to be defended against the Revenue. The tax treatment on the first £30,000 would have to be earned by demonstrating to the Revenue that the money was not an entitlement, but an ex gratia payment. What we have done in the case of Members of Parliament, and what we are about to do in the case of members of the Greater London authority and London Mayors, is define such a payment, in statute, as non-contractual, even though it is made under statute, and so will certainly be received by the holder of the office in question.
Any payment that someone in the private sector was certain to get when they relinquished office would certainly be taxable in full, and the Revenue would rightly argue that case, so we are creating an anomaly for a very small class of people, all of whom happen to be politicians.
May I point out to the hon. Gentleman that elected representatives who lose their income as a result of the wish of the electorate, and not after voluntarily standing down, are in a rather odd position? Any other employee who is made redundant can claim redundancy and could succeed in getting up to £30,000, tax-free. Clearly, a Member of Parliament who loses at an election is not redundant, because there is someone else doing the job; someone else takes over. That is the anomalous position, which I suspect does not exist elsewhere in the economy.
The hon. Gentleman makes a good point and draws attention to the need to distinguish between office holders who relinquish their positions voluntarily, which is more akin to voluntary retirement or quitting a job, and those who are involuntarily retired by their employer, in the private sector, or by the electorate, in the case of elected officers. There is clearly a much stronger case for generous treatment of those who, through no volition of their own—I will not say no fault of their own—find themselves turned out of office.
There would need to be careful drafting of such provisions. An unscrupulous person—I trust that there are none present—could decide on retirement and then put up as the “Don’t elect me” candidate in a seat where they had no chance of being elected and qualify for the full severance payments. The ruling would have to include the introduction of party into British law and would have to state that the person had to stand again for the same party in the same seat, or it would not be sensible.
My right hon. Friend makes a good point. I will not test the patience of the Chair by going any further down that route, other than to say that equally, there would be the problem that Members in seats with large majorities would be unlikely to find an opportunity to retire by offering themselves for election and failing. Other Members might, at some point in their career, expect to face that problem. I fully accept that there are difficulties.
May I caution the hon. Gentleman about the use of the adjective “generous” in the present context? One can have a debate about the generosity of the amounts that an elected representative would receive under such a statutory scheme, but one should not apply the adjective “generous” to the concept that a sum up to the first £30,000 of any such payment is particularly generous or favourable to elected representatives, because that is the case for everyone else in the population under redundancy schemes.
Well, perhaps the hon. Gentleman and I can continue the debate outside the Chamber. That is not central to the point at issue.
In her reply, the Minister did not answer the question whether the logic of the Government’s intentions is that elected executive mayors more generally will be afforded similar treatment, both in terms of the ability to receive payments and in terms of the tax treatment of those payments. She made it clear that she does not believe that there is a case for extending such payments to councillors, and she gave a coherent explanation—they are not full-time and they are expected to have other employment—but elected executive mayors, as I understand it, are expected to be full-time. We did not get to the bottom of whether we shall see a further extension of the provision to executive mayors.
On reflection, after listening to the arguments, I have decided that I agree with the tax expert whom I quoted earlier that £30,000 of taxpayers’ money would probably be a price well worth paying to see the back of the spiralling expenditure of the Livingstone regime in city hall. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 49 ordered to stand part of the Bill.
With this it will be convenient to discuss the following amendments: No. 13, page 51, line 12, leave out from ‘acquisition’ to end and insert ‘as a zero-carbon home.’.
No. 4, page 51, line 12, leave out ‘occupied’ and insert ‘acquired by a buyer’.
No. 14, page 51, line 12, at end insert—
‘(2A) In section 58B omit subsection (6).’.
No. 20, page 51, line 26, at end add—
‘(8) The Treasury shall, by regulations, define a “zero-carbon home”.
(9) Regulations under subsection (8) must have regard to the desirability of ensuring that all new homes should be zero carbon by 2016.
(10) Regulations under subsection (8) shall be made by statutory instrument.
(11) A statutory instrument containing regulations under subsection (8) may not be made unless a draft of it has been laid before and approved by resolution of the House of Commons.
(12) Regulations under subsection (8) shall be laid not later than 31st December 2008.
(13) On the coming into operation of regulations under subsection (8), regulation 5 of the Stamp Duty Land Tax (Zero-Carbon Homes Relief) Regulations 2007 (SI 2007/3437) shall cease to have effect.’.
Amendment No. 21 replaces amendment No. 4, which should have been withdrawn from the Order Paper.
The Government and the Chancellor claim to be concerned about the environment. In this year’s Budget statement, the Chancellor said:
“our greatest obligation to the future must be to tackle climate change.”—[Official Report, 12 March 2008; Vol. 473, c. 295.]
The Government claim that they want a meaningful reduction in the UK’s carbon emissions and that their zero-carbon homes initiative will kick-start the market for new, highly efficient technologies in homes. They talk about how the policy will set a gold standard for green homes.
I do not think that we are quite there yet, so my amendments are a helpful start. They try to explore and challenge whether the Government’s zero-carbon policy, as it stands, can ever be truly fit for purpose. Amendment No. 21 aims to clarify what could be an ambiguity in the current drafting of the policy. Amendment No. 20 aims to prevent a likely problem from occurring, which, if not stopped, could really damage the Government’s chances of meeting their already challenging ambition of ensuring that all new domestic homes are zero-carbon by 2016. We Conservatives also support that target.
Let us not forget that the zero-carbon homes policy was enacted by regulation only eight months ago, in October 2007. Even so, Treasury Ministers are already changing their own policy, less than a year after it went through Committee. In October 2007, the original statutory instrument specifically excluded flats and maisonettes from being eligible for the relief. At the time, my hon. Friends and I questioned the sense of that exclusion; we now know from later statistics that nearly half of all new homes built in Britain are flats.
Just months later, by the time of the Budget, the Chancellor was already announcing that, after all that, the zero-carbon homes policy would be extended to include flats as well as houses. We very much welcome yet another adoption of a Conservative proposal and I hope that my amendments today will, similarly, be adopted—although without the eight-month delay. I have no doubt that the Government’s ambition, which we support, for zero-carbon homes by 2016 will be better achieved if the amendments are adopted.
Amendment No. 21 is a redrafting of new subsection (2)(b). It aims to define better and more carefully what constitutes a first acquisition. My understanding is that the provision is drafted to ensure that stamp duty relief may be claimed only the first time a home is bought. During our debate on the statutory instrument in Committee, the Minister responding said that extending the relief to second and subsequent sales would provide no value to the taxpayer. However, the proposed Government definition in the Bill covers a dwelling that
“has not previously been occupied.”
In practice, that could allow for multiple stamp duty land tax relief claims on the same property, if that property were sold again but never occupied in the meantime. For example, somebody could buy a newly built zero-carbon dwelling from a developer for their elderly parent to live in. They would gain stamp duty relief from the developer because their parent would not yet have moved in, although they were planning to; the residence would never have been occupied. Under clause 90, if, unfortunately, the elderly parent died prior to occupying the dwelling, the next purchaser would presumably also be allowed to claim stamp duty relief, as the home would still not have been occupied. The amendment would clarify the definition of a dwelling in respect of providing stamp duty relief to mean one that has not previously been acquired. It would remove the ambiguity of the current drafting and would deliver the Bill as the Government intend it.
I can imagine no objection from the Minister to amendment No. 20. It simply provides an insurance policy—that there will be a clear definition of a zero-carbon home by the end of the year, just as the Chancellor promised in the Budget. Crucially, amendment No. 20 would also require the Government to use a consistent definition of what constitutes a zero-carbon home across Departments, in a joined-up way. That definition would have to be approved by the House, and any anomalies between the definition arrived at after the summer’s consultation and the existing definition in the relevant Treasury statutory instrument would have to be identified. Those differences could then be debated and voted on, so that a single, workable definition could be achieved.
The lack of joined-up government between the Treasury and the Department for Communities and Local Government is a critical failure, as it means that we still have no clear definition of what a zero-carbon home is—even though the Government first announced their policy on such homes in December 2006. That means that, by the time a single policy is arrived at, it will have taken more than two years to get the definition that we need.
The Government say that the aim of stamp duty relief on zero-carbon homes is to stimulate demand for such homes, but it is almost inevitable that the present uncertainty, as long as it exists, will hold back both demand and supply. How can industry and buyers aim for a target when that target’s definition is not established or keeps changing? No wonder there is so much uncertainty in the building profession. The Government have told builders and developers that they want all new homes to be zero carbon by 2016, even though they—the Government—do not know what that means. That is why they are having to launch a fresh consultation.
A recent survey by the National House-Building Council found that most of those surveyed did not know what a zero-carbon home was. The lack of explanation and education about zero-carbon homes means that, according to the council, there is a
“distinct possibility that purchasers will decide against buying newly-built, low carbon properties.”
Another cause of uncertainty in the existing Treasury statutory instrument needs to be resolved. It is not clear whether the energy required to power day-to-day appliances used when a zero-carbon house is finally occupied can come from renewable sources via the national grid, or must come from a renewable source connected to the property directly and exclusively by private wire. I think that that is what the statutory instrument suggests, and it would be helpful—certainly for the building industry—if the Minister cleared up that confusion.
Even if we succeed in tying down the Treasury definition of a zero-carbon home, there are other dangers with the approach announced in the Budget. By the end of the year, after the consultation process, we will have a new definition of what constitutes a zero-carbon home, but that definition may well be different from the one contained in the statutory instrument. Any such difference would be even more confusing and damaging: for instance, developers might develop, build and market new houses in the quite proper belief that they were meeting the definition of zero-carbon homes agreed after the consultation, whereas buyers might not be aware that those homes did not fulfil the Treasury definition of zero carbon for stamp duty relief purposes. That is a recipe for unhelpful uncertainty, and it is certainly no way to kick-start the market.
Under amendment No. 20, the Treasury definition contained in the statutory instrument would be amended to ensure consistency with the final definition agreed following the summer consultation proposed on page 105 of the Red Book. Getting rid of the uncertainty matters, but the signs are that designing and developing zero-carbon homes will be a challenge.
So far, the Government’s stamp duty relief policy has been less than impressive when it comes to kick-starting the market. In the eight months between the start of October 2007—when the statutory instrument giving stamp duty relief on zero-carbon homes came into force—and the end of March this year, a grand total of just 10 homes qualified for zero-carbon stamp duty relief. In fact, there were six homes last year and four this year, with just one in March, so the run rate of zero-carbon homes qualifying for stamp duty relief seems to be tailing off, if that would have been thought possible at the end of 2007. Given the lack of homes that are qualifying for the relief, will the Minister enlighten us as to the carbon savings that have resulted from the zero-carbon homes that have qualified so far? What research is the Treasury doing to find out whether the stamp duty relief for zero-carbon homes, as it currently operates, is really making a difference to buyers’ behaviour?
I have a suggestion for the Minister. Given that so few people have qualified for zero-carbon home stamp duty relief so far—just 10—what about getting them all down to Westminster to have a round table discussion about these issues? There are so few of them that it would be perfectly feasible. If she would give me their contact details, I would be happy to organise that meeting so that we could all learn from the minimal transactions thus far—or perhaps we could do a conference call, which might be more environmentally friendly. I would be happy for the Minister to sit in on that.
There is a serious point here. We need to understand which people and which homes have already qualified for the relief. Are the people claiming the relief major developers who have just sold their first prototype building to someone and are perhaps therefore in a position to start being able to mass-produce, which would clearly be very good in terms of reaching the 2016 ambition; or are they, as I suspect, individuals who are keen to play their role in tackling climate change and have had themselves a zero-carbon home built to a more individual specification, which may suggest that we are less likely to see mass production of such homes? I would love to be able to sit down with those people and talk to them about whether they felt that the current stamp duty relief policy had influenced their behaviour in relation to buying a zero-carbon home and, if not, what policy would have positively influenced their behaviour in order to cut emissions further.
I must question the Minister about whether the Treasury’s zero-carbon home stamp duty relief policy joins up effectively and more broadly with the ambition of the Department for Communities and Local Government to have all homes built as zero carbon by 2016. I have discovered through parliamentary questions that the 10 zero-carbon homes that have qualified for stamp duty relief so far were all in a 1 per cent. stamp duty band, which means that they probably had an average cost of £187,500. We can therefore broadly assume that their average stamp duty would have been 1 per cent. of that—£1,875. If so, the £15 million budget set aside to fund the policy from now until 2012 will fund a total of 8,000 homes—fewer than 2,000 a year. If we are to hit our zero-carbon homes ambition by 2016, we should by then be building 240,000 zero-carbon homes a year. These things do not seem to match up with one another. When I questioned the Minister in the statutory instrument Committee when the regulations first went through the House, she was unwilling to explain how the £15 million budget had been arrived at. I am pretty confident, and perhaps she can confirm, that the assumptions behind that budget were that 8,000 homes within the 1 per cent. band were receiving an average of £1,875. Will she have yet another go at clarifying the underlying assumptions as regards the £15 million that is currently set aside for the policy?
Perhaps the Minister could also confirm that the original budget of £15 million was set in 2007—before this year’s Budget announcement allowing flats also to qualify. If nearly half of all new properties built are flats, we should have expected the Treasury to double the amount set aside for the policy. Instead, as far as I can see, it has added no new money whatever to pay for the relief, suggesting an assumption that the Budget change in 2008 will have no impact on the amount of relief it expects to be claimed. Again, that does not make sense.
That brings me to my final point. As with vehicle excise duty changes in the 2008 Budget, which the Government now admit will make virtually no impact in reducing CO2 emissions, the zero-carbon homes stamp duty relief policy came with much fanfare, but as far as the behaviour change it desires to achieve is concerned, it seems destined to fail. Even the Government have said that they expect the original stamp duty relief policy on zero-carbon homes to reduce emissions by 1.6 million tonnes by 2020, when household emissions in 2006 already stood at 155 million tonnes. In this year’s Budget, Treasury Ministers did not even try to pretend that they thought that the Budget would cut emissions. Page 107 of the Red Book describes the environmental impact of the zero-carbon homes change as including flats. It refers to a
“Small reduction of carbon emissions.”
Perhaps the Exchequer Secretary can tell us just how small.
Yet again, a Budget measure has been announced that is designed to reduce carbon emissions, but is in reality a shambles. We have no definition for zero-carbon homes, no idea of the real budget needed by the stamp duty relief policy, no idea of the number of homes that will claim relief and no idea of the reduction in emissions that the policy will lead to. The Treasury may talk a good game when it comes to environmental taxes, but its rhetoric is way ahead of its practice. The only way that things will get better is under a Conservative Government because this is not zero carbon—it is zero credibility.
I am grateful for the opportunity to follow the hon. Member for Putney (Justine Greening), because I agree with the central thrust of her analysis—the Government’s provisions are gimmicky, inadequate and do not start to deal with the scale of the problem that confronts us. Where I depart from the line taken by Conservative Front Benchers is in the conclusions that I draw. I conclude that the Government need to be far more ambitious and visionary. The criticism made by the Conservative party always appears to be that the Government are gimmicky, so we should abandon all hope and not venture down the path at all. As far as I am aware, its central criticism reflects the fact that the party whose leader has a propeller on his roof that does not work thinks that the Government are too gimmicky.
I am grateful for that intervention, because the hon. Lady made a criticism that the Government have not allocated anything like enough money to reflect the scale of their policy. However, I have not heard financial commitments from the Conservative party to fund such policies. The Conservatives seem extremely reticent about giving hard, cast-iron financial assurances that are designed to change behaviour and reduce CO2 emissions in this country. I have seen the leader of the Conservative party riding his bike to this building, with an England flag on the back of it when England is doing well in football matches. I know that he has a propeller on his roof that does not work. I have seen all that imagery and gimmickry from the Conservative party, but I have not seen any concrete policies.
On the contrary, the hon. Lady, whenever she makes a political point at the Government’s expense in this Chamber—a legitimate thing for her to do—says that the Government’s efforts, which I accept are timid and insufficient, will not make any difference, or make only a negligible one. Her conclusion seems to be that the Government should not be venturing down that path at all. However, perhaps she would like to intervene to say that the Conservative party’s position is that vehicle excise duty rates and petrol taxation should be much higher and the number of wind farms should be much greater.
The hon. Gentleman claims that we have made no progress on our environmental agenda, but he is wrong. For example, the Conservative party suggested a tax on a whole plane rather than air passenger duty, and we proposed feed-in tariffs, which the Government are eventually adopting. We do not have to demonstrate our credentials—
We will consider the subject that I mentioned later in our deliberations.
In our amendments on homes, we share Conservative Members’ analysis that the Government lack vision and ambition, but we go on to urge the Government to adopt a more visionary and ambitious set of policies rather than simply throwing up our hands in despair. It is worth sharing some statistics, which show the urgency of the position and the inadequacy of the Government’s proposals.
The current housing stock of 25 million homes in the United Kingdom accounts for around 27 per cent. of the country’s total carbon emissions—approximately double the amount of carbon dioxide that cars in the UK produce. It is worth dwelling on that momentarily because transport gets singled out—not unfairly, because it is a major contributor to CO2 emissions. However, if one stopped the average person in the street and asked whether domestic households or transport was the much greater contributor to global warming CO2 emissions, the reply would overwhelmingly be, “Transport.” Yet the energy produced in our homes is a major contributor. [Interruption.] The hon. Lady says from a sedentary position that the public perception is that transport is not a major contributor to CO2 emissions. [Interruption.] The hon. Lady is giving a running commentary from a sedentary position. If she has something to say, she can intervene.
I did not intend to interrupt the hon. Gentleman’s speech, but I did not claim that the public did not think that there were emissions from transport. I said that many people in my constituency are also aware that their household emissions are even greater than those from transport. That is not to say that they do not believe that transport emissions are a problem.
I am grateful for that intervention. Perhaps we can resolve the matter only through opinion polling or asking a sufficiently wide cross-section of the public. I was not trying to be especially controversial—I simply observed that transport attracts far greater attention in the debate on CO2 emissions than domestic households, yet the latter contribute significantly to the total amount of CO2 emitted in the United Kingdom.
I suggest that—I stress that I am not citing actual statistics—in 20 years, 80 per cent. of current homes will still be used, whereas 80 per cent. of the road transport fleet will not. There is much higher turnover of transport stock and it is therefore much easier to tackle transport emissions than to deal with emissions from homes. I say that as someone who has lived for 25 years in a property that was built in 1888.
I am grateful for that intervention because that takes me—you will be relieved to know, Sir Alan—to the amendments that the Liberal Democrats have tabled. They try to widen the scope of consideration so that the Government do not concentrate only on new homes, which are clearly important, but focus on the UK’s housing stock as a whole. In any given year, roughly 1 per cent. of the houses occupied in the United Kingdom will have been built in that year, while 75 per cent. of houses in 2050 will have been built before 2007. If we concern ourselves solely with newly built houses, we will address the situation only incrementally.
Indeed, I would like us to go much further in that regard, too. It distresses me that large new housing developments are built on the edges of towns throughout the country with the car in mind. It is hard for the people living in those houses to buy a pint of milk or beer without getting in their cars. Such developments are often built without shops, pubs, village halls, churches, post offices or other amenities, which people cannot reach without driving a car. The houses are quite well insulated, but they could still incorporate large numbers of building features that would improve their carbon emissions.
There is a lack of ambition among builders in that regard. However, if we neglect the existing housing stock, we will not tackle the problem with anything like the urgency that it requires, particularly given the interesting cultural dimension in this country, whereby people often aspire to live in older houses. People in the United States, for example, would think that the best house that one could buy would be a brand new one, in the same way that people in this country would, by and large, like to buy a brand new washing machine, car or whatever else.
The most expensive and desirable houses in the United Kingdom are often those built, say, 200 years ago. There is not quite the market drive towards new house building in this country as there is in some countries. Whether because of a cultural or social dimension, it is seen to be desirable to live in an older house, often with not very well insulated windows, for example. We therefore need to turn our attention to how we improve such matters.
I am not the only person who takes that view. In the Select Committee on Communities and Local Government report “Existing Housing and Climate Change”, the hon. Member for Milton Keynes, South-West (Dr. Starkey), the Labour Chairman, called for a
“much clearer focus on what must be done to bring existing housing up to required energy efficiency standards”.
She also said:
“We need the Government to go further and do much more to help householders radically cut carbon emissions from their homes, whether they were built in 2007 or 1707.”
That is the position of my party, too. We have put forward large numbers of policies to try to accelerate the level of home insulation, as well as other measures that can be put in place to try to reduce CO2 emissions both in Britain’s existing housing stock and in newly built houses. That is the scale of the ambition that we urge the Government to adopt. We have no problems with the measures in the Budget; we just think that they do not go far enough.
The speech that the hon. Member for Putney (Justine Greening) gave was interesting, as is her amendment No. 20. Unfortunately, however, as sometimes happens, she leavened her speech with too much righteous indignation. I will bear that in mind when I think of the reports of the views of Conservative party activists on eco-towns, for example, which the Government are putting forward and which are so important.
I want to distinguish between the construction and the occupation of new properties. If we are talking about zero carbon, the first thing that I would like to do is change the terminology. It is a little late for that, because the terminology is already in statute, from the Finance Act 2003, but we are almost certainly not talking about zero-carbon homes. Rather, we are talking about zero-CO2 homes. I venture that almost no home will be built in the United Kingdom in the next 100 years without any carbon in it, because wood is carbon and the architraves around the doors, if nothing else, are likely to remain wood.
The reason I stress that point is that it highlights the use of language and whether we are talking about emissions when we talk about zero-carbon homes—I will use that phrase, because it is in the legislation already and in the proposals before us. However, we need to distinguish between emissions from the construction and emissions from the occupation of such homes. That is why amendment No. 20 is interesting. Indeed, I shall be interested to hear what my hon. Friend the Exchequer Secretary says about definitions and the need for definitions.
I find it difficult to envisage the construction of a new home in the United Kingdom in the next 20 years involving zero CO2 emissions, if only because for many years to come it is quite likely that some of those building the home will drive to the site in a car fuelled by fossil fuels, not by electricity. They will use electric saws to cut wood, and sometimes electric concrete mixers, and some of the electricity might well come from fossil fuel. We might move to mass renewables. We could move to nuclear, but the building of nuclear power stations involves CO2 emissions. Construction workers might drive to the site in a vehicle powered by electricity from a renewable resource and plug in rotary saws that are powered in the same way. A consideration of zero CO2 emissions during a home’s construction depends on how far one wants to take things towards the absurd. If we are to avoid reaching an absurd situation, the definitions must be clear and we must distinguish between construction and occupation.
On the occupation of houses, should we require those seeking the tax exemption to guarantee that their washing machine will be run only on electricity from renewable resources? How far should we take things when we consider zero CO2 emissions for occupation? I am worried that we will move towards bringing into the equation CO2 offsetting, which is one of the biggest boondoggles around. My hon. Friend the Member for Nottingham, South (Alan Simpson) has mentioned in the Chamber—wittily, as usual, but quite rightly—that there is an adultery offset website. Allegedly, the person behind it is a rather spotty youth called Kevin from somewhere like Plymouth. He agrees to remain chaste and not to engage in sexual relations—certainly not adultery—so that someone who signs up to the website can engage in adultery absolutely guilt free because of the adultery offset—[Laughter.] That might produce a laugh, but it highlights some of the problems with CO2 offsetting. Although this is being exposed, CO2 offsetting is often a complete con. It is said that Coldplay chose 10,000 trees in somewhere like Indonesia to carbon offset one of their world tours, but that all the trees were dead.
I raise this point regarding the definition of a zero-carbon home under amendment No. 20. Will CO2 offsetting come into the definition on the occupation side of the equation—when someone is living in the house—and when measuring whether the occupation leads to no net use of CO2? We need tight definitions and a clear political direction, preferably with cross-party consensus, to determine exactly what constitutes a so-called zero-carbon home.
I am following the hon. Gentleman’s argument carefully. I am aware of his concern about the issue and he is right to ask for clear definitions. However, when carbon offsetting is done properly, sensitively and in sufficient volume, it can genuinely offset the carbon that we use. Would he want to discount it completely from a definition?
I would not want to discount it completely from a definition, but one would have to be careful about bringing carbon offsetting into the definition of a zero-carbon home. There have been carbon capture and storage projects in Norway for several years and in Saskatchewan, Canada. Most people would regard CCS, when properly carried out, as suitable CO2 offsetting. However, planting trees that then die—either naturally or prematurely—is not really CO2 offsetting. We need to be careful with the definitions. I urge the Exchequer Secretary, bearing in mind that she is a Treasury Minister—she is a very able Minister—to try as best she can to give the Committee some clarification, with regard to amendment No. 20, about what a zero-carbon home really is.
I rise to support my hon. Friend the Member for Putney (Justine Greening). Her amendment makes a lot of sense, and I hope that the Minister will simply concede that. I am sure that the Government intend the tax exemption to be available only on the first sale-and-purchase transaction. The drafting in my hon. Friend’s amendment would ensure that rather more accurately than the drafting in the Bill, so it would make sense to accept it.
Like the hon. Member for Wolverhampton, South-West (Rob Marris), I wish to concentrate more on amendment No. 20 and what constitutes a zero-carbon home. I approach the issue from the proposition that it is better to try to change people’s conduct using tax incentives than through tax impositions or compulsion. The principle in the amendment is therefore welcome. It is right that the Government should try to address emissions related to the home environment as well as transport emissions. We well know why that is important: many more of the typical family’s emissions come from the family home. The problem is a difficult one, but it can be addressed using a series of incentives and proposals, of which this would be just one.
I understand my hon. Friend the Member for Putney’s worry that the measure will have a small impact. Part of the reason it will have a small impact is to do with the definition, which lacks clarity about what is a zero-carbon home. There might be a feeling out there in the marketplace that zero-carbon homes are unachievable, and that we should move our targets to what might better be called low-carbon homes as technology develops and the marketplace responds. That is what we do with motor vehicle manufacturing, the regulation of which is tightened progressively over the years, so that each generation of cars is successively better. As a result, exhausts have been cleaned up, and there have been changes regarding the production of fuel to give a certain level of performance. We could have a similar trajectory with housing and the improved performance of our homes, preferably through an incentive scheme.
The hon. Member for Wolverhampton, South-West rightly said that the zero-carbon home of the Government’s imaginings is not truly zero-carbon because the construction process will entail a certain level of carbon dioxide emission. He could add to his list the emissions of vehicles used on a site to dig the ground and move the earth, as well as any pile-driving and concrete mixing required to provide the foundations and a stable platform on which to build.
Another aspect of all building processes that causes perhaps even more carbon emissions is the manufacture of building materials. Most of the building materials going into a typical British house have been produced using energy-intensive processes. The cement industry is a big energy user, as is the brick industry. That consideration needs to be fashioned into a policy. Although it will be good news for those who wish to cut carbon emissions if homes can be constructed that emit few or no carbon emissions, it will not be such good news if the building materials used to achieve that degree of insulation and that carbon-free standard were produced using energy-intensive methods or if they had to be transported quite far. Such homes would take many years to break even on the carbon account.
These issues are difficult. Carbon accounting is a rudimentary science at the moment, and all too many people considering it think that there are silver bullets and easy answers. They think, for example, that stopping people driving would make the problem go away, but it would not. The issue is more complicated than that. All sorts of processes and circumstances involve carbon dioxide emissions, and a sophisticated carbon account is needed before sensible policy conclusions can be reached. I hope that the Minister will produce rather more sophisticated research—perhaps not today but in the months ahead, as this policy develops—so that we can have a better idea of what the true carbon account would be on a so-called zero-carbon home. I hope that the Minister will be able to provide a little more definition today, as my hon. Friend the Member for Putney requested. If the policy is to have any chance of working, the wider world, interested in building new homes, needs a clearer idea of what is required, and we need a clearer idea of whether it is achievable.
I would regard as a failure a policy under which only 10 homes qualified in more than half a year, and, if I were a Minister, I would regard it as my important duty to tweak and change it until I had a decent number of homes coming forward, so that I could claim that the policy was some kind of success. I put it to the Minister either that it is a problem of persuading the market that what she has in mind can be done—the Government are meant to be good at putting out messages through the media—or that perhaps more work needs to be done on the sort of home that is envisaged, working in conjunction with the industry, so that we can roll out a policy for the hundreds and thousands rather than the one and twos as we seem to have at the moment.
I think that a stamp duty tax break is a very attractive tax break, as stamp duty is very high on the more expensive houses and still a lot of money on the relatively cheap houses because house prices have increased so much. We would expect to have something for the expenditure of tax revenue forgone; we do not seem to be getting it at the moment, so I hope that the Minister will use amendment No. 20 as an opportunity to clarify and improve the definition so that it delivers on the carbon front, taking into account the production of carbon in building the house as well as in subsequently living in it, as well as delivering the number of homes needed to fulfil the targets.
I am delighted to return to the subject of stamp duty exemptions on zero-carbon homes, as provided for under clause 90 and the amendments proposed by my hon. Friend the Member for Putney (Justine Greening). I have some interest in the issue, having been fortunate enough to encounter it during the Committee stage of last year’s Finance Bill and, by happy coincidence, when I joined my hon. Friend during the subsequent debate on the statutory instrument in December. Some members of the Committee may also have been present last year and will remember that we had great fun in the debate, largely at the expense of the then Economic Secretary, the right hon. Member for Normanton (Ed Balls). However much we teased him and laughed at his ability to tie himself in knots, there was a broad consensus that we wanted the policy to work in practice.
Stamp duty is a considerable expense for anyone trying to get on the housing ladder and last year’s revenues reached some £6.4 billion—a 40 per cent. increase on the previous year. It is quite right for the Government to seek to influence behaviour by reducing some of the burdens of that huge rise in taxation. In that respect, the potential benefits of the policy are wrapped up with how it is perceived by home buyers—and, of course, home builders.
In the same constructive spirit, I welcome the change proposed in clause 19, which will extend the relief to registered flats—something that I asked for when we debated the statutory instrument and the then Economic Secretary gave the Government’s favourite answer: that it would be reviewed. To give credit where it is due—it is right to do that sometimes—it has not only been reviewed but acted upon and duly extended, so I am delighted that once again the Government seem to be listening to the Conservative party; but it is a shame that neither the Economic Secretary nor the Chief Secretary, who I am sure would have been particularly well briefed on the subject, could be here for today’s debate. It is a shame because there is already a sense of discontinuity creeping into the way in which the zero-carbon homes agenda is being dealt with and there is a sense in which the Government’s lofty aspirations are not being matched by the reality of delivery.
As my hon. Friend the Member for Putney has already mentioned, parliamentary questions have done what endless questions in Committee could not: they have elicited the number of zero-carbon certificates that have actually been issued. Unfortunately, it is a very small number indeed—my right hon. Friend the Member for Wokingham (Mr. Redwood) made that point. Will the Exchequer Secretary update us as to what the latest number is?
That matter worries me less, however, than does the caveat that appears at the end of a couple of parliamentary answers. As the Exchequer Secretary stated in one of them:
“We expect the number of qualifying transactions to rise as more properties eligible to claim the relief go on the market.”—[Official Report, 19 March 2008; Vol. 473, c. 1223W.]
I am sure that the number of transactions will rise given that we are starting from a very low base, but it seems that the Government expect some magic exponential effect to occur, and they always seem to expect it to occur soon rather than now.
Last year, the then Economic Secretary proposed the same kind of optimistic but ill-defined acceleration as is now appearing in such parliamentary answers. He said—in the way that only he can—that
“there will be a non-linear, progressive, accelerating build-up over time on the basis of which we will get to a figure of 200,000 by 2016.”—[Official Report, 26 June 2007; Vol. 462, c. 198.]
However, he also admitted that the pace of the acceleration depended on the definition that was adopted for zero-carbon homes.
I do not wish to plough the same ground too many times, but the Government have never given satisfactory answers in the repeated questioning over the costing of this measure. There still seems to be a disparity between the £15 million that was set aside for stamp duty rebate and the 200,000 houses that the Government hope will benefit from it by 2016. My hon. Friend the Member for Putney made that point in her excellent speech at the beginning of the debate. Can the Minister confirm the total value of the stamp duty land tax relief for new zero-carbon homes that has so far been claimed, and whether that figure fits in with the projected cost to the taxpayer of £15 million by 2011-12? Moreover, since clause 90 extends eligibility for the relief to flats, may we have an updated costing? It will, presumably, be in excess of £15 million, but by how much? I ask that as there does not appear to be a figure in the Red Book that reflects the extension.
Given the low initial take-up, the ongoing scepticism about the definition, the uncertainty over costing, and the damage that all this does to the public perception of the policy, do the Government propose to undertake a full review of the operation of the policy in its first six months, and will they publish the results? We called for regular such reviews last year, but the only information on progress since then has been provided by sporadic parliamentary questions. The Government’s seemingly boundless optimism cannot compensate for lack of detail on how the policy is working in practice and how it is expected to evolve over time.
I shall now return to the question of the public perception of the zero-carbon standard. The National House-Building Council Foundation has recently published a research paper entitled “Zero carbon: what does it mean for homeowners and housebuilders?” which presents a detailed investigation of public expectation and reaction. The first challenge that the Government face is that only 4 per cent. of those polled had any knowledge of the stamp duty exemption that we are discussing today. The NHBCF also suggests that that is unsurprising, given the very low uptake revealed in parliamentary answers. If the policy is to be a success, awareness and uptake will need to feed off each another, and raising awareness is a huge challenge. Part of the reason for these issues is simple scepticism about what the standards mean, what they will cost to implement and how they will affect homebuyers’ lifestyle choices.
The NHBC Foundation’s chairman, the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), stated in the report’s press release:
“It is vital for homebuyers to actually want to live in zero carbon homes if they are to be a successful reality. If this does not happen, there is the distinct possibility that purchasers will decide against buying newly-built, low carbon properties.”
The report found that home owners tended to view the 2016 zero-carbon aspiration as laudable, but did not believe it to be at all realistic.
Furthermore, home buyers tend to view energy efficiency in stark economic terms; if it saves them money, they will buy it. For example, nearly half those polled were open to the £700 additional cost of meeting the code level 1 standard, because it generates savings of about £50 per annum, but fewer than one in 10 believe that a £400 saving is sufficient return on the £35,000 additional investment needed to meet the code level 6 standard, which reflects a true zero-carbon home. If the cost of qualifying for the zero-carbon stamp duty exemption is an additional £35,000, as the Government estimate, and the maximum stamp duty rebate is £15,000 on a £500,000 property, clearly a significant amount of additional cost must still be met from elsewhere.
Perhaps that gap explains why opinion on the house builders’ side is, if anything, less favourable. Although there is widespread awareness of the code for sustainable homes, the report found that
“the perception of the industry is that, whatever the merits of the Code itself, it is being severely undermined by the muddled and incoherent way in which the Code agenda is being driven.”
The construction industry will ultimately determine whether the zero-carbon aspiration is a success or a failure. When confidence in the 2016 target was assessed, only 26 per cent. of house builders polled believed in their technical ability to deliver the standard and just 14 per cent. had confidence in the commercial sense in doing so. The following quote from one builder is indicative of the tone of the study:
“I have no confidence in it whatsoever. We are currently involved in building a Code Level 6. If the Government expects Code Level 6 houses in 2016 with the technology that’s available today then there won’t be any houses built in 2016. It’s so complex and expensive.”
That is the background to this issue, and it is the challenge that the Government must meet. The process of meeting that challenge is not helped by the level of uncertainty surrounding both the zero-carbon standard and all the Government’s sums, which are contingent on it. Perhaps that is why the report concluded that many builders wanted to pause for breath at the code level 4 standard, and that they tended to view the huge additional investment required to create a genuine zero-carbon home as impractical and inefficient.
The Government have committed to review the operation of the stamp duty incentive in 2012, which is midway between now and the 2016 deadline for all new homes being zero-carbon. May I draw the Minister on whether the Government will reconsider offering graded reliefs to properties that meet one of the intermediate code levels but are not strictly zero-carbon? Such an incentive structure might help builders to commit to further costly investment in new technology.
The Budget announced new pump-priming funding for a new 2016 delivery unit to guide, monitor and co-ordinate the zero-carbon programme. That is welcome, but will the new unit have within its remit the ability to re-evaluate the operation of the incentive structure? Even more importantly, will the unit act decisively to end the confusion about the zero-carbon standard?
The NHBC Foundation found, rather like the hon. Member for Wolverhampton, South-West (Rob Marris), who had his own non-linear, progressive, accelerating build-up to this point, that
“some confusion does exist, however, with the fundamental issue of what ‘zero carbon’ actually means”.
That is the focus of today’s debate. I appreciate that the draft Stamp Duty Land Tax (Zero-Carbon Homes Relief) Regulations 2007, which the House approved in December, had been amended to bring them in line with the code for sustainable homes and that issues such as connection to gas mains were cleared up. Nevertheless, there is evidently still a degree of confusion within the industry, which is why it is paramount that the Government act quickly.
One house builder in the NHBC Foundation study is quoted as saying:
“The Building Research Establishment...assessors do not know whether a 2016 carbon neutral home is carbon neutral for the whole house or is it just for the energy and lighting in the house. If the BRE assessors don’t know, how are the housebuilders supposed to know?”
The Red Book does include a commitment—in the Treasury’s usual and modestly named “utopia-regular” font—that a definition of a zero-carbon home for the purposes of the 2016 ambition will be forthcoming at the end of the year following further consultation. But that being so, I see no reason why the Government will not accept amendment No. 20, which would commit them to laying regulations on the long-term definition before the House by the end of December.
This policy and its associated definitional problems have now had a very long gestation period and things are still changing in fits and starts. In its first six months of operation, the stamp duty exemption has been used a mere handful of times. Nevertheless, it has already been the subject of one backdated statutory instrument, in December, and now another backdated clause in this Bill to extend its remit. We have now debated it several times and come at it from so many angles that I am beginning to feel as though this is groundhog day.
Every month that goes by without certainty is a month in which the confidence of the building sector and the general public in this policy will be further eroded. This policy is becoming the very definition of spin over substance. The time has surely now come to make a commitment in the Bill to get the long-term definition right once and for all, and I welcome our amendment to that effect.
We have had an interesting debate. I have been struck by the good will on both sides of the Committee towards making progress to achieve the desired outcome—the existence of zero-carbon homes, whatever the definition—and to ensuring, by 2016, that all new house building is zero-carbon. That is very positive.
My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) made a point about the turnover of housing stock being much slower than the turnover in, say, transport. That has a direct bearing on the carbon savings calculated from the existence of zero-carbon houses. By definition, those savings start slowly and increase as zero-carbon and low-carbon homes, which are not the same thing, are built and have an increased presence in the housing stock. The benefits in carbon savings from the existence and development of such homes will start off as minuscule and rise slowly. If the process is successful, the carbon savings will be much greater at the end than at the beginning. Clearly, they will have to be much greater by 2050 if we are to reach the 60 per cent. or 80 per cent. savings that the Stern report demonstrated were necessary to achieve climate stabilisation. I thank my hon. Friend for bringing that point to the Committee’s attention.
The other point that needs to be borne in mind before I get into the detail of the debate was made during a very good speech by the right hon. Member for Wokingham (Mr. Redwood). He said, to quote him, that carbon accounting is a very rudimentary science at the moment. That is true, and it will evolve and develop as we go along. We cannot expect to have the same level of sophistication in how we do something this new and novel, even though it is important, as we can in other accounting methods.
Hon. Members in all parts of the Committee will have to be patient as we develop our measurements and standardise them for reporting back to the House. We also need to avoid the problems that we have had with the more ordinary accounting methods for companies, which were developed a couple of hundred years ago. They were developed all over the world on different bases and it has taken 200 years to standardise them.
We need not only to develop our standards of carbon accounting for our economy, but to do so in a way that can be standardised across the globe if we are to develop emissions trading systems and ways of measuring life-cycle carbon emissions. That is what my hon. Friend the Member for Wolverhampton, South-West was talking about in his speech. Although it is an aspiration for us all, and although these are important tools, we cannot pretend that we have all the answers now. If the Government are to be criticised for keeping coming back to definitions and for making minor savings in carbon emissions at the beginning of an important but long-term process, as a Minister I will have to put my hands up to that.
Hon. Members from all parties need to understand, as some have made clear they do in their comments today, that the situation is evolving. Standards have not yet been set and they need to evolve. Global standardisation also needs to evolve. Carbon accounting is a rudimentary science that needs to become much more sophisticated very quickly if we are to be effective. I hope that hon. Members will bear those issues in mind as we deal with the detail on the amendments, as well as with the new clause.
Before I deal with the amendments in more detail, let me say that much fun has been had with the number of zero-carbon homes that are in existence, and people have said that the carbon savings are so minuscule that they will make no difference. The stamp duty exemptions that we are debating under clause 90 and the amendments to it are important, but they are only one part of the work that the Government are doing.
By definition, since the exemptions are attempting to create a different standard for the emissions of a house over its general life, such houses will form a tiny part of the housing stock and will have to be in the new-build areas. Hon. Members should not forget that the Government have a raft of other policies that deal with existing housing stock and make it more energy efficient. Those policies include the carbon emissions reduction target regulations and Warm Front regulations, which are doing so much on energy efficiency. We have a whole range of retro-fitting activity, if I can lump it all in that phrase, that attempts to deal with our existing housing stock.
It is true that we need to go for housing with low carbon emissions and to try to retro-fit some of our stock in order to bring that about, but the strict definition of zero-carbon would require most existing houses virtually to be demolished and rebuilt for them to reach code 6. When we consider the work that the Government are doing, we should distinguish between new build and how important it is to have radically more energy efficient, very new buildings that people can live in, of which I know there are only 10, although I hope that there will be very many more soon. However, it is not surprising that the process has taken this long, when we did not start with definitions that people agreed on and when a lot of this work is new and being done for the first time. Therefore, I crave the indulgence of the House in saying that such work is front-end loaded and that the results are back-end loaded. I hope that people will accept that, by definition, that must be the case.
Clause 90 has two purposes, the first of which is to ensure that the relief from stamp duty land tax for new zero-carbon homes is extended to cover new flats. I perceive that that has a general welcome around the House. The relief will apply to any new flat that meets the stamp duty land tax zero-carbon standard that is purchased from 1 October 2007, which is the date on which the existing relief was introduced. We do not want to exclude any zero-carbon home, whether a flat or house, that comes on to the market.
Yes, that is my understanding. Clearly, the delay was caused by checking how common parts and other issues could be dealt with to maintain a definition of zero carbon that was robust enough to qualify for the relief. Again, that was done to ensure that silly mistakes are not made in new areas. The hon. Lady had fun criticising the Government for not including such provision originally, but the work had to be done to find out whether it was doable in principle, and I think that she welcomed the extension to flats under the clause.
The clause will also create the power to introduce regulations that permit Departments that are carrying out assessments of whether homes meet zero-carbon standards to charge reasonable fees for providing such a service. Regulations that provide for fees will be made immediately after Royal Assent has been granted to the Bill. The clause will amend sections 58B and 58C of the Finance Act 2003 to ensure that the relief from stamp duty land tax for new zero-carbon homes introduced in October 2007 is extended. The relief will apply to any new flat that meets the stamp duty land tax zero-carbon standard that is bought from 1 October. Therefore, if any new zero-carbon flats have been built since the introduction of the relief, they will be included.
As with new zero-carbon houses, the relief will provide for the complete removal of stamp duty land tax liabilities on all new zero-carbon flats up to a purchase price of £500,000. If the purchase price of a flat is in excess of £500,000, the stamp duty land tax liability will be reduced by £15,000. The relief will help us meet our 2050 climate change targets by encouraging house builders to build homes that are more energy efficient and that maximise renewable technology. The stamp duty land tax incentive is designed to help to kick-start the market for new methods and to support the 2016 ambition of all new homes being built to a zero-carbon standard.
The hon. Member for Putney (Justine Greening) was under the impression that there were two definitions of zero carbon. In fact, there is only one Government definition. The Treasury definition and the code for sustainable homes definition are the same. The Department for Communities and Local Government will consult in the summer on the 2016 definition of zero carbon, but we believe that larger developments can meet the current definition and that it is harder for small city infill developments to meet it. Clearly, when practical issues to do with the definition come to our attention, it is important that we are flexible in how we respond, so that we do not disadvantage particular areas.
No. The stamp duty land tax relief applies to the first sale of a house. The emissions-related benefits of that house are then thought to be important enough in themselves to be worth having; I hope that all Members in the Committee agree. The stamp duty land tax exemption is important in making it more attractive for house builders to build new zero-carbon houses—new, more radical, energy-efficient houses—and for buyers to purchase them. It is important to ensure that our existing housing stock becomes zero-carbon over time.
I said earlier that although it is important to be certain about the definition of zero-carbon homes as there is more sophistication in terms of what is available, how such homes can be produced and built, and what materials are used, it is important that we are flexible, and the hon. Member for Putney nodded. I hope that she will accept that point. It would be absurd if I were to say, “We will define zero-carbon homes as we did in the regulations. The definition will not change in the next 20 years, no matter what new technologies, building methods or ways of measuring or defining zero-carbon come along; we must stick with the definition that we first made.” I hope that she will realise that it is important for us to accept that the definitions could evolve. However, there is already a definition with which house builders know they can work; many are already doing so. I can tell the House that two developments are now being planned that will result in the building of 400 homes that meet the current definition of zero-carbon, so there are already signs that house builders are beginning to engage positively with the process.
Moving on to the amendments that we are debating, I detect that no matter what scepticism there may be, the extension of the zero-carbon homes provisions to flats and maisonettes is supported by Members in all parts of the Committee. The Government have considered the amendments to clause 90 that deal with extending stamp duty land tax relief. Amendment No. 4 would change the definition by replacing the word, “occupied” with the phrase “acquired by a buyer”. We believe that, in practice, a relief that is restricted to homes that have not been previously occupied will have the same, or virtually the same, scope as a relief restricted to homes that have not been previously acquired by a buyer. The amendment is therefore unnecessary.
Amendment No. 13 would extend the relief to all acquisitions of a zero-carbon home, whether new or old, and regardless of whether the home has changed hands before. As I have said, the Government believe that the relief should be restricted to the first acquisition of a new zero-carbon home. That fits in with the key objective of the measure, which is to kick-start the building of zero-carbon homes by stimulating consumer demand. Once the homes are built, we expect the benefit in terms of energy savings to remain in the home for many years. We do not believe that it would provide any value to the taxpayer if the relief were extended to cover second and subsequent acquisitions of a home, as is envisaged under the Liberal Democrats’ amendment No. 13.
On the issue of existing homes, I hope that the hon. Member for Taunton (Mr. Browne) will recognise the fact that the Government have a range of policies in place, including the carbon emissions reduction target and Warm Front, that provide for the retro-fitting of energy efficiency to existing homes. The standards associated with zero-carbon homes are designed to accelerate the provision of new energy-efficient technologies in new build, rather than to be applied to existing houses. New developments can meet the standards more cost-effectively, as it is possible to use special new building materials and techniques to reduce a home’s energy consumption to close to zero, and to deploy larger-scale, development-wide generation technologies to fill the gap. That is not possible in the same way in a retro-fit scenario.
Amendment No. 14 would remove the sunset clause in the Finance Act 2007 that ensures that the relief will not apply on or after 1 October 2012. The Government do not accept the amendment because we estimate that by 2016 or 2017 the cost to the Exchequer of providing stamp duty land tax relief on all acquisitions of a zero-carbon home, whether old or new, and regardless of whether the home has changed hands before, would be well over £2 billion a year. We further estimate that the cumulative cost of the amendment to the Exchequer by 2016-17 could be as much as £6 billion. That reflects the fact that by 2016 it will be mandatory for all new homes to be built to a zero-carbon standard, and a significant number of zero-carbon homes will be starting to change hands for the second time. The amendment is unnecessary in any case, as the Treasury has the power to extend the end date of the relief by Treasury order if there is a case for extension when we reach that date.
Finally, let me turn to amendment No. 20, which has a number of parts. In the amendment, it is suggested that the Treasury should define a zero-carbon home through regulations by no later than 31 December 2008. It is also proposed that the regulations be subject to the affirmative procedure, and that when they come into effect, existing regulations defining a zero-carbon home should cease to have effect. The Government do not accept the amendment, because a zero-carbon home is already defined by regulations laid before Parliament in December 2007 under the vires in section 58B(4) of the Finance Act 2003. As has been said today, a draft of those regulations was approved through a resolution of the House last year. Furthermore, the Government believe that that definition balances the requirement for a robust definition that delivers value for money to the taxpayer against the need for an achievable standard that will incentivise the development of the zero-carbon homes market.
The Government will conduct an interim review of the stamp duty land tax relief by 2010. That review will provide an opportunity for examining the effectiveness of the tax relief in stimulating the innovation that is necessary if we are to realise the ambition of all new homes being zero-carbon by 2016. I therefore propose that the amendment be withdrawn.
I will not withdraw my amendment; I will press it to a Division. I do not feel that the Minister has addressed the issues behind my amendment sufficiently well to make me seek to withdraw it. Her response suggests that people who are in right-to-buy contracts with a developer, and who may occupy a zero-carbon home before eventually buying it, would not qualify for stamp duty land tax relief, which seems unfair. On that basis, and because of the uncertainty about the definition, I will press amendment No. 21 to a vote.
Question put, That the amendment be made:—
Clause 90 ordered to stand part of the Bill.
New Clause 1
Collective enfranchisement by leaseholders
‘(1) Section 74 of the Finance Act 2003 is amended as follows.
(2) In subsection (1) omit “by an RTE company”.
(3) Omit subsection (4)(a).
(4) In subsection (4)(b) omit “by an RTE company”.’.—[Mr. Gauke.]
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
New clause 1 is an attempt to rectify a small but aggravating injustice in the stamp duty land tax. It is an injustice against the thousands of people who own the leasehold of their property and wish to acquire the freehold under the Leasehold Reform, Housing and Urban Development Act 1993. It is a technical problem recognised by hon. Members on both sides of the Committee, and we hope to provide a solution to it this evening.
I shall have to take a few moments to set out the technical concern; I hope that I do not empty the Chamber in doing so. The problem exists for many people. I must confess that I have tried to identify the number of people affected, but I have not succeeded. I do not know whether the Exchequer Secretary will be able to shed any light; it is a complicated matter, and I would be surprised if she could.
Let me give an example. There is a block with, say, 100 flats. The leaseholders wish to acquire the freehold, which is worth, in aggregate, £600,000. That, of course, would mean an average of £6,000 per flat—well below the stamp duty land tax threshold. However, I should say something about how such a transaction works. The freehold is acquired by one company formed by the leaseholders; the acquisition is therefore viewed as one transaction. The consideration of £600,000 would fall within the 4 per cent. band for stamp duty land tax, so 4 per cent. stamp duty would be payable. The leaseholders would be liable for an average £240 each, and the Government would collect £24,000 in stamp duty land tax.
One could say, “So what? The purchasers knew that they would have to pay up, just as one would normally have to for such a transaction.” However, let us consider the issue from the individual’s point of view: they would be paying £6,000, and stamp duty is not normally payable on such a sum. To be fair, the Government recognised the issue and sought to address it in section 74 of the Finance Act 2003. The purpose of that section, as set out in the Act’s explanatory notes, was that
“the total stamp duty land tax due will be more in line with the stamp duty land tax that would have been due had each share of the freehold been bought separately.”
To return to our example, there would be 100 different transactions, each at £6,000. Not one of those would exceed the stamp duty threshold. There would not be a single transaction of £600,000 on which stamp duty would be payable, and the leaseholders acquiring their freeholds would not be paying stamp duty land tax.
However, there is a problem as section 74 refers to amendments to the 1993 Act, to which I have referred, and they are set out in the Commonhold and Leasehold Reform Act 2002, which refers to a right to enfranchise, or RTE, company. Such a company is defined in section 4A of the 1993 Act, as amended by the 2002 Act. At this point, I am surprised to see a few hon. Members still in the Chamber.
The problem is that the provisions implementing section 4A had not come into effect in 2003—nor have they now, in 2008. To benefit from the provisions, the freehold would have to be acquired by an RTE company. However, strictly speaking, such an entity does not exist. That is clearly an example of a failure to provide joined-up government; presumably, the Treasury and the Office of the Deputy Prime Minister, which was responsible for the 2002 Act, should have been working together and come up with a consistent definition. When the Treasury was preparing the Finance Act 2003, one would assume that it consulted with the Office of the Deputy Prime Minister, which would have given the Treasury assurances that it could make use of the definitions in the 2002 Act and proceed on that basis. Sadly, things have not worked out that way.
There is an ambiguity. One could advance the argument that because there was a definition of an RTE—indeed, draft regulations further set out the definition—one could still fall within the definition even if it had not been enacted. Precisely those circumstances have obtained in one case. The leaseholders of Elizabeth court in Bournemouth grouped together and formed what would have been an RTE company, had such an entity existed. Their group complied with the definition in section 4A and draft regulations.
Her Majesty’s Revenue and Customs took the view that it was impossible for people to benefit from the relief contained in section 74 of the Finance Act 2003 until section 4A came into force. Presumably, HMRC need not have pursued the matter as vigorously as it did. It could have used its discretion not to pursue, but it did not do so, with the result that the case—Elizabeth Court (Bournemouth) Ltd v. HMRC—went to the special commissioner.
On 31 October 2007, the special commissioner decided that the relief was not available until the RTE provision came into effect, and it is worth noting why she came to that decision. In part, it was because an ambiguity in the statute made it necessary for her to look at Parliament’s intention. The special commissioner did that, and determined that Parliament’s intention was that the relief under section 74 would not be available until section 4A had come into force. I do not know whether any clarification in the course of this debate would lead to a change in the law, but it is worth noting that Parliament’s intention was considered.
The aggregate cost of acquiring a freehold is likely to exceed the stamp duty land tax thresholds. What progress are the Government making in addressing that problem? The hon. Member for Liverpool, Riverside (Mrs. Ellman) submitted a parliamentary question on that point, to which the Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool (Mr. Wright), responded:
“In relation to the RTE company provisions, there are a number of legal and practical difficulties which still need to be resolved and work is continuing in order to determine a way forward. Therefore no timetable has yet been set to bring these provisions into force.”—[Official Report, 29 February 2008; Vol. 472, c. 1988W.]
Another parliamentary question was asked by my hon. Friend the Member for Enfield, Southgate (Mr. Burrowes), who I know has pursued this matter on behalf of his constituent, Mr. Leo Athanasatos of Windsor court in Southgate, where 34 leaseholders are trying to acquire the freehold. The Under-Secretary of State stated that
“tenants exercising their right of collective enfranchisement do not yet benefit from the SDLT relief provided for in section 74 of the Finance Act 2003, although this remains the intention once the practical difficulties have been resolved.”—[Official Report, 11 March 2008; Vol. 472, c. 238W.]
The Government have had five years to resolve those practical difficulties. So far, they have not produced even a timetable for dealing with the problem: the relief remains ineffective, and there is no sign that the Government will address that. It is a significant matter for many thousands of people, as many flats are held on a leasehold basis, especially in London. I own a flat on that basis. I hasten to add that I have no intention of acquiring the freehold, and so have no interest to declare, but many people in London do want to do that. Even so, the Government do not appear to be tackling a concern that hon. Members of all parties recognise.
New clause 1 is the Opposition’s attempt to rectify the problem. It would remove the references to “an RTE company” in section 74 of the Finance Act 2003, and provide that the relief would be available where a chargeable transaction is entered into in pursuance of a right of collective enfranchisement. We do not want the present problems to drag on. Instead, we want to resolve what is an aggravating matter for many people. It is clearly unfair for people in the circumstances that I have described to be hit by stamp duty when that is not the intention of either the Government or the Opposition.
If the Government cannot accept new clause 1, we hope that they at least exhibit some urgency about bringing forward their own solution. The present legislation is defective, and HMRC appears to be pursuing relevant cases with some vigour. It is taking in revenue, even though that is not what the Government have said is their intention. The Government have promised that they will deal with the matter, but there appears to be little or no practical activity in that regard.
There is a failure in the system, and we believe that new clause 1 would deal with something that has been allowed to fester for far too long.
First, may I say that my party has considerable sympathy for new clause 1, as presented by the hon. Member for South-West Hertfordshire (Mr. Gauke)? That is principally because so much time has elapsed since the proposals were first put forward, and the case in Bournemouth to which he referred will no doubt be replicated throughout the country.
As has been made clear, the Leasehold Reform, Housing and Urban Development Act 1993 entitled qualifying tenants to bring about the enforced sale of the freehold of a building to the tenants acting together. Sections 121 to 124 of the Commonhold and Leasehold Reform Act 2002 make changes to the collective enfranchisement rules under the 1993 Act. They provide that collective enfranchisement must be carried out by an RTE company, as defined under section 4A. As we have heard, the SDLT will be calculated by dividing the amount paid for the collective purchase by the number of flats involved.
That seems fair and reasonable, and we all accept that that approach should be adopted. The Government argue that the relief rate provided by the Finance Act 2003 will ensure that RTE company members—that is, the individual tenants—fund the SDLT
“at a rate broadly appropriate to their own contribution to the purchase and do not suffer a higher rate of tax because they are acquiring the freehold under a collective arrangement.”—[Official Report, 11 March 2008; Vol. 472, c. 238W.]
That too seems entirely sensible and reasonable, so it is somewhat amazing that SDLT relief is still not available to tenants exercising their right to collective enfranchisement, even though the principle was agreed six years ago. Sections 121 to 124 of the 2002 Act have not been brought into force, which means that section 4A has not been introduced.
We have heard that several Members have raised questions with Ministers, who have indicated that there are legal and practical difficulties which need to be resolved and that work is continuing in order to determine the way forward. There is no idea of when that work will be determined, when we will get to a resolution, or what the legal and practical difficulties are that are being experienced. Perhaps the Minister will be able to inform us about that.
Many of these legal and practical difficulties also apply in my constituency, and they should have been thought through some five years ago. The relief is intended to provide an incentive for leaseholders to work together rather than individually. As the hon. Gentleman and my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) rightly point out, this anomaly should be ironed out at the earliest possible opportunity. Does the hon. Gentleman agree that these so-called legal and practical difficulties were not foreseen some five years ago?
In the court case, or the special commissioner’s case, the fact that section 4A had not been brought into effect meant that it came down to intention. As the hon. Gentleman says, it has not been brought into effect because of the practical difficulties that the Government have identified.
I am grateful to the hon. Gentleman for that clarification.
New clause 1 would remove all references to RTE companies from section 74 of the Finance Act 2003 so that sections 121 and 124 of the Commonhold and Leasehold Reform Act 2002 do not need to be enacted for groups of tenants to be able to qualify for stamp duty land tax relief. That would logically lead to any group of tenants pursuing their right to collective enfranchisement becoming eligible for such relief under the 2003 Act. I am not certain whether this is a probing new clause or one that will be pressed to a vote, but it is over-simplistic in terms of the legal and practical difficulties, and it could create huge uncertainty for tenants pursuing their right to collective enfranchisement. The purpose of requiring an organisational set-up in the first place is to create that legal certainty and to allow its members clear and defensible rights. Removing RTE companies from section 74 of the 2003 Act would mean that any form of grouping could qualify for SDLT relief, and there could be all sorts of further loopholes and exploitation. We do not know what basic rights the tenants will have. The new clause would certainly not empower them in the way envisaged in the proposals, and it could even undermine their security.
A way round this might have been to introduce an amendment entitling RTE companies retrospectively to claim the relief once the Government had solved their problems with the 2002 Act so that we knew that this was going to happen or could implement a deadline for its commencement. Neither of those would be ideal, but they might be more legally defensible and give tenants some of the security that they require.
The whole purpose of setting up an RTE company as a legal entity would be to bring these groups of tenants together into one legal entity and to have certainty that they could then exercise basic rights under the legislation, which would include SDLT relief. Lots of groups of tenants would not necessarily be RTE companies. Removing RTEs would presumably open this out to all sorts of tenants. While that might have some relevance to SDLT, it could undermine some of their other rights and certainties. Another option would have been to introduce changes to remove an RTE company and replace it with a common definition of a company in the original legislation—the Leasehold Reform, Housing and Urban Development Act—and the 2003 Act. In that way, tenants could qualify for SDLT relief while having the legal protections and certainty afforded by being a company.
The essence of the issue—I am glad in a way that the hon. Member for South-West Hertfordshire has raised it—is that these legal and practical difficulties cannot be allowed to go on for ever. After five years, the Government must tackle them head on and decide what they are going to do so that we have some certainty this time that these reasonable and justifiable reliefs can be given to all the groups of tenants who have got themselves together in RTEs and are now waiting to get the thing done. I would be grateful if the Minister explained how the Government are going to tackle that and resolve what has been an outstanding issue for far too long.
I promise not to detain the Committee too long. Not least, I will try not to go into the legal jargon that my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) had to use in order to make sense of this, and thereby clear the Chamber.
The hon. Member for South-East Cornwall (Mr. Breed) accused the new clause of being too simple, but it would resolve the problem very quickly. Defective legislation is wrong. We are here to introduce legislation that supports our constituents and supports the country in moving forward. The Government admit that they have defective legislation on the statute book, yet one would have thought that in the past five years the great minds that have been in post in the Treasury might have got their act together and moved forward. This is the sort of defective legislation that an incoming Government might expect to have to resolve, but it is that of an existing Government trying to introduce measures to help people in purchasing the lease of their property.
I must admit that this would probably not affect many properties in my constituency. However, having grown up in a seaside town once I eventually got away from London in my early teens, I know that there are huge effects in seaside towns with large purpose-built leasehold blocks, as well as in many of the cities of this great country. I find it difficult to understand why over the past five years the great minds of the Treasury have not made proposals to repair defective legislation that is taxing people of this country as it was not designed to do.
I support new clause 1 and hope that my hon. Friend the Member for South-West Hertfordshire will press it to a vote.
I rise to support my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), who has done the Committee and the nation a great service by highlighting the ridiculous position that we find ourselves in. I hope that Ministers will take this away and come up with an answer more rapidly than their predecessors have been able to over the previous five years.
As I understand it, the Labour party and the Labour Government wish people to have this exemption if they are buying the leasehold interest in their flat. Certainly, the official Opposition wish them to have that exemption. The hon. Member for South-East Cornwall (Mr. Breed) was rather more muddled. At one point he seemed to be in favour of certain people having that exemption, while at other times he seemed to worry that undesirables would be allowed in.
It is easy to understand that if one wants to ensure that people have certainty, that relates not only to their stamp duty land tax but to all the other rights that need to be protected. If people go into this as groups of tenants who do not have the protection of an RTE company, they may well lose some rights and benefits in order to gain in terms of tax.
That just shows the muddle that the Liberal Democrats are in. On the one hand they say that they want to join the Government and the official Opposition in trying to expedite people getting this tax relief for the purpose of enfranchisement, and in his next breath the hon. Gentleman says that it might not be a good idea to let them have that freedom because they might make a mess of it. Once again, we see that the Liberal Democrats do not actually believe in freedom at all. They do not believe that people are intelligent or able to make their own decisions; they believe that they have to micromanage decisions from Parliament. It would be even better if the Liberal Democrats got out of their muddle by agreeing with the Government and the Opposition. People should have the right to enfranchise their lease and buy the freehold, and they should be able to do so free of tax. We could then say to all those seeking to interpret the will of the House that the whole House was united, not just the two major parties.
I would like to make one new point during this brief debate. While Ministers are trying to get the right legal advice and put the right form of words into the necessary provisions so that the will of the House five years ago and now can be pr