Westminster Hall
Tuesday 8 July 2008
[Mr. Eric Martlew in the Chair]
Artists’ Resale Rights
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watts.]
I am grateful to you, Mr. Martlew, and to Mr. Speaker for selecting this subject for debate. Today’s turnout shows that the subject was well chosen. Shadow and former Ministers, and people who really care about this subject and who often speak about it, are here today. Such a well contested and attended debate is somewhat unusual in this Chamber, so I shall keep my remarks brief to ensure that everybody has the opportunity to speak.
The background to the debate is that in 2001, the European Commission introduced a resale right for artists so that they benefit when their work is resold. The measure had long been promoted by the French Government, who called it a droit de suite, and long wished for by artists, who might have received very little money from a first sale, and who saw their patrons and the people who bought their work benefit commercially from its later success and from any appreciation in its value. It was understandable and perfectly correct that artists would lobby for the measure.
Despite the artists’ good case and the fact that the resale right was originally intended to cover living and dead artists, as it does, the United Kingdom opposed directive 2001/84/EC when it was first promoted by the Commission because of the damage that it was likely to cause to the UK art market. After negotiations by Ministers—I had a certain amount to do with those when I was a Parliamentary Under-Secretary at the Department for Culture, Media and Sport, and previously, as an Opposition spokesman—the UK secured the right to derogate for a limited period. I should emphasise that the derogation applies only to the sale of the work of living artists.
It has been a success, although not unqualified. Living artists have undoubtedly benefited—some 568 benefited in the UK between February 2006 and August 2007. My hon. Friend the Member for Rhondda (Chris Bryant), who has taken a great interest in the subject and who has discussed and debated it previously in the House, reported in a debate in November 2005 estimates that some 85,000 or 90,000 artists would benefit. That has proved to be somewhat optimistic: a relatively small number of artists have benefited but, for them, it has been a success and has improved their living conditions.
To date, because, in my view, of the derogation, the UK art market has survived and prospered. It is the largest art market in Europe—it is very strong—and it is important for both artistic and commercial reasons. We do not lead in many world markets but, apart from the United States and one other entry into the field in the past year or so, we have the largest art market. That is important for us, not only commercially, but for the arts community, because it puts the focus on London and on the quality of art.
I entirely agree with the case being made by the hon. Gentleman. He will recall that the Government, despite gaining some concessions, voted against the original directive, because they saw the damage that it would do to the British art market. Does he know why the Commission is persisting with the move to extend the artists’ resale right to dead artists? That would only help American, Japanese and Swiss dealers and arts centres, and would be to the detriment not only of London, but of Europe. Should not the Commission defend Europe as a trading centre rather than introduce disincentives for people to bring their art to Europe from elsewhere in the global market?
Perhaps because I share the right hon. Gentleman’s position I am not the best person to explain the disadvantages of the scheme. However, one of the qualifications of the joys of the artists’ resale right as it was originally envisaged is that if the measure applied to dead artists, their estates and descendants would benefit. That is not improper. It is quite right that the descendants of, say, Matisse, benefit from sales of his work, but it is not exactly what was envisaged by those who originally promoted the ARR.
I agree with the hon. Gentleman on that point. However, given that collectors and consigners at the top end are very mobile and that they can have multiple consignments wherever they like, does he agree that it would be foolhardy to extend droit de suite until the EU has successfully negotiated with Switzerland and the United States, which are playing no part in the matter, and for good reason?
I agree with the hon. Gentleman, but the debate is moving considerably. The French, who originally promoted and envisaged droit de suite—hence the name—may well begin to recognise its effects on their art market, which they are keen to promote. We could see movement on that in future, and on the battle lines that heretofore have been quite well drawn. People other than the UK Government are beginning to recognise that, although the artists’ resale right is admirable in its intention, if it is extended to the past, it will create problems that its original promoters did not envisage.
I am slightly confused by the hon. Gentleman’s argument. He says that the current scheme for living artists is working well and that he would have liked more to be helped by it, but that the real problem lies with the future and passing those benefits on to heirs and successors. The argument against the original scheme, which he supported, was that it would be a huge disaster to the arts market in this country, but that has doubled in size. What is the evidence that there is a problem with the current scheme or that it will be worse in future?
The difference, as the hon. Gentleman knows only too well, is that we secured the derogation. It is right to extend that beyond 2005, perhaps to 2012. While the art market changes and settles in the next decade, the derogation ought to stay. We would be well advised to extend the derogation so that we can see what changes in the art market. Huge changes are taking place. I mentioned that we were the No. 2 art market in the world after the United States, but we are now the No. 3, because of the astronomical development of the Chinese market. However, that will not be the only new market; it is likely that Russia and India will grow, too. Art is going to be a big area for development. Everything is changing, and while that is happening it would be sensible for us to negotiate with the European Commission to extend the derogation. We cannot anticipate what will happen to the art market in the next 10 years, so let us see what happens. The derogation has worked well and has saved the art market from its original fears, so we should try to extend it. That is the case that I should like to promote.
In 2012, the present derogation will expire, and Europe must decide what we do after that. There is a simple choice. On the one hand, we could go back to the original directive, under which all works of art—except for works of decorative art—would be covered. As we originally anticipated, however, that would cause problems for our art market and art markets elsewhere, including in France. On the other hand, we could seek a further extension of the derogation for a limited or, indeed, an indefinite period. Given that we cannot anticipate the future, a limited period of, say, 10 years would be a sensible measure, because we would be able by that stage to see how the art market had shaken out. We cannot predict that that will be a simple development, but an indefinite extension is probably not well advised.
What we have here is a clash of two good arguments. Artists have a good point, and I have great sympathy with their position and that of collecting societies such as the Design and Artists Copyright Society, which collects on behalf of artists. There is much to commend their position, although many people are somewhat uncomfortable about the fact that it is artists’ families who benefit, not artists themselves. However, on the other side of the argument—the side that I definitely support—the British art market is good for the United Kingdom and for its artists, and the derogation would allow the art market’s beneficial work to continue. This is therefore an interesting debate because it is quite finely balanced; it is not that one side has a rubbish argument and the other is incontrovertibly right. The debate raises interesting questions, but, on balance, there is a strong case for extending the derogation.
Those who say that the British art market is strong do not take into account changes such as those that are happening in China, which overtook us this year, or the fact that the art market is changing enormously as capital moves over the world and the profile of new countries increases. On the other side of the argument, the benefits to artists have not been quite as great as people originally envisaged. The 85,000 to 90,000 artists mentioned by my hon. Friend the Member for Rhondda in his speech in 2005 have not benefited—the numbers have been much smaller. Since February 2006, DACS has collected £4.4 million on behalf of only 1,400 artists, although that money is very useful and very good for those artists. However, only a relatively small number of people have benefited, contrary to the EC’s original prediction that 250,000 artists might benefit. Indeed, another problem with the scale and spread of the money collected is that 80 per cent. of that collected in the UK went to fewer than 140 artists. One could therefore see this as a specialist scheme, which undoubtedly benefits a few artists, but not the whole artist community.
In that sense, the provisions are not unlike the public lending right. The public lending right is a wonderful thing, although it is underfinanced, but those who benefit from it are those who least need it, such as J. K. Rowling. She does extraordinarily well from the public lending right because her books are borrowed so much, but other, less famous authors do not do so well. My father receives a payment from the public lending right every year, and his cheque usually comes to a champion £5, which I gratefully receive and give to the Royal Society of Literature. It is not, therefore, the famous artists who need the money, and measures such as the artists’ resale right and the public lending right for books, although extremely well intentioned and important, do not necessarily benefit the people we think they will.
There are good arguments on both sides, and I look forward to listening to colleagues, but I believe that the Government are playing it about right: they are consulting on the issue, and I hope to hear from the Minister that they are likely to negotiate hard for an extension beyond 2012 and perhaps for 10 years to allow them to see how the art market develops. I am encouraged in feeling that that is the right approach by the fact that things are changing in France, which has always been the champion of droit de suite, and we might well see some sympathy and even support for our Government’s position from the French Government. That is hard to predict, but the world is changing, and we are on the right side of the argument in asking for a further derogation to see how fast and how much the situation changes.
Thank you for calling me to speak in the debate, Mr. Martlew. I congratulate my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) on securing a debate on this important subject, which concerns many hon. Members, as can be seen from the turnout.
I have come across this issue on two separate occasions. I was Parliamentary Private Secretary to my right hon. Friend the Member for Makerfield (Mr. McCartney), whom I am happy to see here today, when he was the responsible Minister at the then Department of Trade and Industry. I was also a member of the Select Committee on Culture, Media and Sport when it considered the artists’ resale right a few years ago and produced a report that helped the Government to come to terms with the issue after earlier opposition.
My position is directly contrary to that of my hon. Friend, because I believe that we should not seek a further derogation, but build on what has already been achieved by providing some remuneration to artists and allowing that to continue after their death. The argument that we heard from the other side of the Chamber is similar to the one we heard when the measure was first introduced way back in 1997. We were told that there would be an horrendous effect on the art market, which would devastate our position as one of the world’s leading art trading centres. However, things have not happened in that way. There are, however, other factors at work in the art market that do cause a problem, and I shall return to them later.
The hon. Gentleman is absolutely right that there has been no clear evidence to date to suggest that the measure has impacted on the UK’s position as a leading arts centre. Will he not concede, however, that it is far too early to tell what effect it is having on the art market and that the art market in the UK is being distorted for several other reasons, including the high prices being paid by Russian and Indian collectors for works by impressionists and post-impressionists?
The hon. Gentleman has a background in this area and knows far more about the art market that I do. Clearly, I listen carefully to what he and others in the market say, but the evidence so far is that the impact has been minimal.
There are, however, other areas where we do have a problem. My hon. Friend mentioned the rise of China, and there are reasons why the Chinese art market has developed in the way that it has. We might also see the rise of Russia as an art market, although it is more difficult to see that at the moment because of some of the circumstances in Russia. We must be alive to the problems, but the artists’ resale right is a pimple compared with the other problems facing the market.
Is not the hon. Gentleman making the same mistake that the Treasury is making in relation to the British economy? Just because something goes well in good conditions, that does not mean that it is secure for ever. We may now be entering a period of recession, and the background to that is a shift of economic power to the far east and other economic jurisdictions. Is it wise of Britain to impose a fiscal penalty on one of its premier successful industries? That must be damaging. The hon. Gentleman will recall that the Commission assured us that other art markets would follow suit and introduce a retail levy, but they have not done so, putting us at a disadvantage unless we extend. Are the proposals wise?
Order. Interventions should be short.
The EU is still negotiating, and I do not know when, if ever, it will conclude those negotiations. However, I repeat my point that the amount of money that we are talking about is trivial compared with the overall turnover of the art market.
A few years ago I introduced a ten-minute Bill in the House with the aim of tackling the buyer’s premium, which has an interesting history. In the mid-’70s, when the economy, sadly, was in a similar position to now, both the major auction houses, Sotheby’s and Christie’s, were having some difficulties, so they introduced the buyer’s premium, which was 10 per cent. in those days. It had a significant effect on the market and obviously on their income. Progressively they have increased it, so that in some cases it is now 25 per cent.
I looked at Sotheby’s website last night. In London its buyer’s premium is 25 per cent. on prices up to £25,000. On prices above that level, up to £500,000, it is 20 per cent., and above £500,000 it is 12 per cent. The website helpfully gives an example—from New York, as the same figures apply there—of how that works in practice. On a lot sold in New York for a hammer price of $1,500,000 the buyer’s premium would total $262,500. That is an added cost to the purchaser and a staggering amount when it is added to the seller’s premium. I have not checked what that is, but usually we would expect it to be about 10 per cent., perhaps going up to 15 per cent., with a smaller percentage for more expensive items. It is ludicrous to argue in the context of those figures that a maximum of £12,500 going to an artist or their beneficiaries has a devastating effect on the market, and leads to the “We’re all doomed,” scenario that other hon. Members have presented.
The hon. Gentleman inadvertently hits the nail on the head. The auction houses would love to think that they get 10 per cent. from consignors. What happened when they put up the buyer’s fees was that the consignors’ fees came down proportionately. However, his point is a good one. He read out figures that are applicable in New York or London. That is the key point. Wherever one buys those works of art, one pays that commission. With droit de suite, one does not pay it in the United States and elsewhere.
The hon. Gentleman is right. At Sotheby’s, exactly the same figures apply in London, France, the Netherlands, Italy, New York, Switzerland, Hong Kong, Australia and Canada, although the situation is slightly different in Canada. However, my point, if the hon. Gentleman will allow me to make it, is that if the auctioneers can add such an amount of money to their costs and, because of the reach of the two main auction houses, apply the premium around the world, they have a margin that can be cut if they feel that the £12,500 that they would see as being creamed off for artists is having a serious effect on their market. It could be taken out of that premium.
As a lawyer I have tried to consider the buyer’s premium in terms of the contract, and it has always struck me that there is a real problem with it. The hon. Gentleman is right to point out that it enabled auction houses to reduce the seller’s premium, which helps them to attract business; but the seller suffers in another way, because everyone who buys knows that they are paying the buyer’s premium, and in a case such as the one I mentioned, no one will bid up to the price that they are prepared to pay. If I am prepared to pay £1.5 million for a work of art but I know that I will have to pay another £200,000 or £300,000 on top of that, I will cut what I am prepared to bid, so the seller loses anyway. That is a serious problem.
I have made the point I wanted to make. The evidence is that the scheme works: it has not damaged the market, and it will continue to work. Much of the reason it works is the efficient and effective way in which the Design and Artists Copyright Society has worked on it. It manages the scheme very effectively and fought for it through the various stages of its development that I have described, from 1997 when it first appeared in the in-tray of my right hon. Friend. The scheme works and the fundamental question for me is why artists should be treated any differently from writers and musicians; why should their heirs and successors lose when copyright extends for up to 70 years in those other cases?
I am conscious that many of the arguments have been rehearsed before, and many hon. Members want to contribute to this debate, so I shall keep my comments brief. I congratulate the hon. Member for Stoke-on-Trent, Central (Mark Fisher) on securing this timely debate, and I hope that the Minister will reflect on various points.
First, it is too soon to say whether droit de suite has had an adverse effect, or otherwise, on the UK art market. The UK art market has been thriving. The Minister will have seen the report in The Times this morning on the huge prices paid by international collectors for impressionist and post-impressionist works. That, I think, has artificially maintained London as a centre of the art world in the current uncertain economic climate. The key point relates to international collectors. We are not talking about the small consigner or small purchaser. What really drives the auction houses and dealers—their engine room—is the big, expensive items, which are being collected by a new group of international collectors, who are united by one thing: their mobility. They may have properties here and elsewhere, and they move around the world. Consigners recognise that.
It is less a matter of the single consignment that might attract droit de suite than of the fact that in an estate with a multiple consignment, the impact of droit de suite on several paintings might seriously affect where the executors choose to consign those works of art. We are playing with fire if we choose not to extend our opt-out in this matter at a time when the United States and Switzerland—both vibrant centres of the art market—are not prepared to join in. I would have a rather different view of droit de suite if I knew that, rather like the buyer’s premium, it was a universal levy. However, until it is, it would be foolhardy not to extend our opt-out.
This is not a question of fat-cat auctioneers, of which I was one—or rather I was a thin-cat auctioneer, associated for many years with Sotheby’s, although I have not been for six or seven years now. When we talk about the art market, we should recognise that we are talking about dealers, the hotels that put up people who come to the great auctions, and—this will be of interest to the shadow Arts Minister, my hon. Friend the Member for Wantage (Mr. Vaizey)—museums and galleries, and exhibitions, all of which piggy-back on London’s identity as an art centre. One only has to talk to the Mayor of London to realise that he wants London to remain pre-eminent as an art centre. That is not something that just happened, or will just continue. Other world centres would love to take on the role, not least Paris, as has been said. It is interesting that President Sarkozy, who is keen to re-establish Paris as a centre of the art market, is apparently having second thoughts. We can all subscribe to the romantic idea of “La Bohème” and the starving artist in the garret, but the reality is somewhat different.
It is sometimes said that Christie’s and Sotheby’s are behind what is happening, and that allegation was certainly made when the matter was originally debated, but they own companies and have auction houses in New York, so in a way they will be the last to lose. It will be the small people such as packers, porters, framers and insurers—in other words, the workers—who cannot move, who will lose when jobs go from the London and European art markets.
Indeed that is true. My right hon. Friend has been a champion of the art world in that respect for many years—he has form.
To quote some more statistics, in the first 18 months of the measure’s operation in the second largest art market in the world, only 1,104 artists benefited, of whom only 568 were British. The top 20 artists received 40 per cent. of the total collected, and the top 10 per cent. shared out 80 per cent. The idea that the money has filtered down and is saving artists from penury is far from the truth. The signatories to a letter in The Daily Telegraph last week suggesting that the artists’ resale right should be imposed immediately, for ever and a day, were headed by the excellent artist Damien Hirst. He is not exactly a starving artist by anyone’s reckoning. It is interesting that some other leading artists, such as David Hockney—I am not sure about Lucian Freud—are on record as being against droit de suite. There is by no means universal demand from the artistic community.
Who benefits from droit de suite? DACS clearly benefits. It has been driving hard to promote it; of course, that is what DACS is in the business of doing. I do not believe that the evidence suggests that droit de suite makes a material difference to struggling artists in this country. What makes a material difference to artists in this country, struggling or otherwise, is that London is still the centre of the art world, and that people from around the world come to the UK because of that. That has a huge knock-on effect, and it is incredibly important that that position be maintained.
Will the hon. Gentleman give way?
I am just concluding. We would be doing artists of every sort, as well as dealers, collectors and small auction houses, a huge disservice if we did not continue the opt-out, particularly at a time when the United States and Switzerland are not playing ball.
I congratulate my dear Friend the hon. Member for Stoke-on-Trent, Central (Mark Fisher) on securing this debate, even though, for the first time in 11 years, we are on opposing sides. Like my hon. Friends the Members for Aberdeen, North (Mr. Doran) and for Rhondda (Chris Bryant), I served on the Select Committee in 2005, and I think that it was our Committee that changed the view on the issue.
I have heard Members say, “We mustn’t do this,” or “We mustn’t do that,” using exactly the same argument rehearsed in 2005. We were told that the measure would devastate the market. It has not. We are talking not about a major overhaul—it involves just under 2 per cent. of turnover—but about the rights of individual artists. That is something that the Labour party should be proud of. They are the people that we represent and should represent. I disagree, for the first time, with my hon. Friend the Member for Stoke-on-Trent, Central.
The Design and Artists Copyright Society’s management of resale rights has been a great success. DACS has collected £5.2 million in royalties since February 2006, on behalf of just over 1,500 artists. Those royalties have reached a wide range of people, including the artists whom the measure was intended to benefit: young artists and those on low incomes.
We are told that the UK art market has been in a terrible position. In 2004, the value of the market was £4.2 billion, but resale rights have had such a devastating impact that the value is now £8.5 billion. Perhaps we need another two years to check, but to say, “My goodness me, it’s really dangerous to do this” is absolute nonsense. That growth is not just due to one or two large buyers, either; it is because London is the centre of the marketplace and always will be. That has been proved categorically. I simply do not see a danger that less than 2 per cent. of the market will alter or change habits; I do not follow that argument.
The hon. Gentleman is displaying a bit of financial optimism. The world art market has enjoyed a comparative boom in the past decade, but that may come to an end. Also, the London art market might have done even better in the good years. Should we not prepare the ground for a further shift of economic power and buying ability to other countries, instead of putting further fiscal disincentives before foreign people who might want to continue coming here to buy and sell art? It is no good looking at the past; he must look ahead, rather than simply saying that, because the change was not too disastrous, everything must be all right for the future.
What I find when I travel around the world—whether to an Organisation of Petroleum Exporting Countries summit, a G8 summit or other summits—is that the people who support France, Germany and America are British solicitors and British accountants. The whole service industry supports the whole world, and the art market is one part of that. I disagree; the measure will enhance the market.
Since the law was implemented, resale royalties equate to less than 1 per cent. of the current value of the UK art market. The cap on the maximum royalty payable for each work sold ensures that the royalties do not adversely affect the behaviour of sellers and buyers. The royalties change, so that those at the top get less and those at the bottom get more. That is redistribution, which is something that the Labour party should be proud of.
Some 87 per cent. of art market professionals say that the resale right has not damaged their business. I shall cite more of the report in a minute. The implementation of the UK regulations and the management of the resale right in the UK have been held up as a model of excellence by other countries around the world. The European directive obliges the UK Government to complete the implementation of the right for artists’ heirs and beneficiaries. There is simply no evidence to suggest that buyer behaviour has been adversely affected by the introduction of the resale right during the transition period, and no evidence yet to suggest that it would be adversely affected by the implementation of stage 2 of the directive.
In work commissioned by DACS, Maven Research spoke to 335 art market professionals and 151 artists. I understand that the Antiques Trade Gazette report “The Impact of Artist Resale Rights on the Art Market in the United Kingdom”, which was supported by the British Art Market Federation, only surveyed 35 art market professionals. That is astonishing. DACS surveyed 335 art market professionals and 151 artists. What did it find? I have said that about 87 per cent. of art market professionals felt that the measure had not damaged their business. More than 60 per cent. of them said that resale rights take them less than five minutes and cost them less than £10 a quarter in administration, and 76 per cent. of them said that the purchase of artworks was unaffected by the new law. Some 39 per cent. of art market professionals feel that the impact of artists’ resale rights has been positive; 95 per cent. of artists are in favour of them, and 90 per cent feel that the law should be extended to the beneficiaries of deceased artists. Some 80 per cent of the artists who receive resale royalties are British. The report’s findings are broadly in line with the view of the UK Intellectual Property Office.
The hon. Gentleman rightly draws our attention to an important report. However, he has missed one important figure from it: 11 per cent. of the artists surveyed said that the implementation of the scheme has encouraged them to do more work.
Indeed. Well spotted.
I hope that my hon. Friendwill understand that it is important to support young artists. The measure is a way to help them grow into different artists, and who knows where that will lead? I hope that we can persuade the Minister that 2010 is enough and that we do not need to change the date to 2012.
I have, on occasion, disagreed with my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher), but I have never disagreed with him quite as strongly as I do today. What I find most depressing about the contributions to the debate—not those of the two colleagues who served with me on the Select Committee on Culture, Media and Sport when we did our report on the art market, but those of other Members—is that the arguments are precisely those that we heard before.
I remember Anthony Browne, the chairman of the British Art Market Federation, telling the Select Committee that Cork street was going to die. He said in the Financial Times:
“In effect we’re going to hand a large part of the London market to New York on a plate. This is the single biggest threat to the competitiveness of the UK’s international art market.”
The Antiques Trade Gazette wrote:
“The introduction of Droit de Suite in the UK could result in the loss of up to ten art dealing jobs for every artist who would benefit from the tax.”
So far, 1,500 artists have benefited, so 150,000 people working in the art market have apparently gone—completely and utterly disappeared—in the past two years.
That is silly.
My hon. Friend may think that that argument is silly, but my point is that those who campaigned against the introduction of any artists’ resale right in this country said that, for every artist who gained, 10 people would lose their jobs in the British art market.
The hon. Gentleman opposite, whose constituency I cannot remember—the hon. Member for Sotheby’s. [Hon. Members: “Withdraw.”] I do not mean that in any derogatory way; that is merely how I often think of the hon. Member for East Devon (Mr. Swire), because of his previous job. He knows a great deal about the British art market, but I was intrigued by the fact that he said that the British art market consists not just of auction houses but of museums, galleries, hotels and all the people who work in the industry. The only people that he left out were the artists, whom he did not mention at all as part of the British art market, yet one of the reasons why the British art market and the auction houses and galleries in London are doing phenomenally well is that Britain has an extremely vibrant group of artists at the moment. France’s art market is finding it very difficult to take off—or to regain the position that it once had—partly because it lacks that artistic vibrancy.
As several hon. Members have mentioned, since the introduction of artists’ resale rights, there has not been a collapse of the British art market, but, if anything, a resurgence. I do not attribute that directly to the introduction of artists’ resale rights, as my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) was half suggesting, but it cannot be argued, as it was three years ago, that the British art market will suddenly become less competitive as a result and lose out to other markets around the world. Indeed, as we have seen, the market has grown from £4.2 billion to £8.5 billion.
Another argument used three years ago was that it would be impossible to administer the rights and almost impossible to find all the artists and to ensure that money was taken from those buying the paintings and so on. In fact, out of the 1,500 artists who have benefited, there have been difficulties probably on two or three occasions—absolutely minimal difficulty. In fact, the administration has gone more smoothly certainly than that of many other parts of government, such as working tax credits or—
The Child Support Agency.
Indeed. There is perhaps an argument for asking DACS to run parts of the Treasury.
There is a serious point: those who campaigned against artists’ resale rights, arguing that it would be impossible to administer, must face the fact that it has been introduced remarkably smoothly. As my hon. Friend said, 60 per cent. of art market professionals say that it takes merely five minutes to do the paperwork for each transaction and that, per quarter, the administration costs them about £10.
The hon. Member for East Devon said that one of the problems is that those who receive the money are those who least need it, and my hon. Friend the Member for Stoke-on-Trent, Central referred to public lending rights. I must confess that I have published a few books that are available in libraries, but I gain nothing from the public lending rights.
Because nobody borrows them!
Quite probably. And neither are they available in any good bookshop.
From the inception of public lending rights, they extended to all writers who wanted to participate—one has to register to receive any money. As my hon. Friend the Member for Sittingbourne and Sheppey said, a large number of artists have benefited from resale rights—some 1,500 so far, and I am sure that there will be more—and significantly more will benefit if we stop the derogation and extend the rights to the estates of deceased artists. Only 2 per cent. of artists who have received money under the rights received more than £50,000, so those who suggest that it benefits only the Damien Hirsts and the Antony Gormleys of this world are wrong. I accept that the list of those who wrote to The Daily Telegraph was headed by some very famous names, but it included some 587 names, the vast majority of whom most ordinary people in Britain would not have heard of.
The artists’ resale right works so effectively not only because it is a progressive tax—the larger, more valuable articles do not attract the same percentage—but because there is a cap of just €12,000. Some have argued, including three years ago—the hon. Member for East Devon repeated the argument today—that people might say, for example, “If you extend the right to deceased artists, those selling Bacon paintings will take them to the USA.” I do not think that, if one is selling a work for 5 million, 10 million, 15 million or 20 million dollars or pounds, the €12,000 will make a significant difference. What does make a difference is where one believes that the best market is for an artist. For example, it is pretty unlikely that Lucien Freud works will go to the USA for sale, but many Francis Bacon paintings are already going there.
I believe that Lucien Freud’s works are going there, too. The point that I tried to make was not about individual paintings, but multiple consignments. With a multiple consignment, auction houses, for example, will already be considering what seller’s premium could be secured. They will factor in all those things, and I submit that, if someone has 20 or 30 paintings, all of which might attract the €12,000 charge, they will consider where best to sell them.
I am not so sure, although, obviously, the hon. Gentleman has a great deal more experience than I do in auction houses and the consigning of art works. However, I would have thought that someone thinking of consigning 20 or 30 artworks by the same artist at the same time—
Not the same artist.
Sorry, the hon. Gentleman is grumbling from his seat.
I was talking not necessarily about 20 or 30 Bacons, but about multiple consignments, which could consist of 20 or 30 works by different artists.
In which case, we return to the argument about how an individual chooses to sell works. I thought that the hon. Gentleman was referring to the consignment of lots of works coming from the estate of a recently deceased artist. In that case, it is very unlikely that an individual will say, “Yes, it is a good idea to sell 20 paintings by the same artist at the same time,” because that might dramatically affect the value of each painting and might not produce the best result for the individual.
In the end, the Government must face not only the rights and wrongs of artists’ resale rights, but what should happen with works by deceased artists. As Members have said, the Government have a derogation until 2010, and if they want to, they must prove to the Commission that there is good reason for extending it until 2012. I will suggest two main reasons why I think that there is no good reason to do so: first, families are often the vital guardians of the an artist’s artistic heritage. An interesting case is that of the artist William Scott, who sadly suffered from Alzheimer’s for the last eight years of his life. His family passed on to me an interesting story through the William Scott Foundation. In 1950, he created a painting that sold at the time to a collector for £60, of which William Scott received £30—the dealer took the other half. Out of William Scott’s £30, he had to pay £14 for the frame. So he received all of £16 for that artwork in 1950. Last month, that painting sold at auction for £1.1 million. William Scott is deceased, so the family do not receive anything. Some might think, “That’s fair enough. He sold it. End of story!”
Actually, however, after William Scott’s death, his family founded the William Scott Foundation, which provides a catalogue résumé of all his oil paintings, which was not likely to have been done commercially. They have also maintained an archive and, as often happens with many families, provide advice on whether works are fakes. Again, such services are nearly always provided free by families. As I said, they are providing a full authentication service for William Scott works to galleries and auction houses. They also assist students with theses and art history projects, deal with all the copyright and reproduction rights and have already established that 27 works are fake. And what do they do with all the money coming into the foundation? Every single penny goes towards Alzheimer’s research.
Those who think that, by extending the right to the families of deceased artists, we will simply help the fabulously wealthy children of successful artists could not be further from the truth. I have one other example from Wales. Incidentally, £23,000 has been paid out to Welsh artists since the rights began. I am sure that many hon. Members will know of Sir Kyffin Williams, one of Wales’ great artists, who generously gave a large number of paintings to a new gallery on Anglesey. His artwork is still significantly undervalued. I suspect that, in the next few years, it will significantly appreciate. If I could afford to buy one of his paintings, I would. He died nearly two years ago, in September 2006. Again, managing his estate is very complex. Nicholas Sinclair, who manages his estate, says that, in some cases, it is pretty much a daily job. He deals with licensing inquiries, memorial exhibitions and the fakes that have started to appear in auction houses. All that work is done on an unpaid basis.
The value of a Kyffin Williams in five years’ time will largely depend on Mr. Sinclair’s unpaid work. Those who own important paintings, or paintings by artists who are recently deceased, are likely significantly to benefit from the artists’ resale rights going to ensure that families can maintain the heritage of the individual artists. If we want a vibrant British art market—as vibrant as possible—we must ensure that the derogation is ended and that artists’ resale rights apply not only to living artists but to those who are deceased as well.
In the end, there is a moral point: those who benefit most from the great creativity and imagination of individual artists should surely be the artists themselves and the families who supported them, and whom they supported. If we cannot stand up for that in the House, I do not know what we can do of value.
I congratulate my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) on securing the debate on artists’ resale rights. I, too, have some form: it was 10 years ago this week, on 15 July, that I first participated in a debate in the Commons on this issue with the right hon. Member for Wells (Mr. Heathcoat-Amory), who sadly has had to leave the Chamber on other business. In addition, I was the Minister of State in the Department of Trade and Industry who, for two years, had to travel around Europe, negotiating with other Governments on this subject. Whether or not my activities were successful is another matter. Such is the life of a Minister.
My visit to Vienna was somewhat more difficult than my visits to Paris, Brussels and other places in Europe. When I arrived, a coalition Government had just taken power. I do not make this point to warn against coalitions, but I had to see two Ministers on the same day: the Minister for Legal Affairs, who was on our side, and the Minister for Art, who was not. Although we had decent discussions, I left with no clue what the position of the Austrian Government would be in the Council of Ministers. I hope that my hon. Friend the Minister of State will not have that problem in his discussions in the coming weeks and months.
We must consider how to manage globalisation with regard to the art market, in the same way that we have done with the financial markets, insurance markets, and education and health services. As markets change, there is always a debate about what role Government should play to help to manage the change, so that at the end of the change resulting from globalisation, there is an effective market in the UK. The marketplace is still changing, and 10 years on, the arguments put to me when I was a Minister remain legitimate.
As the market has changed, we have benefited from a global explosion in the number of paintings coming on to the market and from the price on resale of those works of art. Let us be clear, however: no country has a guarantee for ever and a day that it will be the place in which business is done. I do not agree with my colleagues when they say, “London has always been the place, and always will be.” That is not true. As we have seen in the past decade, as our market has grown, new markets have emerged and grown from not having a single sale to being the second biggest marketplace in the world. In the next 10 years, there will be further significant changes. I want to ensure that, in the next 10-year cycle, the UK remains in as strong a position as it was 10 or 20 years ago and as it will be 10 or, I hope, 20 years from now.
Difficult decisions have to be made. At the end of the discussions, such decisions can only be made on the balance of probability; they can only be a judgment. As my hon. Friends the Members for Rhondda (Chris Bryant) and for Sittingbourne and Sheppey (Derek Wyatt) eloquently said, that does not mean that we should use globalisation as an excuse or a barrier, because it will undermine artists and artists’ rights. They are absolutely right to say that we cannot have art without artists. Nor should we have artists who sell on. Those who do well find that they can look after themselves in the marketplace, but for many artists, that is not the case. Many artists who are deceased left their work to their estate, but that work should be better handled and managed and recognised for its worth. That is all true. To do that, we have to operate in way that is consistent with the changes in the global marketplace. The argument that we heard 10 years ago remains the same today. We should all be in favour of artists’ rights; but in a globalised marketplace, wherever that artist sells, they should be protected. It should not be part of the selling mechanism that one part of the world has an advantage in the marketplace over another part of the world.
That argument was made 10 years ago about the national minimum wage. The old argument for the minimum wage was that we needed to establish a right in the marketplace so that no employer undercut another on the basis of the wages and remuneration paid to their employees. That applied to small and national markets. Before the national minimum wage was introduced, whether it was a small company or a national company, people were being unfairly undercut in the marketplace. If we have a national mechanism in which everyone is involved, there is no disadvantage. The same is true in a global sense in this international argument that we are having. It is certain that had we not had the derogations that we have had, the UK would have suffered proportionately—even in an increasing marketplace.
It has not.
My hon. Friend says it has not. What is true is that we have been able to argue our corner and maintain our share during the exponential increase in the value of the marketplace. However, my hon. Friend should acknowledge that it is also true that in new and emerging markets and traditional markets, our competitors are at an extreme advantage in the coming years because they are not going to implement any international agreed norm in terms of payments of resale rights for artists. That is the reality. Therefore, we should not be arguing against each other; we should be trying to find a way forward. Perhaps my hon. Friend the Minister will come up with one in a few minutes’ time. [Laughter.] The hon. Member for Bath (Mr. Foster) laughs. I was not attempting to undermine my hon. Friend.
The point that I am making is that the Government, over the past 10 years, have done quite well in getting us to the present position. Those who cried out from the sidelines have done nothing practical to resolve the two issues that must be resolved: one is to protect our place in the international marketplace, and the other is to do something about artists’ resale rights, for which there is a desire. We need to do both things. I think that they can only be achieved by international agreement—whether it is by amendments to the Berne convention or by some other mechanism. Perhaps that is how we should be spending our time over the next two or three years—using the time for which we are arguing with the EU to have genuine international discussions, so that we can reach a conclusion on the matter. Even if we do not come to a conclusion, we cannot keep coming back to the marketplace with the changes in globalisation and use that as the only lever to defend the rights of the British marketplace. That will not work and it cannot work.
The Chinese experience proves that. From a standing start, the Chinese now have more than 46 per cent. of parts of the international marketplace. I hope that in 2010 at the Shanghai Expo—I will be the commissioner-general for this House at that event—we ensure that British artists are prominent, as one of the examples of how the UK is an international market leader and wants to remain so. I also hope that we will open up our businesses to increasing business opportunities in markets such as China.
I know that the Minister and the Opposition spokesmen need to respond to the points made so far, so I will make a final point. I say to my hon. Friend the Minister that I hope that he continues to take the position that he does regarding the negotiations, but at the same time we need to recognise that simply asking for a derogation is not good enough anymore. We genuinely need to try to find a way of gaining an international agreement that deals with the points that all of us want to be dealt with. We want to see Britain in a strong position in the top three places in the international art market, but at the same time we want to see artists and their families, or whoever comes after them when they die, getting their due worth for the works that they have produced, because, in the end, without the artists, there is no marketplace to defend.
I am delighted to follow the right hon. Member for Makerfield (Mr. McCartney) and other hon. Members who have made very valuable contributions: the hon. Members for Aberdeen, North (Mr. Doran), for Sittingbourne and Sheppey (Derek Wyatt), for Rhondda (Chris Bryant) and for East Devon (Mr. Swire). Above all, I congratulate the hon. Member for Stoke-on-Trent, Central (Mark Fisher), not only on securing the debate—in a sense, that was the easy bit—but on setting it out in such a rational and calm manner, quite rightly pointing out that we were going to have a finely balanced argument. He put that case very fairly. I will argue that, yes, the argument is finely balanced, but I come down on the other side of the argument to him.
We are debating whether the UK should take up the opportunity of derogation to pass on deceased artists’ resale rights to their estates and successors from 2010 to 2012. This is a really important debate. However, what has hardly been said—only the hon. Member for Rhondda mentioned it, I believe—is that there are rules surrounding whether or not we can take up that derogation. It is worth reminding ourselves that article 8 of the directive states very clearly that member states may apply to have:
“up to two more years, if necessary to enable the economic operators in that Member State to adapt gradually to the resale right system while maintaining their economic viability”.
Those are the criteria against which we must judge whether we even have a case that we should be making. I do not believe that we have a strong enough case against those criteria, although I accept that there are counterbalancing arguments.
When we obtained the extension to the derogation, we also obtained a number of other measures, including the limit of €12,500; I think that that is the figure, but if we can get the correct figure on the record, that would help. That limit has been very significant in ensuring the success of the artists’ resale right scheme for artists who are living now. It has not put a huge burden on the art market, despite all the fears that were expressed on its introduction; we have heard them expressed by other hon. Members today, and they were also expressed in the run-up to the introduction of the scheme in 2006. There were those who said that the art market in this country would collapse as a result of what was allegedly a huge imposition on the art market. We have heard the figures; the art market has doubled from £4.2 billion in 2004 to £8.5 billion today. The capping of that limit has been crucially important to the growth of that market.
We only have to look at some of the record-breaking prices that have been reached recently to show how vibrant the art market is. Reference has already been made to the sale in June of the Lucian Freud picture for nearly £12 million at Christie’s in London. The interesting point about that particular sale is that the picture was in fact being sold by a private art collection in America, and the owner chose not to sell it in the United States but to sell it in this country instead. That shows the vibrancy of the art market here. With the works of artists such as Freud and Bacon going for such astronomical sums, it certainly seems that that €12,500 limit is hardly having a huge impact on sales. Robin Woodhead, the chief executive officer of Sotheby’s Europe, said:
“At the top end of the market the €12,500 ceiling for droit de suite [ARR] on any single work is not going to be a deciding factor. London is such an important centre and the market here is so strong, led by names like Freud, Bacon and Caro, that ultimately I do not believe it will make a difference.”
Clearly, the evidence to date suggests that, despite all the fears, the €12,500 ceiling has not made a difference.
However, the hon. Member for East Devon and other hon. Members are right to ask whether or not extending the right to another group—the inheritors of the estate of deceased artists—will make a big difference. So far, nobody has given an estimate as to what they think that figure will be and what the impact of that change will be on the market. I am certainly no expert, and if the hon. Gentleman has better information than I do, I would be interested to hear it. However, the figure that I have been given is that the likely figure that will be collected will be somewhere in the region of £18 million or £19 million. That would equate to something like 0.4 per cent. of the value of the art market, which is a very small proportion in comparison to the figures of 10, 15 or 25 per cent. that we heard earlier on. I genuinely do not see that there has been a strong enough argument to show that this change will have a huge impact on the art market.
We have already heard from the hon. Member for Sittingbourne and Sheppey about the very detailed study that was conducted by Maven Research and I will not repeat all of the figures that he has given. Suffice it to say that the vast majority of artists believe that the scheme has been beneficial to them and that its extension would also be beneficial, encouraging them to do more work, which in turn would benefit the art market. As the right hon. Member for Makerfield has said, without the artists there simply is no art market, so we should be encouraging them. Equally, the vast majority of those people who work in the art market itself have said that the current system is not burdensome—they say it is neither time-consuming in terms of bureaucracy, nor unduly costly, and they support its extension.
However, there are some matters that it is important to address. The right hon. Gentleman made the very important point that those of us who believe that the scheme should be extended without the derogation for two years must acknowledge the point made by the hon. Member for Stoke-on-Trent, Central and other hon. Members, which is that we must remember that we are operating in a global market. There is a threat from the Chinese, the Swiss and the Americans, who are not applying these sorts of additional costs, however small I might argue those additional costs are, to their art market. That is why the right hon. Gentleman is 100 per cent. right to say that one of the crucial things that the Minister must do—I, too, hope that he will do it—is to confirm continued support for what was said in 2006 at the introduction of the scheme, which is that the European Union would work to try to ensure that those elements of the Berne convention that apply are adopted globally. It is critical that we work hard to do that and to show the benefits of the artists’ resale rights worldwide.
However, I would also say that if we in this country are not prepared to carry on with the scheme that we have already agreed to, that can hardly be a very strong argument in negotiations, as we go around the world and say to people, “You should do it, but incidentally we are not prepared to do all of it ourselves.” It is important that we maintain the scheme.
It is also important that we recognise that some of the arguments against the scheme really do not stand up, for example, suggesting, as some hon. Members have done, that it is only the very rich and very successful artists who have benefited. That is simply not the case and other hon. Members have given the figures that show why it is not the case. Other hon. Members have also pointed out that the costs of the scheme are very much lower than some people have suggested.
Since it was raised by the hon. Member for East Devon, I also want to refer to the letter that appeared in The Daily Telegraph on 30 June. He said that it was a letter signed by the likes of Damien Hirst, Sir Nicholas Grimshaw and others, and that it was hardly surprising that they would say what they did in the letter. However, I am sure that he also looked, as I did, at the full list of 500 artists or members of artists’ families who were signatories to that letter. The vast majority of them are not household names. They are not making vast sums of money. I shall end by reading a brief extract from the letter:
“We are a group of British artists and artists’ families. Some artists achieve success during their lifetime; many do not achieve recognition until after their death…The Government must make the right decision in order to protect the legacy of artists and the heritage of our nation…We should be entitled to bequeath our intellectual property—the value of our life’s work—to our families. After all, musicians and writers have long been used to a royalty system which has not harmed their respective industries. The Government must implement stage two of the Artists’ Resale Right immediately.”
I agree.
There have been some excellent speeches today. Those from Government Back-Bench Members were a mixed bag, but they were fascinating nevertheless.
I congratulate the hon. Member for Stoke-on-Trent, Central (Mark Fisher) on securing the debate. He spoke in measured tones about the worthiness of the cause, and I agree entirely that artists should share in the value of future transactions involving their work. He spoke about the 568 British beneficiaries so far, and called in a measured way for an extension of the derogation to 2012, considering the effect that it might have on the art market.
The hon. Member for Aberdeen, North (Mr. Doran) was in favour of immediate implementation despite the risks, and the former shadow Secretary of State for Culture, Media and Sport, my hon. Friend the Member for East Devon (Mr. Swire)—the thin cat—made a both knowledgeable and impassioned plea that we take a realistic view of the impact on the art market.
The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) made great play of defending artists. I could not help wondering if he was the same hon. Member who boasted in the not too distant past about the number of illegal music downloads he had enjoyed. To a large degree, I had to put his comments in that context.
Actually, it was not me but my children. The hon. Gentleman should put that right.
I am happy to put the record right: it was the hon. Gentleman’s family rather than him.
The hon. Member for Rhondda (Chris Bryant) spoke in favour of immediate implementation. He locked horns during interventions on him and made an important point about the maintenance of existing works of art by those who inherit them. That was a key point for all of us to take on board.
The right hon. Member for Makerfield (Mr. McCartney) rightly drew our attention to globalisation and the importance of international agreements and the international context. I could not help wondering whether he had had a direct hand in some of the formal negotiations that brought us to the present reasonable position.
Given the amount of time available, I shall briefly whiz through my points. Stage 1 of the EU regulations on artists’ resale rights was implemented in 2006. It entitles artists to a percentage of the sale price whenever original art works are resold in the British art market. The Government negotiated a delay to the full implementation until 2010, which can be extended on request until 2012.
Stage 2 would extend the resale rights to the heirs of deceased artists for up to 70 years after their death. The Government are currently deciding whether to push ahead with implementation or to apply for a further derogation. I hope that today, after so many representations, the Minister will finally reach a conclusion on the matter, because the current limbo and uncertainty are uncomfortable.
The UK, thanks to its artists, traders and entrepreneurs, is in the enviable position of being at the cutting edge of the art scene, as well as having a world-leading art market. Our painters, designers, sculptors and cartoonists contributed to an art market that was worth about £8.5 billion in 2007, as has been pointed out. It is the Government’s responsibility to ensure that no unnecessary obstacles are placed in the way of British talent, and I am not sure that we need extra bureaucratic grit thrown into the smooth-flowing machinery that is today’s successful British art market. We must nurture self-evident talent and protect and promote the free market that has given us such success.
The newly introduced resale right is certainly enabling artists and their heirs to share in the future traded value of their work, but many questions need to be asked. What will be the long and short-term impacts of the new resale rights on the UK art market? Will resale rights act as a barrier to emerging artists?
I appreciate that the decision has not yet been made, but it is worth reflecting on whether it is appropriate to extend the rights to the heirs of deceased artists. Some of those people may be non-UK residents. Indeed, some of the trusts may be based overseas and have aims that are in conflict with the UK interest. I do not express a view on those issues but simply flag them up for consideration before it is too late. I invite the Minister to explain the reasoning behind the decision that he may or may not have reached, because if the Government do not have a clear answer—[Interruption.] I am not pre-empting his taking a firm, clear view today. I hope that he will, but I am not pre-empting him.
We certainly believe that it is best if creators enjoy the value of the work that they create, not only because it is right but because it creates an incentive to develop new works of art for the enjoyment and economic benefit of the nation. The argument is that artists’ resale rights will enable creators and their heirs to share in future transfers of the value of their work. It is equally important that the law creates a level playing field for those engaged in similar pursuits—that is an age-old principle. It is worth bearing in mind that the resale right brings the copyright for visual artists into line with those for other artists such as writers and musicians. I suspect that that is welcomed on both sides of the House.
Perhaps, above all, it is essential that new regulations do not restrict UK competitiveness, so it is reassuring that the independent report commissioned by the UK Intellectual Property Office suggests that the resale right has not so far damaged UK businesses. The UK art market has been growing at a rapid pace: its £4.2 billion value in 2004 grew to £8.5 billion in 2007. I recently met with Joanna Cave, the chief executive of the Design and Artists Copyright Society, who emphasised that the royalties are capped at €12,500, thereby limiting future potential royalty costs, that the right does not apply to private sales, and that there is no evidence that phase 1 of the resale rights scheme has harmed the UK art market. However, I would point out that these are early days and that the full evidence is yet to be seen.
There remain major concerns about the implementation of phase 2. Although the resale right may enable artists to share in the future value of their work, there are concerns about the long-term impact on the competitiveness of the UK art market. Some crucial questions must be answered by the Minister today.
First, will the measure damage the prospects of new artists? Will art houses begin to avoid selling the work of unknown or emerging artists in order to avoid the added burden of paperwork, bureaucracy and expense? The IPO indicates that 80 per cent. of all payments were distributed among the top 100 artists, which seems to imply that, at present, it is protecting the most popular artists rather than specifically helping and encouraging new talent.
Secondly, what is the short-term impact? Extending the resale rights of deceased artists will account for a much larger share of market sales.
I have been listening carefully to the hon. Gentleman. He seems to be saying yes and no at the same time. Is he in favour of the artists’ resale right? Does he or does he not believe that there should be a derogation?
I thought I was being fairly measured in my comments, unlike the hon. Gentleman. I am merely pointing out both sides of the argument to show that this is a difficult judgment to make, which is why I shall urge the Minister to make a decision immediately.
So no policy.
If the hon. Gentleman will stop barracking, our position is absolutely clear. The resale right may enable artists to share in the increasing value of their work, but there remain real concerns over the long-term impact on the competitiveness of the UK art market. Ill thought through European regulations could have a devastating impact on the UK economy. To ensure effective implementation in the UK, we are calling on the Government—I shall do that in a minute—to extend the derogation until 2012. That is clear, and I am glad that the hon. Gentleman had the patience to listen.
Royalties collected in 2007 accounted for 0.04 per cent. of the total value of the UK art market, whereas they would have accounted for 0.2 per cent. if they had been collected for living and deceased artists. On the one hand, the amount represents a tiny slice of the total UK art market; on the other hand, it represents a massive increase in share. In fact, it is a 500 per cent. increase—a massive jump.
Thirdly, what is the long-term impact? I received correspondence from the British Art Market Federation, which points out that the UK art market has benefited from a global art boom in the past few years but that we should consider the long-term effects if we are not in a boom situation in the future. New York has arisen very quickly.
Fourthly, we must ask what will be the effect on international UK competitiveness. The right hon. Gentleman put that point very well when discussing globalisation and the context in which we survive. In seeking the delayed implementation of the measure, the Government sought a commitment from the European Commission to introduce resale right into the international Bern convention, the idea being to ensure that UK and European art markets could compete on a level footing with others, namely in the US and Switzerland. If the UK moves ahead with stage 2 without progress on international negotiations, the UK is bound to suffer. I urge the Minister and the Government to get off their hands and get this negotiation underway and ensure that it is in place.
We must not forget that this is a retrospective introduction of a right. That is something that we should always be cautious about. I urge the Minister to seek a derogation until 2012 and I look forward to a crystal clear response this morning, because any further hesitation or delay only insults our artists and risks our international art market.
I warmly congratulate my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) on securing this debate. I am glad to have the opportunity to talk about the artists’ resale right. I acknowledge the substantial contributions made by my hon. Friend the Member for Aberdeen, North (Mr. Doran), the hon. Member for East Devon (Mr. Swire), my hon. Friends the Members for Sittingbourne and Sheppey (Derek Wyatt) and for Rhondda (Chris Bryant), my right hon. Friend the Member for Makerfield (Mr. McCartney), the hon. Member for Bath (Mr. Foster) and the official Opposition spokesman, the hon. Member for Windsor (Adam Afriyie), who seems not to have realised that last week we launched a consultation document on the artists’ resale right derogation for deceased artists. It is therefore a little premature of the hon. Gentleman to expect me to make decisions immediately.
I appreciate how important the artists’ resale right is, both to artists and to the art market. The UK has a thriving, prosperous art market of which we can be justly proud. It makes a huge contribution to our economy; it is the largest art market in Europe and one of the largest in the world. I appreciate the arguments made by right hon. and hon. Members about the art market being highly mobile.
Without the creativity of artists there would be no art market. Artists make a valuable contribution to the cultural identity of the UK. The Government want artists to be to able to benefit from their creativity. The artists’ resale right raises strong, passionately held views on both sides in the debate, as we have heard this morning. The Government must strike the right balance between the interests of artists and the interests of those selling their work.
Droit de suite has been in place for just two years in the UK. The latest figures from the Design and Artists Copyright Society show that it has collected £4.2 million on behalf of 1,444 artists. That may not sound like a great sum in overall UK economic terms, but it is important to those who receive it. Has the introduction of droit de suite damaged the UK art market? The short answer, at least so far, is no. Since the introduction of the ARR, the UK art market has continued to grow. In fact, according to a recent study, it has grown more in the past two years than the art market in the United States, as a number of hon. Members have said. But we must not be complacent. Markets can change rapidly. It has been represented to us that the true impact of the artists’ resale right on the art market may be masked by the current derogation.
We must ask ourselves who is right: are we peering over a cliff edge or can we count on our relatively benign experience so far as a reliable guide? The Government are not omniscient in these matters; we are keen to listen to the different opinions out there. That is why we have launched the consultation. However, as those who read the consultation will understand, it recommends that, based on the evidence currently available, the option to seek an extension of the derogation is taken. However, the UK Intellectual Property Office is seeking views and evidence on whether that position is correct.
The consultation was launched last week. As we have heard already, the derogation was one of a number of concessions that the UK successfully fought for during negotiations on the directive, in recognition of the fact that the transition to artists’ resale rights may not be completed by 2010. Member states that were entitled to use the derogation can apply to continue to use it until 1 January 2012, which would allow more time for the art market and collecting societies to adapt to the right.
My hon. Friend the Member for Stoke-on-Trent, Central asked whether the right to derogate could be extended for a further 10 years. Our priority must be to deal with the possible extension of the derogation to 2012. As he will be aware, a longer derogation would involve reopening the EU directive. We cannot be clear that member states or Members of the European Parliament—this would be a matter for co-decision—if given the chance, would not want to change other aspects of the right, such as the current limit on the cap, increasing the rate, and so on. My hon. Friend and those in the art market will want to reflect carefully before pressing us for a further derogation. At present, we need to focus on whether it is right for the derogation to be extended to 1 January 2012. Clearly, there are differing views on this matter, as we have heard this morning. I heard what my hon. Friends the Members for Rhondda and for Sittingbourne and Sheppey said in their powerful speeches.
Hon. Members also mentioned the important issue of the international context of the decisions that we are taking. I take on board the points made by my right hon. Friend the Member for Makerfield and the hon. Member for Bath. As I said, the UK’s art market is the largest in Europe, so we need to consider the international position. The main competitors to the UK art market are, as we have heard, not other EU member states, but the United States, Switzerland and China, none of which has introduced an artists’ resale right. It has been argued that the application of the right could mean a seller of a deceased artist’s work moving the sale out of the UK to avoid the artists’ resale right payment. The hon. Member for East Devon made that point clearly in respect of collections. We want to hear more evidence on that.
I take the point about the need for international agreement and those aspects of the Bern convention that are appropriate in this regard. Surely, it is right that globally we look to have a level playing field, and I can confirm that the Government want to pursue that. Other countries are showing an interest in the artists’ resale right. Both Australia and New Zealand are considering introducing resale rights. That is positive news, but the major countries where art dealing takes place need to be part of an international agreement.
We also need to consider the effect that the introduction of the right for deceased artists will have on the administration of payments. That has not been discussed quite so much this morning, but it is important. I pay tribute to the work done by the collecting societies. That was acknowledged by my hon. Friends the Members for Stoke-on-Trent, Central and for Rhondda. The burden of administering the right falls on the art market. I do not accept that it is particularly burdensome to administer, but we always want to consider potential burdens on business.
I welcome this debate, which will help to inform the debate launched by the consultation document. I thank right hon. and hon. Members for their interest in the issue and encourage them to make representations during the consultation phase, which ends on 22 September.
Human Trafficking
Every few months, we debate human trafficking in the House and, with wringing of hands and tearing of garments, every speaker highlights how awful it is. Ministers are abject with apology and say how dreadful it is, and the Government say that they are doing everything they can to stop it. Let us give the Minister his due. He is thoroughly decent and is doing a difficult job with conviction and humour. We all know that he is a good egg. He travels the world searching for answers, studying the problem and meeting officials and, rather like “The Pilgrim’s Progress”, is bedevilled, I hope, by obstacles rather than temptations. I pay tribute to his commitment.
I had not considered human trafficking before 2005, although I was trained in the caring professions. I first became aware of its horrors when, as a member of the Select Committee on European Scrutiny, I visited Romania and Bulgaria before their accession to the EU. I had never travelled to eastern Europe before 2005, and I had no idea of the extent of the abject poverty there, nor that fraud was a recognised way of life and that the judiciary and the police were riddled with corruption. I was also oblivious to the fact that there is, and has been for generations, a Roma community with 6 million to 8 million disadvantaged people living in a similar way to that in the middle ages in Britain. Some 70 per cent. of people in most towns and villages live on the breadline, and their only means of transport is a horse and cart, with the horse sharing the accommodation with the family.
In that environment, there are inevitable risks of young people in such communities being trafficked to more prosperous western European countries. Children are often sold through debt bondage to successful gangs who prey on the poorest members of their own communities. Some are duped by the lover-boy syndrome, and are persuaded by lucrative jobs that do not exist but are under the illusion that the Elysian fields are not far away.
Three years ago, trafficking in Britain was hardly acknowledged. There is relatively little mention of it in Hansard before 2004. Trafficking tended to be confused with prostitution, and I believe that it still is. Child trafficking was considered to be something to do with adoption from families who had too many children and wanted to find homes for them. It was something that charities dealt with.
What is the reality? Human trafficking is one of the most lucrative businesses in the world, comparable drugs and arms dealing. If it were not lucrative, traffickers would not do it. However, when the going gets tough, traffickers become craftier. If the risks become greater and the money less certain, traffickers switch to another country or another field of criminal activity. There is a pan-European criminal network, but much trafficking is conducted by a loose association of men and women who make a living by exploiting poor and vulnerable younger people who are looking for a better life.
Two years ago, the media were in full cry. A week did not pass without lurid pictures of grotty rooms inhabited by loosely clad women. The horror stories abounded. More recently, the police raid in Slough resulted in middle-page spreads in the tabloids depicting Roma children, many under 10, pickpocketing, stealing from ATMs and shoplifting. The media captured vividly the discovery of so-called cannabis factories on the edge of northern towns and cities with Vietnamese boys tending the plants for rich and influential bosses.
We must not be too surprised that the result of Pentameter 2 was 167 victims discovered, 528 criminals arrested, 822 premises visited, 6,400 police intelligence reports gathered and £500,000 recovered. Of the victims, 13 were children. That is hardly surprising, but what is surprising is that, apart from the BBC, which ran the news item all day, the media did not give it much media attention. It is as though they have grown bored with the subject, the public are anaesthetised to horror stories that no longer shock, and the media are moving on to something else.
Furthermore, MPs do not see many votes in the fight against trafficking. Constituents are not too concerned about exploitation, provided that it is not in their street. In Devon, most people tell me that it simply does not happen there, but they are wrong. Pentameter 2 found evidence of trafficking in many west country areas, and quite a lot in Plymouth. The fact is that it is all over Britain, and perhaps the Minister will confirm that if he has half a chance and sufficient time.
There is some confusion about nomenclature. The difficulty is the culture of disbelief and the inability of trafficked people to disclose and articulate what they have been through. They are fearful of reprisals. Some of the young people who are trafficked to Britain are carefully schooled so that they can escape quickly from a local authority into whose hands they may be placed. Just yesterday, The Western Mail in Wales, which I read regularly, reported that 35 children were missing without trace from major cities in Wales, raising concern about child trafficking there.
The hon. Gentleman has done a considerable amount of work on the matter, and I apologise for the fact that I cannot stay for the whole of the debate. Has he seen the briefing prepared by ECPAT UK—End Child Prostitution, Child Pornography and the Trafficking of Children for Sexual Purposes—which highlights local authorities’ lack of concern, and their inability and unwillingness to accept the protocols, particularly the Council of Europe’s convention covering children, and to give victims the benefit of doubt on, for example, age? That report seems to show that local authorities have some way to go in working as part of the multi-agency approach that Pentameter is supposed to provide.
Interventions from the hon. Gentleman are always worth listening to. He has an immense amount of experience. I visited the United Nations conference in Vienna with him, which was an education for me and, I think, a mild education for him. His point was well made.
I am sure that when the Council of Europe convention on action against trafficking in human beings is ratified—I hope that the Minister will say something about that—local authorities will get into gear and become more sympathetic and sensitive to the problem, but I reckon that the problem is lack of resources. Until they receive more resources, they have enough on their hands without this problem.
Is the hon. Gentleman aware that the Chairman of the Select Committee on Home Affairs said only a short time ago that he and his Committee were shocked to learn that 400 children had gone missing from local authorities in this country? Is he aware that the despicable crime of human trafficking is closely linked with prostitution and the running of brothels? Does he believe that the police, and particularly the courts, should take a tougher line with those who run brothels?
I do not know whether to refer to my hon. Friend or the hon. Member. Perhaps I should refer to him as something in-between. I thank him for his intervention.
The subject is complicated and the word “missing” in the phrase, “children going missing from local authority care” is slightly confusing. When children go missing, they are often in transit in local authority so-called care. Having been found as victims of trafficking, they are placed in a so-called place of care, but it is not secure, and there is a problem with how secure it should be. If it is too secure, the children are in a prison.
Brothels are where many trafficked women are found. The problem, as I am sure the Minister will say, is to obtain sufficient evidence that the women are prepared to make available to enable the police to nail the traffickers. They are terrified of reprisals, they do not speak the language and many of them are in a strange country. There are great complications in nailing traffickers, who are much more nimble than we are. I am grateful for that intervention.
The Western Mail reported 35 children missing without trace in major cities in Wales. The Government clearly have a problem with identifying victims of human trafficking. The Crown Prosecution Service should remember that they have a duty to explore all the facts when dealing with young people involved in, for example, cannabis cultivation and other organised crime before they seek a prison sentence.
Let us remember what trafficking is. It is the exploitation of someone by making them do something that they would not want to do if they were fully aware, compromising them, duping them and coercing them. The problem is how to distinguish between genuine victims of trafficking and illegal migrants. That recognition is critical because it determines how the Government treat people. Illegal migrants are usually given short shrift and a one-way ticket back to where they came from.
The Government have a poor track record on producing meaningful statistics. The problem is that they do not really have any statistics and those that they do have are totally misleading. We were told that the UK Human Trafficking Centre in Sheffield would change all that, so perhaps the Minister could tell us whether it has. Will the Minister tell us when we will have some reliable statistics that bring together the information from the various police and UK Border Agency operations?
One can understand that victims of trafficking are a problem for the Government because there is always some doubt about whether people have been genuinely trafficked or whether they knew what they were getting into and are illegal migrants searching for a better way of life. Even with genuine victims, the Government are often reluctant to identify them early enough and decide what to do with them, where they should go, how to fund them and how to help them.
Media coverage of Pentameter 2 suggested that an increasing number of British young women are trafficked from one part of the UK to another. Sadly, the sexual exploitation of British young people is nothing new. Operation Glover—a police operation—focused on the internal trafficking of British children, and that is what the media picked up on when reporting on Pentameter 2. Somehow the press completely missed the fact that 13 children from Romania, Nigeria, Brazil, China, Estonia, Afghanistan, Eritrea, Congo and Cameroon were found by Pentameter 2. Two of the children were returned without a welfare assessment and were virtually deported on the spot. In addition, two children went missing within hours of being placed in care. One child was issued with an asylum registration card that contained the details of a false passport given to her by a trafficker even though the police and the UK Human Trafficking Centre both knew that it was fraudulent. UK Border Agency staff who issued the card maintain that they were unable to do anything else even though they knew that the details had been provided to her by traffickers and were totally false. It is clear that the protection response to children cannot be hailed as successful—in that case it was deplorable.
Out of the 167 victims discovered by Pentameter 2, how many were provided with legal representation consistent with the Government’s obligation under article 12 of the Council of Europe convention on action against human trafficking? Out of the 13 children found, how many were provided with guardians consistent with the Government’s obligation under article 10 of the convention? How many of the victims are now in a safe refuge to which traffickers do not have access and how many have agreed to give evidence against their traffickers?
Pentameter 2 has achieved 528 arrests, which is a remarkable number, yet we lack specifics. Where did those arrested come from and how many were UK based? Will the Minister put on the official record from which countries they hailed? How many of those 528 have been charged with trafficking offences? It is interesting to note that the figure of 528 that was reported under Pentameter 2 was adjusted in the revised action plan that was announced on the same day, which states that the actual number of traffickers found was not 528 but only 99. Are those 528 individuals separate or have fewer people been charged with multiple crimes?
Have there been any successful prosecutions under Pentameter 2, because on 3 July The Guardian reported that there had been 24 successful prosecutions as a result of the operation? In other words, is this massive police crackdown putting traffickers behind bars and if so, how many? Alternatively, are traffickers more nimble with their footwork than the heavy hand of the constabularies acting together with the bureaucracy of the Crown Prosecution Service and the unco-ordinated activities of the UK Border Agency?
My hon. Friend lists an impressive array of questions that we look forward to the Minister answering in due course. In addition, may I ask the Minister what sentence someone prosecuted for trafficking will serve, whether they will serve their sentence in full, whether the sentence will be exemplary and whether traffickers are being prosecuted under the Proceeds of Crime Act 2002?
I did not think that it would be fair to ask the Minister all these questions today so I tabled them last night so that they would appear on the Order Paper. The Minister has had early warning and has been able to work on the matter since early this morning. Surely, one of the guiding principles should be to deter traffickers by making them increasingly uncomfortable if they continue to ply their trade in this country. Our aim must be to drive them out of this country and, with that in mind, I established the all-party group on the trafficking of women and children. We plan to set up similar cells in other parliaments in all EU countries so that Back-Bench MPs can put pressure on their Governments to shut down the entire trafficking network. That is our goal.
In conjunction with ECPAT UK, which, as the Minister knows, is a coalition that represents Save the Children, UNICEF, the National Society for the Prevention of Cruelty to Children, the Children’s Society, Anti-Slavery International and the Jubilee Campaign, we have made an application to a substantial human rights charitable trust in this country to provide 20 per cent. of the total funding to the Daphne III project, which is partly funded by the European Commission. I hope that my mild optimism about that will be rewarded because it would result in sufficient funds being made available over the next two years to support the establishment of the new venture and would provide an opportunity for Britain to lead the way in outlawing trafficking, or at least reducing it, on a European level—and my goodness we need that to happen.
With ECPAT’s help and expertise, parliamentarians throughout Europe can make a major contribution to tackling this growing problem. By October, we will hopefully have set up parliamentary groups in Poland, Romania, Germany, Italy and Holland. We will then do so in the rest of Europe. Perhaps the Minister would like to add his support to that initiative, which is currently being considered by the European Commission’s justice, freedom and security directorate. I am sure that a nod from him would produce the necessary result—I hope that it will do, anyway.
The hon. Gentleman has focused on the position in Europe, but does he agree that the findings of Pentameter 2 show that the majority of victims come from China and Thailand? One of the problems is that those victims did not have the same level of coercion, which led to other complications. Although the hon. Gentleman is doing excellent work in Europe, does he agree that the Government should do more in the far east and work with Governments there to try to eliminate the problems in the source countries?
What the hon. Gentleman does not understand is that I am not St. George and there are a lot of dragons, but I thank him for his intervention.
By October, we will be setting up these parliamentary groups and we hope that the Minister thinks that they are complementary to the successful initiatives he is taking forward under the action plan. I hope that parliamentary groups in this country and the rest of Europe will be able to work with him and his teams of Ministers. Once we sort out Europe, we will deal with the far east, but at the moment, we are trying to get a ring around Europe, so it becomes more difficult to traffic in and around Europe.
Over the past two years, our all-party parliamentary group on the trafficking of women and children has tabled more than 150 questions—even though the Minister has been unable to answer a number of them—initiated debates, and generally put pressure on the Government here to raise the profile of what I call new slavery, both in the Commons and the Lords. I believe that the group even helped to get the former Prime Minister to sign the Council of Europe convention—he was somewhat reluctant to do so until a number of questions were asked by hon. Members from all parties. Although we are still waiting for ratification, as the Minister knows, I would like to put on record the immense amount of help I have received from the right hon. Member for Birmingham, Ladywood (Clare Short), Baroness Elizabeth Butler- Sloss, my hon. Friend the Member for North-West Cambridgeshire (Mr. Vara) and the other officers of the group.
Human beings are particularly vulnerable to trafficking if they are poor and believe that a new life awaits them round the corner that can provide them with the material prosperity they are lacking. It is more difficult to unearth trafficked women if prostitution is driven underground, as it has been in Sweden where prostitution is illegal.
Will the hon. Gentleman given way?
I will in a moment. Can the Minister confirm whether there are similar plans to make prostitution illegal in Britain because I know that he has been thinking about doing so and has led discussions on it?
There is nothing illegal about prostitution in Sweden. The illegality is in the purchase of women and the purchase of sexual services. What the women do is perfectly legal.
That has put me in my place. I thank the hon. Lady for telling me that, but it does not alter the need to ask whether the Minister is considering making prostitution or the buying of services illegal in Britain.
It is said that 800,000 people are trafficked each year around the world, and that is likely to continue in one form or another for the foreseeable future. All that we can do is to try to reduce it, to punish the traffickers severely and to help genuine victims so that they can embark on a new life. Incidentally, the so-called reflection period of 28 or even 45 days fails to grasp the essential conditions of trafficking. It takes years of support, psychological help and kindness for trafficked people to recover from what has always been an appalling ordeal. Above all, victims need compassion and understanding. As Vicky Quandamatteo, the director-psychologist at the Il Fiore Rome refuge said, anyone who believes that trafficked women can snap out of it and become useful members of society within 28 or 45 days, without a prolonged period of support and help, needs their head examined.
Although the Government always mention the sterling work of the POPPY project, it is worth pointing out that as a result of Pentameter 2, POPPY accepted 46 referrals. Where are the other 111 women found under Pentameter 2 now residing? How many of those are receiving the support that they need? How many have already been forcibly removed from the UK? What plans are there to establish more POPPY projects throughout the country?
Pentameter 2 is over. Chief Constable Dr. Tim Brain is to be complimented on a highly proficient and professional operation, following, as he did, in the footsteps of Graham Maxwell, who was the mastermind of Pentameter 1. We are fortunate to have police officers of their calibre. Will we now have Pentameter 3, or will the Minister ensure that there is a chief superintendent in every police force who has an ongoing responsibility to outlaw human trafficking? Without the Pentameter initiatives, it is unlikely that we would have known of or found the trafficked victims whom we have found. Those victims were not found only in inner cities. Will the Minister remind hon. Members of how many victims were found outside cities? Besides the 163 brothels that were raided, how many victims were found in the 273 private homes that were raided, and where are those people?
In this respect, transparency is crucial. There is too much secrecy. Local communities need to keep a lookout, but they need to know where they are looking. Bringing into the public domain the information that I have described will make the general public more vigilant. They will be alert to the fact that trafficking is a problem that affects many towns and villages throughout the country.
I thank Mr. Speaker for offering to be the first president of the all-party group on trafficking of women and children to mark the 200th year of the abolition of the slave trade, and agreeing to host a major reception at the end of October in the Speaker’s House. I hope that we can announce that we in Britain are spearheading a new initiative against human trafficking. I hope that with the support of the EU and backed by charitable funds, we can make even more progress in ensuring that this new form of slavery becomes a thing of the past.
I join the hon. Member for Totnes (Mr. Steen) in praising the Minister. Indeed, I add my praise for the work of the hon. Member for Totnes. However, I am extraordinarily depressed by his speech, because the reason why slavery was abolished was that it was made a crime to purchase slaves, and he has just said that we should not consider in the House or anywhere else the demand side of trafficked and other prostituted women, particularly trafficked children, and make any purchase of sexual favours from trafficked people a crime. He wishes to intervene simply on the supply side, but unless we tackle the demand side, there will be absolutely no reduction.
The hon. Gentleman talks about creating a Europe-wide network of parliamentary groups, and obviously, as a strong pro-European, I wish him well and will support that. He said jocularly that he would sort out Europe first and then the rest of the world, but the main difficulty is that a great part of the trafficking takes place within the borders of the European Union. For example, when the World cup was held in Germany in 2006, the Germans organised the trafficking of 40,000 extra prostitutes into Germany to serve the clients, as they put it, who came to the World cup and, in the midst of either jubilation or dismay at their teams’ performances, felt that they should go and buy sex with some girl brought in from Czechoslovakia, Latvia or Lithuania. There is a fundamental divide on how we should tackle the problem. I am firmly of the view that, unless we consider the demand side in some way, we will not deal with the supply.
The hon. Gentleman read out some of the statistics from Pentameter 2, but if we look at the latest available conviction data for England and Wales provided by the Ministry of Justice, we see that there were a total of 15 convictions in 2006.
Yes, 15 people were found guilty of trafficking for sexual exploitation. A grand total of 17 people—14 men and three women—were found guilty of abusing children through prostitution and pornography. Those are absolutely ludicrous conviction rates. Certainly, under Operation Pentameter 2, many massage parlours and brothels were raided and a number of people detained, but as the hon. Gentleman rightly underlined, instead of obeying the injunction of the Bible,
“Suffer the little children to come unto me”,
the reaction of Government officials was, “Suffer the little children to be put into my hands and I’ll boot them out of the country as fast as I can.” Frankly, that shames Britain. Far from a freedom chain to get those sex slaves to freedom, we maintain their exploitation by dumping them back in their countries as quickly as we can, in which case they simply turn round to their traffickers and say, “Get me back in to make some money.”
We need to consider the problem more broadly. The hon. Gentleman took an intervention about Sweden from my hon. Friend the Member for Slough (Fiona Mactaggart). Roger Matthews, professor of criminology at South Bank university, who has just published a very good book called “Prostitution, Politics and Policy”, says:
“In Sweden, where the purchase of sexual services has been criminalised there has been a significant decrease in street prostitution and a lower level of trafficking than in neighbouring countries. Importantly, the recent law which makes the purchase of sexual services illegal appears to have affected public attitudes in general with the majority of teenage men seeing the purchase of sexual services as illegitimate.”
I would welcome a change in culture in Britain whereby the majority of teenage men—indeed, adult men—considered as illegitimate the purchase of sexual services, and until we have that change of culture, all our fine words and all our co-operation through the Parliaments of Europe will count for nothing.
We can contrast Sweden with the state of Nevada, where prostituted women operate legally. Fifty-seven per cent of the students surveyed at the university of Nevada thought that it was impossible to rape a prostituted woman because, once money had been offered or paid, the woman had to do whatever the man wanted. That illustrates the cultural gap between those who argue for the legalisation of prostitution as we see it in Nevada, where people believe that a prostituted woman cannot be raped, and Sweden, where the men are confronted with their responsibility and there has been a cultural change regarding the purchase of sexual services and a significant decrease in trafficking. There is not one country in the world where prostitution is tolerated, legalised or semi-legalised that has not seen an increase in trafficked women. The hon. Gentleman will have to face the fact that if he wants to cut supply, he will have to consider the demand side.
A number of us have raised this issue. My right hon. and learned Friend the Leader of the House did so, and my hon. Friend the Member for Slough—who might catch your eye in a few minutes, Mr. Martlew—proposed certain amendments. They fell because, as we know, the Criminal Justice and Immigration Bill was having its own difficulties in getting through all its stages in the two Houses of Parliament. I understand that, and my hon. Friend the Minister and my right hon. Friend the Home Secretary have agreed to consider the matter. There have been visits to Sweden and other countries.
We need to examine the issue because, until we name and shame the men, we will not do much, even if we do raid as many massage parlours and brothels as were raided under Operation Pentameter. When we raised the issue in the past and said that there were a large number of trafficked women in Britain, we were rubbished by the media. The hon. Gentleman was right to draw attention to the fact that the media tend to back away from the subject; they are nervous of it.
I took part in an interesting debate last week with David Davis, our former colleague, who is now standing in a by-election; Mr. Henry Porter, who writes for The Observer; and Mr. David Aaronovitch, who writes for The Times. Mr. Aaronovitch was on my side, and Mr. Porter was on Mr. Davis’s side. When these issues were raised by the Leader of the House, my hon. Friend the Member for Slough and others, Mr. Aaronivitch and Mr. Porter both argued powerfully that there should be no curb or limit on the right of men to buy whatever sex they wanted.
I mentioned some statistics a moment ago, as listed by the Ministry of Justice, but it is interesting to note that there is no statistic for the offence of having sex with someone under the age of 18 without consent. Consent is difficult to define, but my hon. Friend the Minister for Borders and Immigration said in the House in answer to me that to have paid-for sex with anyone under the age of 18 was rape. However, that statistic is not listed. As we know, the number of convictions for rape in Britain is pathetically and absurdly low, because we do not have people in the Crown Prosecution Service with specific responsibility for rape cases.
I mean no disrespect, but this is a debate about Pentameter 2, rather than prostitution. The debate is not only about sex; it also covers work trafficking and domestic slavery. Sex is one part of it. There is a bigger picture. Even if we were to do what the hon. Gentleman suggests on the demand side, we would still have trafficking for work and for domestic slavery, and it would still be in large numbers.
I completely agree with the hon. Gentleman. I may claim some credit for initiating a campaign, by raising the matter two or three times in Prime Minister’s questions, about the Council of Europe’s convention on action against trafficking in human beings. I agree with the hon. Gentleman that it is about trafficking in general and not only the trafficking of women. I support stronger trade union rights, workplace inspections, rights for agency workers and others, but that is not quite where the Conservative party wants to be on protecting workers from any sort of exploitation.
I return to the question of statistics and finding hard information. When my hon. Friend the Member for Slough and others raised the issue, we were criticised for using figures that were said to be unrealistic. I cited the figure of 25,000 trafficked people, which was given in the Daily Mirror and came from a Home Office estimate three or four years ago. Julia O’Connell Davidson, a professor—there is always a professor involved—from the university of Nottingham, wrote to The Guardian on 28 December criticising me and claiming that I had made a “startling assertion”. She said that that number was
“more than the entire work force of Debenhams. How is it that this vast number of women and girls are so readily available to male clients and yet simultaneously so difficult for the police to detect?”
Of Operation Pentameter in 2006, she said that
“only 84 women and girls…conformed to police and immigration officers’ understanding of the term ‘victim of trafficking’.”
Again, I cite newspaper figures, but I understand that, as a result of Pentameter 2, the figure given everywhere is 18,000, and I am sure that the hon. Gentleman and my hon. Friend the Minister will confirm it.
It is worrying when we have top professors rubbishing the statistics and the facts. In 2005, the same professor wrote:
“There are places in the world where it is estimated that between 15 and 30 per cent of those working in prostitution are under the age of 18 and that up to 75 per cent of the male population engage or have engaged in prostitution use. In such places, proposals to penalise anyone who buys sex from a minor could translate into proposals to incarcerate half the male population.”
That is an extraordinary argument. The professor seems to be giving the green light to our tourist paedophiles.
Order. The hon. Gentleman is straying slightly from the subject.
I am talking about trafficking, Mr. Martlew. I am referring to trafficked women. We have to get the facts and figures right. Since the majority of trafficked women come from the countries to which the good professor refers, I have to make the point. A reductio ad absurdum argument obtains in the mindset of those who argue not for a reduction of sex slave traffic, but for its regulation—indeed, its legalisation.
I am not sure whether the Home Office deals with the English Collective of Prostitutes. We know nothing of its figures or its financing, whom it represents or who controls it, but it argues on its website—I checked this morning—that Government feminists and Christian fundamentalists have joined forces in claiming that prostitution is violence.
Those 18,000 people, according to Pentameter 2, were trafficked into Britain for sexual purposes—they are the prostituted women at the heart of our debate. I therefore state that the use of prostituted women occurs in a context of violence. The Ipswich murders might have been a good example. None of those poor victims were trafficked from outside the UK. Perhaps, as the hon. Gentleman said, they were trafficked within the UK. Trafficking is about what happens inside the UK. It affects the most vulnerable of young girls, many of whom are in care, without parents and without a social framework or other support.
We need to tackle the demand side, as we did with kerb crawling. The original idea of naming and shaming kerb crawlers was rejected as being an interference with the men’s right to go up and down a street and, if they wanted, to pick up a woman and take her away in a car to have sex. Such actions were deemed to be acceptable, but councils and local communities nevertheless went out on the streets and named and shamed. Taking the same approach to brothels and massage parlours—and now internet sex and mobile telephone sex—will be an interference in the liberty of the individual, but I am all for it because, if we do not do so, the trade in sex slaves can only increase.
I join the hon. Gentleman in calling for the speedy ratification of the Council of Europe convention. The Government have signed it, but signature is not ratification, as the people of Ireland and the President of Poland know. We need a network of centres in every major conurbation to which these young women feel that they can go. However, they will have to be protected. They have such centres in Belgium, but the pimps patrol around the centres trying to lure the girls out.
We need investment. I agree with the hon. Gentleman about the problem of finding funds to allow local authorities to act—although, my goodness, we ask our local authorities to do far too much as it is. I remember when the first women’s refuge was opened in Chiswick by Erin Pizzey 40-odd years ago. That was the first in Britain, but thank goodness, there are now many more. In each conurbation, we need a safe refuge for trafficked girls and women.
I ask the Minister to give us some indication of when the Council of Europe convention will be ratified. I ask him also to increase the amount of statistical evidence. I shall not ask him to commit himself to acting on the demand side of sex slavery this morning, but the issue will not go away. I ask him to pay little attention to Professor Julia O’Connell Davidson, who is deeply negative and unhelpful on this issue. I hope that the Minister will confirm that she has not been consulted by the Home Office.
Finally, we need time in the House for a broader debate. This should not be a party issue. It would be a huge interference in the right of the British male to buy sex as he wishes on whatever terms he wishes without being responsible for the prostituted women with whom he has that sex. The men are not going to check whether the girls are 17, 18 or 19—or even 16—or whether they come from Lithuania, Thailand or Cameroon or whether they have been trafficked or are here legally. However, until we deal with the demand side, the supply of sex slaves will never dry up.
It is a pleasure to follow the right hon. Member for Rotherham (Mr. MacShane), who has made his case powerfully as usual. I will talk later about the problem of prosecutions. I pay tribute to my hon. Friend the Member for Totnes (Mr. Steen) for securing another debate on human trafficking. His chairmanship of the all-party group has put human trafficking on the agenda in Westminster and hopefully the media will pick up on that. I welcome the Minister, who I know works extremely hard behind the scenes to achieve action against human trafficking. He is to be congratulated on that.
Slavery was abolished 200 years ago, but it still exists. The trafficking of women and children into this country to work as prostitutes is modern-day slavery. The severity of this harrowing crime is recognised by all. In its press release on Operation Pentameter 2, the Home Office stated that it is
“one of the worst crimes threatening our society”.
Chief Constable Dr. Tim Brain, gold commander of Operation Pentameter 2, described people trafficking for sexual exploitation as
“one of the most distressing aspects of serious and organised crime in this country”.
That is the view of a hardened police officer.
I will begin by highlighting the experiences of one 14-year-old child from Kenya who was trafficked into this country. She came into the country through one of the major airports with a middle-aged white man. She was a black girl from Kenya. She came in on a passport that did not have her name or photograph on it, but was allowed into the country. She was taken to Liverpool, locked in a house and forced to have sex with numerous men. Luckily, she escaped and is now being looked after by a major charity in this country. How many people who are trafficked into this country never escape and are locked into this modern-day slavery?
One of the problems is that this is a clandestine crime. Complete figures and statistics are hard to determine. Operation Pentameter 2 gathered increased intelligence and highlighted organised crime links across the UK and beyond. It is worth reinforcing the clear differences between Pentameter 1 and Pentameter 2. Under Pentameter 2, 167 victims were identified, compared with 88 under Pentameter 1. Pentameter 2 identified 528 criminals, compared with 232. Furthermore, under Pentameter 2, 822 premises were raided, 6,400 police intelligence reports gathered and more than £500,000 seized. That was in just six months. The clandestine nature of the crime can be seen from the fact that of the 822 premises that were raided, 582 were residential properties while only 157 were massage parlours or saunas.
The Dutch rapporteur on trafficking in human beings came to speak at the all-party group on trafficking of women and children last month. His main task is to report on the nature and extent of human trafficking in the Netherlands and on the effects of anti-trafficking policies. He also provides recommendations to the Government. In seven years, 66 recommendations were approved. The Dutch are far ahead of us on this issue and have much more detailed information, which has led to them having greater success in tackling human trafficking. For example, last year in the Netherlands about 700 victims were identified and there were 200 convictions. That is more than in the United Kingdom. Having a UK rapporteur—or commissioner because I do not like that foreign word—on trafficking in human beings would be a major step towards tackling this abhorrent issue. It would show that the Government are serious about eradicating it.
I will touch on the issue of safe houses for identified victims of people trafficking. Safe houses are a vital tool in rehabilitating victims and improving their chances of living as normal a life as possible. Victims are very vulnerable and need to feel safe and protected. That can be provided by specialised safe houses. To ensure that all victims of human trafficking receive the treatment and care that they need, there must be a revolution in the safe housing that is provided. Non-governmental organisations do a valuable job but the majority of them are not specifically aimed at victims of trafficking and so cannot provide care of a high enough standard.
We should look abroad to find out how other people see us. The “Trafficking in Persons Report” for 2008 produced by the US State Department demonstrates why I feel we need urgent action on this issue. It states that in the UK:
“Out of 888 adult women victims referred to its specialised trafficking shelter, only 181 victims were accommodated by the limited-capacity facilities, with an additional 141 assisted on a non-resident basis only. Some of the remaining 566 victims who were not accommodated at the shelter did not meet all of the Government’s criteria for admission. Victims must be over 18; involved in prostitution within three months of referral, willing to cooperate in the prosecution of their traffickers; and must have been trafficked into the UK from abroad. Victims who did not meet these criteria were reportedly referred to other social service agencies, NGOs or to their respective Embassies.”
That is how the US sees our position. Of the 888 adult women identified as victims of trafficking and referred for specialised care only 322 were given it, while 566 were passed on to other agencies to be cared for. Surely that is not right. If a victim is referred for specialised care, we should ensure that enough places are available to provide it.
When looking at providing safe housing for victims, one must not forget the needs of child victims of trafficking. In many ways, children are treated worse than adults under the system. I have met Christine Beddoe, the director of ECPAT UK, on many occasions to discuss this issue. There is great concern about the plight of child victims of trafficking once they have been identified. Child victims are put into social care. However, they often disappear from care, sometimes within days or even hours. One can only assume that such vulnerable children, who have been through the most horrific experiences, are recaptured by traffickers and put into slavery again. This problem must be confronted. I urge the Government to provide secure safe housing for child victims of trafficking to ensure that vulnerable, frightened and defenceless children are given a chance to recover from their ordeals.
The Dutch are piloting the idea of having secure accommodation and allowing children to go out with an adult. That means that they are not locked in, but that they are not vulnerable to being picked up by traffickers again. That is a positive move that the Government could look at.
But costly.
As the chairman of the all-party group reminds me, that move would be costly, but we are talking about the most horrendous crime. It would not be a bad idea to pilot the measure to see how successful it is. I think that there would be more chance of securing prosecutions against traffickers if reassurance could be given to vulnerable children like the 14-year-old girl who was trafficked from Kenya. Such a move might result in more people being put behind bars.
I know that time is getting on, Mr. Martlew. I will finish by 11.50.
May I ask one question before my hon. Friend finishes? Does he agree that we should give the Minister plenty of time to wind up because we have raised a number of points? He is giving an excellent speech, but I hope that other hon. Members who speak—
Order. If there were fewer interventions, the Minister would have more time.
I shall take that advice from my hon. Friend the chairman of the all-party group and throw my speech away.
The right hon. Member for Rotherham mentioned the problem of prosecution. I congratulate the police on using the Al Capone method of putting the traffickers behind bars. Because of the difficulties of the 2003 Act, the police have sought to prosecute people under different criminal legislation. People are being put away, but not necessarily for human trafficking, so the Government could look quite seriously at the wording of the 2003 Act, which was described by Chief Constable Dr. Tim Brain as “a bit lumpy”. Perhaps he was referring to section 57, which refers twice to “intent”. It is difficult to prove intent under English law, so the Government should look again at the measure. We might get more prosecutions if the law was easier to apply.
I know that the Government and the Minister are working hard, and that other parts of Government are pulling the other way. The Minister can be assured that Members of this House want to see action against modern-day slavery. Two hundred years since its abolition in this country, we must bring slavery to an end.
I make no apology for focusing on prostitution in this debate. Let me quote Sigma Huda, who is the UN special rapporteur on trafficking in persons, especially women and children. She said:
“For the most part, prostitution as actually practised in the world usually does satisfy the elements of trafficking…states parties with legalised prostitution industries have a heavy responsibility to ensure that their legalised prostitution regimes are not simply perpetuating widespread and systematic trafficking. As current conditions throughout the world attest, states parties that maintain legalised prostitution are far from satisfying their obligations”.
It is critical that, through law enforcement measures such as Operation Pentameter, we prevent trafficking and protect the victims. To that end, I went last month to look at how the Swedish system operates. The reason why women are such a profitable market is that, frankly, unlike drugs, they can be reused and recycled by the exploiters, which is what happens, so that they make a bigger profit for the organised criminal networks than the drugs that such organisations used to trade.
In Sweden, I spoke to criminal prosecutors, police officers and women in the women’s movement. When speaking to the police, I was struck that those who originally felt that the law against the purchase of sexual services would be a problem had become enthusiastic advocates of it. One of the reasons was that the law helped in prosecutions. Because what the customers were doing was unlawful, they could be engaged as witnesses in successful prosecutions of the exploiters. That made a real difference in Sweden. There are fewer prosecutions in Sweden because, according to phone-tap evidence, there is less trafficking of women to Sweden. In turn, that is because, quite simply, the profits are lower. People cannot make the inflated profits that they can make in other countries because of the difficulties that they encounter and because the police have such effective tools to interrupt the purchase of sexual services.
Sexual services are still marketed on the internet in Sweden, as they are around the world, but the law means that traffickers must move women from flat to flat, that they cannot use the same premises frequently, and so on, so their profits are reduced. There has been a substantial interruption to their activities. I praise the Minister for the publicity that he has put out recently, which is going in a similar direction—I am referring to the posters that address men and say, “Walk in as a punter, come out as a rapist.” That points out to men that if they pay for sex with a trafficked woman, they are raping her. The risk of that approach, however, is to go down the Finnish route. They have specifically criminalised the purchase of sexual services with trafficked women, but no prosecutions have been brought as a result which, frankly, is a warning that, on its own, such a measure is insufficient, and that there must be a wider law.
[Mr. Greg Pope in the Chair.]
I want to address protection. The POPPY project, the Medaille Trust and other bodies that provide protection for women are essential. However, it is also essential that policing is undertaken with a welfare consciousness. The police should ensure that they protect the women involved. I must say that they do that more with their mouths than with their actions. It is important for both women and children who are trafficked that we see a better effort on that.
I am probably the only Member in the Chamber who has had a major raid—allegedly—focusing on trafficked children in their constituency. I have not yet been able to assure myself that that raid was part of Operation Pentameter—I do not believe that it was. It was in any case profoundly unsatisfactory. Some hundreds of police officers raided 17 addresses in Slough. They claimed to the media that it was an operation to protect victims of child trafficking, and I think there was a substantial element of that, but it seemed to me that the main aim was to impress the media that something was being done. Nine of the 10 children who were taken into care were returned to the care of their families within 24 hours and the briefing of the media was so inappropriate that photographs in which the children were easily identifiable were published by the newspapers. I took the issue up with the Press Complaints Commission and discovered that, effectively, the media were not reminded of their obligations to protect those children and were not advised that they should hide their identity. There is no mechanism by which each of the children can be given a guardian, which ECPAT rightly argued for. Even if the case is interesting and shows a blurring of lines between exploitation within and without a family, which I suspect is what happened to a large extent, we share responsibility for child welfare. If each of those children had been given a right to a publicly appointed guardian, they could have been protected much more effectively than otherwise.
Despite the concerns of the hon. Member for Totnes (Mr. Steen), there is profound evidence that the Swedish approach has reduced the extent of people trafficking into that country. If we take an approach that goes for prevention and protection, and that specifically protects children, we would make more of a difference than we have been able to make so far.
I congratulate the hon. Member for Totnes (Mr. Steen) on securing the debate. He has raised the issue in other forums and will continue to do so. We have heard a number of different takes on it from right hon. and hon. Members who have spoken, some of which I will mention.
Let me say at the beginning that the Government deserve praise for the action that they have taken and for the direction in which they are going. However slow and hesitant they have been in taking action in the past few years, they have done more than any other Government on the issue. We know that they are planning to take further steps, and we hope that that will happen sooner rather than later.
However, there is more to be done. There have been roughly only 70 convictions for trafficking under the Sexual Offences Act 2003, despite the two Pentameter operations. There are no simple answers, as I am sure the Minister will say when he responds. We need to look carefully at experience in the UK and in other countries, and hon. Members have touched on the conflict over the lessons that we should learn. If we are to tackle trafficking and the downside of prostitution, should we legalise prostitution, as has been done in the Netherlands, New Zealand and some US states? Would that bring prostitution into the open, making it much easier to control the worst aspects and help those involved? Alternatively, do we take the Swedish route and criminalise at least the purchase of sex, although the distinction between purchasing and selling is a little like splitting hairs or counting angels on a pinhead? Which example should we learn from? Passionate arguments are made by people on both sides.
If we look at other countries, we can also learn how to deal with the freed victims of trafficking, although, again, the messages are perhaps conflicting. The Government are criticised for their predilection for deporting victims and treating them as criminals. For example, they prosecuted an under-age Vietnamese boy found cultivating the crop in a cannabis factory who had been trafficked into this country as slave labour. They have also been criticised for deporting women and children who have been trafficked into the sex industry. Alternatively, should we give those people special immigration status? The Government have argued over the past year or two that such a solution would not be simple, because it could create a pull factor that draws people into the country and a loophole that they can use to gain legitimate status. We can learn from what other countries have done in that respect.
In his opening comments, the hon. Gentleman said that the issue had dominated debate in this country for only about three years and that it was quite a recent phenomenon. Back in 2002, as a new Member of Parliament, however, I went with UNICEF to Thailand and the Republic of Laos to look at the trafficking of children for forced labour in factories and domestic work and for the sex trade. Thailand is significant in that it was one of the top five countries of origin among those who were referred to the POPPY scheme following Operation Pentameter, and we can learn from what the Thai Government and UNICEF did in this case. The children came predominantly from the Republic of Laos, which is a very poor country; indeed, it is very similar, although even worse in terms of poverty, to the eastern European countries that are a source of trafficking, as hon. Members have mentioned. The Thai Government, under pressure from UNICEF, realised that if they simply deported back to Laos everybody they freed from brothels and factories in Thailand, they would soon come back over the border, either willingly or unwillingly.
We looked at cases in which the Thai Government had educated and retrained children who had been freed in police raids for up to a year before taking them back to Laos. The idea was that those children would return to Laos with skills so that they could set up small businesses and have a different lifestyle. However, when we went to the village where one of these girls came from in Laos, which is the poorest country in the world, we saw that her family lived in a breeze-block shanty. There was nothing in the door or the windows, which were just holes in a breeze-block wall. There was one electric light bulb on the end of a long cable, which the family moved from room to room to use. The lesson was that whatever education and retraining these girls were given, many would quickly find their way back across the border because of the attraction of Thailand. Some would then move on to Europe and perhaps England, just as girls who “escape” the absolute poverty of some eastern European countries do. We can therefore learn a lot from the experience of other countries, but we can also learn a lot about how difficult it is to come up with answers. There are no simple answers, and I am sure that the Minister will refer to that, as I said.
Pentameter 2, and Pentameter 1 before it, have shown that successful action can be taken if it is a police priority. Of course, the police have lots of competing priorities. Terrorism has emerged as a major priority, just as knife crime has in the past few weeks and months—there is a constant cycle of such issues. However, something like trafficking is below the radar and below most people’s perception of what is going on, so there needs to be a strong lead from the Government—as Operation Pentameter showed—if the issue is to become a police priority. We have seen in this country and in other countries what a push we need from Governments to tackle this issue. One of the great factors in Sweden’s success—in so far as what they are doing in Sweden is a success—is that they have not only made purchasing sex a crime, but given the police a lot of extra resources and told them that they must make enforcing the law on this issue a top priority. Laws can be passed, but whether they are enforced is another matter.
Sweden also puts a lot of resources into social services and into providing back-up for women who were involved in prostitution to help them take up alternative lifestyles. Something similar is being done on a small scale in Ipswich, following the terrible murders of five prostitutes there. The local police and social services have run a major programme to get women off the streets by providing housing and drug rehabilitation and by helping women into jobs and education so that they can take up alternative lifestyles. A whole package of measures is needed.
I hope that the Minister will tell us what the detailed lessons of Operation Pentameter and the visits to countries such as the Netherlands and Sweden are and what package the Government will introduce in this country. We are 10 months—nearly a year—on from the end of the operation, but what lessons have the Government learned? When will they publish their findings? What do they plan to roll out across the UK based on that experience?
What will the Government do about victims who can currently stay four weeks, or 16 weeks if they co-operate with the authorities? In 2006, a Home Office Minister responded to a question by saying that there were no plans to give victims special immigrant status. However, if the Government are to ratify the Council of Europe convention by the end of the year, as they have said they will, they will have to create some form of special immigration status for victims of trafficking who are freed as a result of police action.
The POPPY scheme is very good, but it can take only 25 people at a time. Will the scheme be rolled out across the country? If it is, will it be adequately resourced or will it just be left to existing local police and social services budgets to pay for the implementation of Pentameter and the POPPY system? Will any such scheme be based on the Dutch example of the four safe houses in Amsterdam? Such safe houses have personal guardians, 24-hour on-duty care, chaperones to take children out so that they cannot be picked up by traffickers on the streets and 24-hour CCTV monitoring of the surroundings. In the Netherlands, only 8 per cent. of freed children subsequently go missing, which is much better than the record in this country. A UNICEF report noted that 183 of the 330 child victims of trafficking whom the police found in this country later went missing. Where do these children go? What research are the Government doing through local authorities into where these children go and how we can combat the problem?
What are the lessons for sentencing policy from Pentameter and the surrounding research? Respondents to Government consultations have said that there should be a heavy minimum sentence as well as a maximum sentence and that it should be linked to deportation and a ban on re-entry following completion of the sentence. Is that the way that the Government plan to go? What are the lessons for the provision of legal assistance and immigration advice to the women and children who are caught up in trafficking and whose identities are revealed as a result of operations by police and social services?
What lessons from Pentameter do the Government therefore intend to implement? When will they implement them? Will they implement in full UNICEF’s recommendations from March 2008 and the recommendations in the October 2007 report by the Joint Committee on Human Rights?
Like others, I pay tribute to the consistent work done by my hon. Friend the Member for Totnes (Mr. Steen) to bring this subject to the forefront of debate. I pay tribute to him not least because, as he rightly said, the House now debates this subject regularly, and we can use these debates to push the Government in the direction that all of us, including the Minister, want them to go. There is clearly no division between Members on either side of the Chamber when it comes to condemning the trafficking of women and children, sexual and labour exploitation and the range of criminal activities associated with those vile crimes. We should also pay tribute to the work of those involved in Pentameter 2 and to those police forces outside the framework of Pentameter 2 that conduct successful operations against trafficking.
As I have said, debates such as this are useful in encouraging the Government further in the direction in which I know the Minister wants to travel. We have had an interesting and powerful debate about trafficking in relation to prostitution, which is a significant part of the total debate, but not all of it. Even in the past hour we have heard powerful arguments on both sides. The hon. Member for Slough (Fiona Mactaggart) pointed out the success of the Swedish approach of criminalising the purchase of sex, but we have also heard from my hon. Friend the Member for Wellingborough (Mr. Bone) that the Dutch are quite successful in combating trafficking—more successful than we are—but that they have much more liberal laws on prostitution. Clearly the Government need to gather more evidence before coming down on one side or other of the debate.
A particularly powerful point was made by the right hon. Member for Rotherham (Mr. MacShane) when he talked about the illegitimacy of certain types of behaviour—
Will the hon. Gentleman give way?
I shall continue paying the compliment before I give way. The right hon. Gentleman was exactly right in what he said about the best way of reducing such behaviour, particularly—and this is something for the Government to consider—in the context of newspaper, especially local newspaper, adverts, which still, after so much debate over many years, continue to carry adverts for brothels, more or less openly advertising that they have a constant inflow of new women from abroad, who are therefore very likely to have been trafficked. It is extraordinary that newspapers continue to do that. Any newspaper man in this country would be horrified to discover that his newspaper carried thinly disguised adverts for drug runners or gun runners. Yet they continue with advertising of the kind that I have described, which I am sure we all find vile.
I am grateful for that last point. I hope that the Newspaper Society will read the hon. Gentleman’s words and act on them, because it can take action. I want to put it to him, however, that the rate of trafficking of women and girls into Holland is proportionately higher than the rate of trafficking into the UK, according to the statistics. It is true that more are arrested, but the level of trafficking is higher because the demand is not dealt with, and legalising prostitution never deals with demand. It cannot slow down trafficking.
The right hon. Gentleman may be right. We will see over time whether the success of the Dutch authorities in combating trafficking leads to a reduction in demand. However, there are decent and sensible arguments on both sides of the debate, and I know that the Government are considering them.
Another aspect of the matter that I hope the Minister will deal with in his remarks, and which other hon. Members have brought up, is the extraordinary paucity and inadequacy of the statistics. Many questions have been asked and my hon. Friend the Member for Totnes made the point that he had helpfully put some questions in writing as long ago as last night, to allow the Minister to consider them. To provide an example of a question that has received an answer, I asked last month what estimate the Home Office had made
“of the number of men and boys trafficked into the United Kingdom for suspected involvement in the sex industry”.
The Minister replied:
“To date there has been no estimate made of the number of men and boys trafficked into the UK for the purposes of sexual exploitation.”—[Official Report, 2 July 2008; Vol. 478, c. 908W.]
I do not expect completely accurate figures, because obviously the area is surrounded by criminality, but I find it slightly extraordinary that the Government cannot even give an estimate of that very important subset of trafficked people. That shows the wider problem—that until we have more accurate information, it will be difficult to get more adequate policy in this context.
Another point that others have touched on, which it is important for the Government to consider, is that in the wake of Pentameter, and now Pentameter 2, we have reached the point at which anti-trafficking operations should be a permanent part of policing, and not a series of discrete operations. Detective Chief Superintendent Kinsella of the UK Human Trafficking Centre told the Select Committee on Home Affairs that
“part of our role at the UK Human Trafficking Centre is actually to invent this as core business across the Police Service”.
The Minister will also be aware of the comments of Chief Superintendent Phillipson of Cambridgeshire police who said publicly a few months ago:
“There are no Home Office targets for this kind of police work”.
He continued:
“This is rape and sexual abuse, happening on a daily basis, but it is unreported crime. I won’t achieve any reduction in crime statistics by closing brothels...But, quite frankly, I don’t care. As far as I’m concerned this is what police work is about and I know that it’s the right thing to do.”
Everyone involved in the debate this morning will agree with the chief superintendent and will, I hope, press the Minister to move the issue up the list of police priorities.
The Minister will be aware of other evidence to the Select Committee, from Chief Constable Maxwell, of the UK Human Trafficking Centre, who said that in some countries further away from Europe there were problems with co-operation and the sharing of information and, in the most serious cases, corruption and infiltration by criminal gangs in the national authorities responsible for dealing with trafficking. I hope that the Minister can impress on his Foreign Office colleagues that a willingness to fight and disrupt trafficking must be impressed on countries as a priority as part of our foreign policy. The Foreign Office and, indeed, other Departments will deal with the relevant Governments on the negotiation of treaties, business deals and intelligence sharing, and I hope that the British Government are now making it clear across the globe that the fight against trafficking is a serious priority for them.
We have inevitably heard a lot this morning about the signature and ratification of the Council of Europe convention on trafficking. The Minister is very aware of its history. The Conservatives called on the Government to sign the convention in January last year. They did so a few months later, which we welcomed. At the beginning of this year, since there had been a fairly deafening silence about ratification, we called on the Government to ratify it. The last public statement that we had from them was that it would be ratified by the end of the year. I hope that at the very least the Minister can repeat that assurance this morning and if possible agree that the date can be brought forward.
I am conscious that the Minister made the point that there are difficulties. In a debate in Opposition time on 16 January he told the House that the Government
“need to make four or five pages of legislative changes if we are to ratify the convention.”—[Official Report, 16 January 2008; Vol. 470, c. 1002.]
Obviously, subject to caveats about looking at the details, we would want to support that legislation and get it through as fast as possible. Can the Minister tell us today whether secondary legislation can be used, or whether primary legislation will be required? If primary legislation is needed, how and when will it be passed? For instance, the Department is drafting an enormous new immigration Bill for inclusion in the Queen’s Speech, which we shall not get until December. Clearly it will be extremely lengthy and will include many controversial elements. I hope that the Minister can give us some reassurance that the particular narrow legislation that is needed for the ratification of the convention will not be wrapped up in a larger and more controversial Bill. Inevitably that will delay ratification.
The Minister will be aware that, quite apart from the very important legislative aspects of the matter, we have proposed a number of practical measures that would make a real difference to this country’s performance in combating trafficking. We have for some time proposed the establishment of an integrated border police force, and I am sure that the Minister welcomed the details of the Stevens report that we issued last week. We said that there should be separate interviews at all airports for women and children travelling alone with an adult who is not a parent, guardian or husband, to identify potential victims. We suggest that immigration officials should check the date on the return ticket of the adult accompanying minors, to look for discrepancies, and we have said that there should be much better co-ordination between Government Departments than has been happening until now. We also think that each police force and local authority should have a strategy for dealing with suspected victims of trafficking.
There are many issues for the Minister to address in the time remaining, not the least of which is that one of the great things that Pentameter revealed is the sheer scale of the trafficking problem and the slightly half-hearted nature of the response so far. We need a permanent police effort; we should already have ratified the convention; and Ministers must explain why, when many thousands of trafficked women live in fear in this country, there are safe places for only about 70. I hope that the hon. Gentleman will address those issues.
It is a great pleasure to serve under your chairmanship, Mr. Pope. I congratulate the hon. Member for Totnes (Mr. Steen) on securing another Adjournment debate on this important issue. Other Members have congratulated him, and I join in those congratulations.
I pay tribute to the work done on this matter by the hon. Member for Wellingborough (Mr. Bone), as well as by my hon. Friend the Member for Slough (Fiona Mactaggart) and my right hon. Friend the Member for Rotherham (Mr. MacShane), who have contributed significantly to the debate. I also thank the Liberal Democrat and Conservative spokesmen for the measured way in which they made their points. It is an extremely important matter to us all. If we continue to try to achieve unity of purpose, we might make more significant progress than we sometimes do. I congratulate the police and all the agencies involved—the United Kingdom Human Trafficking Centre, the UK Border Agency and the Serious Organised Crime Agency—on their work on Operation Pentameter 2, which involved not just the police, but a wide range of organisations.
I will try to rattle through many of the points raised, although not necessarily in the order that they were raised, and to answer some of the specific questions. The Government will ratify the Council of Europe convention by the end of the year. That will not require any more primary legislation. We accomplished one part of it during the summer in the Criminal Justice and Immigration Bill, and one or two small pieces of secondary legislation are necessary to deal with some of the health aspects. I confirm that we are on track to ratify, that no primary legislation will be needed and that some small points can be dealt with by secondary legislation.
As hon. Members have said, Operation Pentameter 2 identified 176 victims, 13 of whom were children. Some 582 criminals were arrested and 822 premises were visited, of which 157 were massage parlours and 582 residential properties. I will return to the matter of residential properties in a moment. Five victims of forced labour were also rescued, three of whom were children. Although we concentrate, rightly, on trafficking for purposes of sexual exploitation and on child trafficking, we must remember that we know even less about trafficking for forced labour than about some other issues. We need to do more on that, and we will.
The hon. Member for Totnes asked me to confirm that trafficking is everywhere. Pentameter 2 involved 582 residential properties, which made it significantly different from Pentameter 1 in terms of where victims were found and where intelligence led the police to conduct their operations. You might say that it was down your street, Mr. Pope. Significant numbers in all areas of the country were involved. It is not just an issue for some parts of some cities; it is significant for every area.
A regional breakdown is available. In the south-west, 65 premises were visited, of which 56 were residential and nine were massage parlours, and 54 suspects were arrested. The hon. Gentleman asked about the seizure of criminal assets. Assets were seized across the country, but in his area, the south-west, £158,300 in cash was seized. Again, figures broken down area by area are available.
The hon. Gentleman also asked about victim engagement. Of the 154 adult victims identified, 22 are in support and 31 have been voluntarily returned. I want to deal with this point, because it goes to the heart of the problem and is a public policy challenge recognised by every Member who takes an interest in the issue. It is one thing to send in police to rescue victims; it is quite another to build up those victims’ confidence and trust to the point where they will work with the authorities and police. That is a huge problem.
Many of the people offered support will not take it, and we should try to understand why. That has to do with deception, fear and intimidation in their own country and, particularly with respect to the Chinese, who made up a significant part of the nationalities rescued, it has to do with debt bondage. We must understand those issues if we are to do something about the problem. Of course, we must ensure that welfare services are available, but even when they are, it is sometimes difficult to encourage people to come forward.
Hon. Members said that trafficking should be core police business. That is essential. On convictions, 100 people have been charged so far. There have been 20 convictions, and many other cases are ongoing. Hon. Members may be interested to know the nationalities of the 167 victims. There were 55 from continental EU states, 81 from China and south-east Asia, five from South America, one from the Indian subcontinent and four from non-EU European countries. I point out that 47 Chinese nationals were rescued; it is a growing problem that we will need to deal with. There were 27 from Thailand and 21 from Romania. There were victims of other nationalities as well, but those are the ones that I am looking at.
Hon. Members will realise that I will not be able to answer all their questions; I apologise. I will deal with two: the demand review, and child trafficking and safety, which many hon. Members mentioned. Child trafficking is a real problem, not only in rescuing children, but in keeping them safe once they are in the care of the state.
When I was in Amsterdam considering the demand review, as my hon. Friend the Member for Slough mentioned, I spoke to the Dutch Government. Hon. Members may know that the Dutch Government provide four 12-bed units. Clearly, many more children than that are trafficked there, as they are in our own country. Each child has individuals responsible for them 24 hours a day, seven days a week. The area is patrolled; that is perhaps the wrong word, but there are people around outside all the time. The children are not allowed out unaccompanied. Given all that—I take the point made by the hon. Member for Wellingborough—children still go missing. Fewer do so, but children still unscrew windows and do all sorts of things to get away from the authorities.
The hon. Gentleman was also right to talk about more secure accommodation. Clearly, we cannot lock up children who have done nothing and are victims, but we must find a way to ensure that rescued children are kept in a more secure environment. It is a difficult problem, even within the Dutch Government model, which has been referred to.
On demand, we have not yet come to any conclusions, but we are considering what to do. We understand that demand for prostitution results in many people being trafficked into prostitution, so we need to do something about that. Even Holland, which is held up as the liberal alternative, is extremely concerned about the impact that its laws have on trafficking. That is why Holland is shutting some licensed premises and managed areas and even considering making it a criminal offence to purchase sex outside the licensed and regulated sector.
I apologise to hon. Members; huge numbers of other points could be made in the debate. I will talk to hon. Members outside this Chamber, so that we can take the debate forward.
Rating (Empty Properties) Act 2007
I wish to draw the Government’s attention to the no doubt unintended consequences of the Rating (Empty Properties) Act 2007, which came into force in April this year, and put a number of companies in Sunderland out of business. There is no reason to suppose that its impact will be confined to Sunderland, and indeed, if the British Chambers of Commerce is to be believed, the impact on jobs and business is likely to be widespread. The fact that the economy now appears to be in downturn will only make matters worse.
The measure was drawn up by two extremely clever people—Kate Barker and Sir Michael Lyons—at the Treasury’s behest. No disrespect to the Minister, but it is a pity that no Treasury Minister is here to account for the consequences—so often the Treasury is omnipresent, and yet absent. The aim was laudable: to give businesses an incentive to maximise the use of their premises and perhaps to lower rents by forcing on to the market properties otherwise being kept idle. That presumed that there would be takers for properties thus forced on to the market, but Sir Michael, Miss Barker and their masters at the Treasury appear to have overlooked the possibility that in areas such as the one that I represent, where a huge swathe of traditional industry has disappeared, there is little or no market for some of the vast industrial premises currently lying idle.
Those responsible cannot say that they were not warned. In response to the Government’s consultation last autumn, One NorthEast, the regional development agency, described the reforms as a “very blunt instrument” that would
“adversely affect what is a fragile regional property market”.
Also in response to the consultation, the North East chamber of commerce disagreed with the premise that commercial properties deliberately left unoccupied represented a significant barrier to growth in the north-east. It spoke of the “serious impact” that the reforms were likely to have if applied across the board. Nevertheless, the Government chose, with minor adjustments, to go ahead, and the consequences are plain for all to see.
Pallion Engineering is a company based in the old Pallion shipyard in Sunderland, and faced an overnight increase in business rate from £55,000 to £277,000. It employs 10 people and rents space to a number of other companies that, between them, employ up to 200 people on a vast site that once employed several thousand. Obviously, an increase in rate demand of the type that I just described will put the company out of business, at a time when it had hopes of attracting subcontracts for the recently commissioned warships. The only impact will be the loss of up to 200 jobs and revenue of up to £55,000 a year, and the odds are that the site will be derelict for many years. Is that what the Government intended?
WH Forster, a print company, offers another example from Sunderland. It employs about 100 people at sites in Sunderland and Gateshead and is faced with an increase in rates from less than £10,000 to £105,000 on premises that it owns in Washington, which it is unable to sell, and which is only about one-third tenanted. It is also trying to sell its existing premises with a view to consolidating on to one site. It has been on the market for three years, but so far there have been no takers. The only impact of this penal increase in rates will be to threaten the survival of a business that has been built up over 50 years.
My attention has also been drawn to SST Engineering, which is a small fabrication business set up only last year that employs just seven people, but with the strong prospect of expansion. It is exactly the sort of business that we should be seeking to encourage. Currently, it uses only one of the three bays on the premises that it rents on the Sunderland enterprise park. When it was set up, it was given to understand that it faced a business rate bill of about £16,000 a year, but now it has been told that it is likely to be about three times that amount. The impact will be ruinous.
I first drew this situation to Ministers’ attention in mid-April. Not unnaturally, I wrote to the Treasury, but the response came from the Minister here, who advised that local authorities had discretion to delay the imposition of the new rates for up to six months, to spread the cost over 12 months, instead of 10, and to offer 100 per cent. relief in cases of particular hardship. I went back to my local authority, which said that that was not so, and that the most that it was permitted to offer under the constraints of European law was 10 per cent. relief, which in the cases of the companies to which I just referred would make no practical difference.
I wrote again to the Minister, on 16 May, and in the hope of generating an air of urgency I copied the letter to the Prime Minister’s parliamentary private secretary and to the Minister for the North East, my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown). One month later, I received a reply from the Minister for Local Government, my hon. Friend the Member for Wentworth (John Healey). It was apparent from his reply that the Government are in denial. The threefold increase faced by the small engineering company, to which I referred earlier, was described as a
“private contractual matter between landlord and tenant”.
There was a paragraph of nonsense about how unhappy businesses have a right to appeal and a reference to section 49 of Local Government Act 1988, which permits relief in exceptional circumstances and which, I am advised by my local authority, is of no relevance in the cases that I have mentioned. Finally, it was suggested that the bill could be spread over 12 months, instead of 10, to
“relieve any cash flow difficulties”.
At that point, it became apparent that I would have to raise the matter publicly if we were to stand any chance of breaking through the wall of complacency that I have so far encountered.
I have since discussed the matter with the Secretary of State for Communities and Local Government, my right hon. Friend the Member for Salford (Hazel Blears), who showed every sign of grasping the seriousness of this situation. Incidentally, I would be surprised if the consequences that I have outlined are confined to Sunderland and the north-east. Only this morning, my attention was drawn to the case of a warehouse business in north London facing insolvency as a result of this legislation. According to the British Property Federation, it will also have an adverse impact on regeneration schemes, because no one will build speculatively if they face the added risk of being taxed on an empty building.
The way forward is clear: one way or another, local authorities must be given the discretion to apply common sense and relieve rates on unused and underused property. If disaster is to be averted, that will need to be done quickly, because the bills have already been sent out and the court orders for non-payment are already being applied for. I understand that the Government had the foresight to give themselves a reserve power to permit local authorities to relieve 50 per cent. of the new charge in the event of an economic downturn, which undoubtedly would help were it to be called upon. However, in some of the cases that I have mentioned, it will not be sufficient. The Government will want to consider giving local authorities the discretion to remit the whole charge if there is a strong case for doing so. That is what I hope the Minister will say today. What I am hoping to hear from him is that the Government have finally grasped the nettle and will take action before people start turning up in our surgeries, accusing us of putting them out of work.
Mr. Pope, it is a pleasure to serve under your chairmanship—for the first time, I believe.
I congratulate my hon. Friend the Member for Sunderland, South (Mr. Mullin) on securing the debate and on the way in which he has put across his points. He has always been a persuasive friend, and I have probably followed him into the Lobby many times because of the conversations that we have had. He has probably got me into trouble once or twice as well.
I take on board my hon. Friend’s concerns about the two local engineering companies and the printer company that he mentioned. I apologise for not being a Treasury Minister, but, as he says, I am a Minister at the Department of Communities and Local Government. I am delighted that he has already had some informal conversations with our right hon. Friend the Secretary of State. If he wants to have detailed discussions, I am happy to set up a meeting between my hon. Friend and Ministers in my Department to help to foster the dialogue.
I will outline how we arrived at our current position and the reasons why the Government have taken the decisions they have. Ultimately, those decisions are aimed at stimulating the market and ensuring that every property is utilised. Non-utilisation of buildings costs the taxpayer approximately £1 billion a year. I understand why my hon. Friend has raised the issue, and I am very sympathetic to his concerns.
As my hon. Friend said, the reforms followed on from recommendations of the independent Barker review into land use planning and the Lyons inquiry into local government. The changes to the empty property rates relief came into force from 1 April this year following Royal Assent to the Rating (Empty Properties) Act 2007, which was scrutinised in great detail during the legislation’s progress through the House.
The main element of the reforms to empty property rates was to raise the business rates liability of owners of empty properties to 100 per cent. of the full occupied rent. The reforms provided a new zero rate for charities and community amateur sports clubs in respect of any property that they own. They also exempt companies in administration from rates on their empty properties in line with our policy to assist such companies. The reforms were part of a package of measures. However, I understand and sympathise with the fact that they have not helped the engineering firms or the printer company that my hon. Friend talked about. The Government considered that it was right for landlords to receive rate relief for limited periods while they manage their vacancies. The reforms kept the three-month exemption period for non-industrial properties, but replaced the previous total exemption in perpetuity for industrial properties with a six-month exemption period.
Let me explain the rationale for the reforms. Our cities and towns occupy very high-ranking positions in the table of the world’s most expensive markets for rents. The 2007 King Sturge survey of global rents found that English towns and cities—namely London, Birmingham, Bristol, Manchester and Leeds—occupy five out of the top 10 positions for the world’s most expensive total occupancy costs for prime industrial space. Those same towns occupy five out of the top 20 positions for the world’s most expensive total occupancy costs for prime office space.
Those points were considered during the course of the reviews that my hon. Friend mentioned. High rents might be a sign of companies recognising the attractiveness of locating in the UK and, to some extent, be a marker of how successful we have been. However, while our cities and towns occupy high-ranking positions in the table of the world’s most expensive markets for occupation costs, owners of empty properties received a subsidy of £1.3 billion, paid for by other taxpayers. The reforms to empty property rates should reduce the costs of relief to the public purse by £950 million in 2008-09 and £900 million in 2009-10.
Obviously, the reforms will benefit the public purse only if the companies concerned are capable of paying the large increases. In the case of Pallion Engineering, there has been a fivefold increase in rates. If the effect is to put the company out of business, that will reduce the revenue available to the public purse.
I am grateful to my hon. Friend for raising his concerns about his constituents and his local companies. As I explained earlier, we have had to strike a difficult balance. We have a big problem with empty properties, but we must do something to stimulate the market, partly to bring down rents and to ensure that the spaces are utilised by would-be entrants to the local marketplace and other companies. I hear what my hon. Friend is saying about his own local businesses. I am keen for him to have the opportunity to sit down with Ministers in the Department to discuss how his local companies have been affected.
The overall purpose of the reforms is to increase the costs of holding empty property, thereby providing a stronger supply-side incentive for owners to re-let, redevelop or sell empty properties. That incentive should increase access to existing premises for business, reducing the need for new development on greenfield sites, increasing the supply of commercial properties available to new and existing businesses, and helping to reduce business rents across the board.
The Minister has outlined a theory. Further south, that theory may be justified. Perhaps there is a market for the surplus property that will be forced on to the market. In large parts of the country, however, especially in the area that I represent, there is no market for that property. Some of it has been on the market for years. Earlier, I mentioned the site owned by the printing works. The company has been trying to sell it for three years, but has had no takers. At that point, the theory breaks down, does it not?
I am always keen to ensure that theory and practice come together and are resolved effectively. The reforms are relatively new, so we will need to look at the patterns and see whether the changes have made a difference. I am confident that they have. My hon. Friend asks whether there will be regional variations—an interesting point that must be considered. It is important to sit down and assess whether the changes are making the difference that Barker suggested they would make.
The Government have estimated that the reforms could result in an overall reduction in business rent across the commercial property sector of between £80 million and £165 million. Such a reduction should directly benefit many local companies up and down the land, which is important when the world economy is facing an increasingly challenging environment. The UK is well placed to meet these challenges, thanks to the resilience and stability engendered by the Government’s macro-economic framework and a decade of reform that has promoted open and flexible markets for labour, products and capital.
To help business further, from 1 April we have seen the implementation of the major package of business tax reforms announced in the 2007 Budget, including the reduction in the main rate of corporation tax to 28 per cent., which will deliver the lowest ever rate in the UK and the lowest in the G7, improving competitiveness and encouraging investment. All these measures need to be seen as a package.
To assist deprived areas, the business premises renovation allowance, which was introduced on 11 April 2007, almost a year before the reforms to empty property relief took effect, gives 100 per cent. capital allowance for the renovation of empty commercial property in deprived areas, as defined by the UK assisted areas map. Hopefully, that measure will also make a difference to many local companies.
The package of measures should help to tackle low demand for property, as it is designed to increase competition in the economy more generally and to maintain the UK’s attractiveness as an investment location, thereby helping to attract foreign direct investment and to stimulate innovation and growth.
It is fully understood that the circumstances of property owners and the reasons why properties lie empty vary from case to case, and that many owners are genuinely trying to let their property, as my hon. Friend has made clear during this debate. However, too many commercial properties lie empty indefinitely, in many cases blighting communities and wasting the potential of brownfield assets. As a consequence, other areas are then developed.
The Government no longer believe that we should continue to offer tax reliefs for buildings to lie empty, so the reforms were applied to all non-exempted properties in England, on the basis that it is in the interest of all communities that land and property are utilised efficiently. Indeed, we find empty properties in all communities in England. For example, in 2004-05 empty properties were found not only in areas of low demand, such as Wolverhampton or Sandwell, but within fast-growing and strong regional economies, such as Ealing, Manchester and Birmingham.
Furthermore, in removing the total exemption for industrial properties, the reforms improve the fairness of the system between different sectors of the property market, by ensuring that the incentive to re-let or redevelop a property is applied to all empty properties, whether they are in the industrial, office or retail sectors.
I can see that my hon. Friend is approaching the end of his remarks, but there is one point that I would like him to address. The problem with all this reform is not that there is not some theoretical reason why it is worthy, but that it does not allow for any flexibility or for the application of common sense. The one thing that might help, as I have mentioned before, is that there is apparently a reserve power to allow 50 per cent. relief in the event of an economic downturn. Is there such a power and, if there is, will the Government contemplate using it? I must say that the situation is very urgent. We are really running out of time; some of the businesses that I have mentioned will be bankrupt by the end of the autumn if this situation continues.
There is no such reserve power that I am aware of, although my hon. Friend did mention local authorities and relief, so I will try to explain a little more about what local authorities can and cannot do. Having said that, the detail of what they can and cannot do is a complex area to get into during an Adjournment debate. I am sure that he will take up the opportunity to meet Ministers to discuss the matter further.
Local authorities have no discretion to exempt or vary the rates liability of empty property ratepayers. Although there are reliefs for small businesses and other occupants, such as charities, they apply only where there is a business in actual occupation of a property. Local authorities have discretion to award hardship relief, but there are provisos within that, too. Those provisos are where it gets a little more technical and complicated, so my hon. Friend would probably benefit from having a more detailed conversation with Ministers about them after this debate.
We believe that overall the reforms represent a good balance between providing incentives to owners to re-let or to redevelop property—I think that my hon. Friend is in favour of that himself, although how we do it is perhaps where the disagreement arises—and for providing rate relief for limited periods while they manage vacancies.
In summing up this debate, I say to my hon. Friend that Kate Barker and Sir Michael Lyons saw that empty property rates should be reformed, and the Government agreed. It cannot be common sense to continue to pay owners to leave their properties empty, to be subsidised by taxes paid by others, when UK rents are among the highest in the world and a hindrance to UK competitiveness. It also cannot be beneficial to seek more land on which to build commercial property when existing land could be put to that use or to alternative uses.
At the same time, however, my hon. Friend makes a very good point, which he describes as theory and practice needing to come together to work. I am very keen, and I know that my Department will also be very keen, to learn from his experience, to help to ensure that theory and practice come together and work effectively.
Recreational Fishing
I feel like I am over Heathrow airport, stacking up and waiting to land on the runway, not having done a Westminster Hall debate before. However, I am delighted to be called in such good time and that I arrived here three minutes before I was due to start, otherwise I could have been slightly embarrassed.
I will use my brief Adjournment debate today to discuss the fabulous contribution that the great sport of recreational fishing makes to the economy of this country. I have been a passionate angler for 37 of my 40 years. I was introduced to the sport by my grandmother, who gave me a cotton reel, a bamboo stick, a bit of string and a bent pin. I fished for five years without any reward. Then my dear grandfather took me to a pond and I caught three goldfish. The less said about that the better probably at this stage, but my grandfather was at my shoulder when I caught my first brown trout and for the first salmon that we caught together on the River Feshie in Scotland. A love of angling has been his great gift to me and it is one that I treasure. I am also pleased to say that, in his early 90s, my grandfather is still going strong and can still wipe my eye on the riverbank.
As hon. Members may know, angling captivates somewhere in the region of 3 million people; 1.5 million of us are extremely hardcore and the other 1.5 million, who make up the total number of anglers, dabble from time to time, but we are still very lucky to have them. Angling also brings people, including the families of anglers, to our great countryside and it gets people experiencing some of the wonderful sights and scenery that this great land of ours has to offer.
The wonderful thing about fishing is that it is blind to class, religion and ethnicity. On the riverbank, everyone is equal and completely consumed by their passion, discussing tactics and methods for landing the fish of their dreams. If more politicians from across the House spent time on the riverbank together, we might be a little nicer to one another and, on occasion, a little less savage.
At this juncture, I should like to pay tribute to my good friend, the hon. Member for Reading, West (Martin Salter), who is chairman of the all-party angling group. Since his election to Parliament 11 years ago, he has done a huge amount for the sport of angling and, as an angler, I am very grateful to him for all his hard work on behalf of all 3 million anglers in Britain.
I should also like to say quickly that some of my happiest times as a Member of Parliament are spent on the riverbank in my constituency, armed to the teeth with tackle bought from Simpsons of Turnford and Johnson Ross Tackle in Hoddesdon. I am a member of the Amwell Magna trout fishing club and recently joined one of the oldest coarse fishing clubs in the country, the Red Spinners. In between my engagements on the riverbank, I find time to be attentive to my constituents.
This debate is about the economic contribution of angling, but I should like to mention that anglers contribute a huge amount to conservation as well. The Anglers Conservation Association works tirelessly to improve habitats along rivers and streams, thereby not only improving the well-being of many species of fish but having a huge impact on invertebrate life, bringing otters back to our waterways and having a beneficial impact on flora and fauna across the piece.
Let us get down to the meat of this—the bold, hard facts. There are about 3 million of us out there fishing at any one time, or on some occasions. As the Minister discovered from the good report that his civil servants prepared on angling, we spend about £3.5 billion to £4 billion a year in pursuit of our passion, and angling is responsible, directly or indirectly, for 16,000 to 20,000 jobs.
I will take away the thought that the hon. Gentleman is a member of the Red Spinners. Given where he comes from, that will probably ruin his political career.
The point about tourism and jobs is important. Does the hon. Gentleman agree that places such as Ireland sell tourism by specifically targeting fishermen and describing the facilities that exist for them, but that the United Kingdom does not do a good enough job to publicise the sport?
The hon. Gentleman makes a good point. For the past 15 or 20 years, Ireland has heavily promoted fishing tourism. Many people come to this country to fish—to Scotland in particular but also to England—but a great deal more could be done. I am proud to say that we have some of the best fisheries in Europe, and long may they last, but we could do more to promote them. The hon. Gentleman is working in his constituency to bring such matters to the fore.
There are 1,000 commercial fisheries—perhaps more—and hundreds of fishing clubs. The economics of fishing are simple. There is bait and tackle, of course, and my garage is like the garage of the hon. Member for Reading, West, which is full of mountains of tackle and hundreds of fishing rods.
May I ask the hon. Gentleman to desist from notifying every burglar in the Thames valley area of the contents of my garage, which I should like to say for the record have all been moved to a secure lock-up? I thank him for his kind comments earlier.
On a more serious point, does the hon. Gentleman acknowledge that some of the figures that he quotes were published in Labour’s charter for angling, which was a serious contribution to Britain’s most popular participant sport? Is he pledged to do what he can within his own party to ensure that there is consensual support for the sport of angling among all political parties in the House in the run-up to the election?
I am happy to say that that will be the case, if I have anything to do with it. Angling should be non-political—support should cross all political parties. If I get the chance at some stage in the future, I should like to be at the fore in forming my party’s position on fishing.
Let us return to the economics. There are fishery fees, and we all spend money on motoring. At a time when we are worried about our environmental footprint, perhaps I should not dwell on the money that we spend travelling around the country to far-flung fisheries. We spend fortunes on provisions from local shops. We bring tourism in the form of trade to pubs and restaurants. We often stay overnight at hotels or campsites, or in bed-and-breakfast accommodation.
To put this into perspective, I give the example of my annual pilgrimage to the sunlit uplands of Scotland to try to catch a salmon. Each beautiful silver fish that I land probably costs me in the region of £1,500 to £2,000. It is money well spent. I have wonderful holidays with my family, but it is my love of fishing that takes me to Scotland. My family also engages with the local community and brings tourist pounds to villages and towns in the area of Islay where I go fishing.
Direct employment is also important in the world of fishing. Many water keepers are employed to look after our fisheries, and professional booking and guiding services are increasingly growing in this country and sending fishermen overseas. The Minister will be aware of our thriving fish farming industry. Fishery managers look after the many thousands of fisheries that people enjoy in this country. Fishing makes an important contribution of some £3 billion to £4 billion a year, as I have said.
In my last two minutes, I shall conclude with these few points. Fishermen are the eyes and ears of our rivers and lakes. If there is a problem, we are the first to raise the alarm. We play a huge role in ensuring sustainability. The catch-and-release mentality pioneered among the coarse fishing fraternity has now moved into the game fishing and sea fishing fraternities.
There are still issues that we need to address. For example, abstraction remains a concern. I was at a presentation a few months ago at which some fishery officers were applauding the increase in barbel and chub stocks on the Wye. I love catching barbel and chub—I am a passionate barbel and chub fisherman—but the Wye is changing from a cold-water fishery that supports salmonids to a warm-water fishery that supports chub and barbel. We need to address the issues that are causing that. Global warming is certainly playing a part, but there is no doubt that abstraction is affecting the water quality of that river.
We need to educate the people who come to this country about our traditions. I always welcome fellow anglers to our shores. We have a lot to offer them, but some people are used to taking fish for the table in their own countries. In this country, we do not do that. We need to educate them, so that they can enjoy our fishing and not come into conflict with people who are concerned about fish being removed from our waters.
I do not share much common ground with the Royal Society for the Protection of Birds in respect of cormorant predation, which still causes concern to fishery owners. I am worried that the RSPB does not recognise that cormorant predation has put, and will continue to put, commercial fisheries out of business until it is properly addressed. However, I do agree with its concerns about the damming of the Severn estuary with a barrage. The hon. Member for Reading, West will say a few words about that.
We must continue to protect fish stocks. I was delighted to serve on the Joint Committee that considered the draft Marine Bill, and I know that the Minister has been at the forefront in promoting marine conservation zones, which will have a huge part to play in improving the prospects for commercial fishermen and recreational sea fishermen. We in the fishing world are good at keeping our own house in order, but issues surrounding the overstocking of certain small still waters are causing concern to the fishing fraternity.
Finally, the Minister will be aware that people are concerned about the ongoing cost of fishing licences. We are happy to pay for the maintenance of our waterways—it is essential that we pay for that—but, at the same time, we must ensure that we do not discourage new entrants from joining us on riverbanks and lakesides. With that ramble, I shall sit down and let the hon. Member for Reading, West say a few words.
I thank the hon. Member for Broxbourne (Mr. Walker) for his kind comments and congratulate him on securing this debate. I had intended to speak for only a few minutes, but the Minister may not have a 22-minute response prepared, so I crave your indulgence, Mr. Pope, to speak a little longer than I had intended.
I particularly want to discuss the value of salmon and trout fisheries in England and Wales in the context of the environmental and economic threat posed by the Severn barrage, should it ever be constructed. I am aware that the Government do not have a fixed position on it at present and that a feasibility study has been commissioned, but it is right and proper that the voices of anglers and those who speak about the wider environment are heard in the run-up to that debate. There are those who believe that the barrage is a done deal. I am not one of them, and I am looking for critics to be proved wrong.
I want to make it clear that I am not a trout and salmon angler. I have no vested interest in fishing for trout, salmon or sea trout on the Severn, the Wye or the Usk, which are the major rivers in that catchment, but as a coarse angler, I am acutely aware, as is the hon. Member for Broxbourne, that what is good for trout and salmon is good for all other species of fish, including those that we coarse anglers choose to pursue.
I want to look at some of the figures before discussing the Severn, the Wye and the Usk. Perhaps the most famous trout and salmon rivers in the country are the Test and Itchen in Hampshire, which I know and in which I have fished for other species. A survey carried out in partnership with the Salmon and Trout Association, looking at the economic value of those two famous fisheries, showed that, in 2005, anglers spent £3.25 million in total to fish both rivers, of which £3 million was re-invested in river management, thus supporting 120 full and part-time jobs. The survey also showed that fishery owners spent a further £250,000, at least, on private conservation projects, mainly to carry out habitat improvements and restoration. So just two comparatively short rivers were generating in excess of £3 million to the local economy of one county.
Let us look at salmon fishing as a whole. The Environment Agency did some work in 2006 on a research and development project to determine the total economic value of salmon in England and Wales, in respect of which the public were asked to value the prevention of a severe decline in salmon to them. The results showed that the value of salmon was some £350 million a year. Bearing in mind that 25 per cent. of the spawning habitat for salmon—that is, 25 per cent. of the spawning habitat in England and Wales—is upstream of the proposed Severn barrage, and given that its construction would effectively destroy migratory fish runs, the simple conclusion is that the construction of the Severn barrage would be cataclysmic for migratory fish in the Severn, Wye and Usk catchment.
When the hydroelectric dam projects were built in Scotland in the 1950s and 60s, special channels were sent up the sides of the dams, allowing salmon in particular to go up to their breeding grounds. Are we not talking about a similar process?
It is possible to create fish passes, but one of the big problems is that there is a world of difference between a comparatively modestly sized dam and a massive barrage that is effectively turning the tidal estuary into a lake. The huge volume of water that is released to generate the force and pressure to power the turbines will suck salmon smolt and all migratory fish through what is effectively a mincing machine.
It is no coincidence that a powerful coalition has come together to challenge the Severn barrage, including the Anglers Conservation Association—the main pollution-fighting body—the National Trust, the Royal Society for the Protection of Birds, the Salmon and Trout Association, the Wildlife Trusts, the United Usk Fisherman’s Association, the Wildfowl and Wetlands Trust, WWF UK, the Wye Salmon Fishery Owners Association and the Wye and Usk Foundation. Those experts in their fields produced, together with the RSPB, a collective response that highlighted the point that I am seeking to make today.
I wish to read into the record that construction of a costly 10-mile barrage across the River Severn would create similar problems, by blocking the path of thousands of fish returning to the Severn and its tributaries, the River Wye and the River Usk. A barrage to generate tidal energy would also destroy wild bird habitats formed naturally by the Severn’s huge tidal range and protected by European law. The Government would have to recreate those sites elsewhere and ensure that they were of similar value to wildlife and that they were on a similarly large scale. Helping fish to adapt to the plugging of the Severn by creating a new pathway from the sea further up river will be even harder, particularly since the Government have nominated the Severn estuary for EU protection because of its importance to fish stocks. So the Government are nominating that vital economic, environmental and wildlife corridor, yet at the same time they are considering putting a barrage across it that could have devastating consequences for the whole fishery.
I congratulate my hon. Friend the Member for Broxbourne (Mr. Walker) on securing this debate. The hon. Member for Reading, West (Martin Salter) is making an argument about the Severn barrage, and the Government have, as he rightly says, not made their decision yet, although they have paid for the feasibility study. Is the hon. Gentleman satisfied with the way that the Government have approached angling? We have seen a reversal on the bass minimum landing size and a massive increase in the price of disabled angling licences. Does he think that the Government have really done what he set down in his manifesto for angling?
Order. Before I call the hon. Gentleman to reply to that intervention, could I gently steer him back to the word “economy” in the title of the debate and suggest that, rather than talking specifically about fishing and the Severn barrage, he also mentions its contribution to the economy?
Thank you, Mr. Pope; I take your gentle chiding.
I am more than satisfied with the progress that angling has made under Labour. As the hon. Member for Leominster (Bill Wiggin) was late, he will not have realised just how misplaced his comments were, given the consensual contribution by the hon. Member for Broxbourne. The Conservative party had a pathetic record when in government and completely ignored angling.
The economic value of the Wye, Usk and Severn fishery is calculated at the moment at between £8 million and £12 million per annum. The Tweed—a Scottish salmon river—is calculated to produce some £20 million for its local economy. Thanks to the groundbreaking work of the Wye and Usk Foundation, the economic value of the salmon fishery on the Wye and the Usk has begun to rise. We have started to see a return of the fish runs that made those rivers so rightly famous and created such value for that fishery.
The peak was in the 1970s, since when we have seen a reduction of some 70 per cent. in visitor numbers, but because of the work of Stephen Marsh-Smith and others in the Wye and Usk Foundation and because of the Government’s actions, pressed for by hon. Members, we have seen the buying off of the Irish drift nets, the removal of barriers to spawning, progressive liming at the headwaters to mitigate the effects of acid rain and 150 miles of habitat restoration work being done on the Wye and Usk.
The Wye and Usk Foundation raised £5 million in funding for that groundbreaking work, a lot of it from the European Union, but also from the Environment Agency, the Countryside Council for Wales and from individual stakeholders. As a result, we have a tourist resource, an economic resource and an environmental resource that is improving. The creation of the Severn barrage is a major threat to that.
I give notice that I, along with many other hon. Members, will be highlighting the potential disaster that the Severn barrage could be to wetlands and to the economy of that important fishery. I thank hon. Members for their patience and for giving me an opportunity to rehearse an argument that will be heard many more times during the process.
I, too, congratulate the hon. Member for Broxbourne (Mr. Walker) on securing his first Westminster Hall Adjournment debate, and what an excellent subject to choose! He spoke eloquently and all hon. Members present were struck by his passion for his hobby, which is shared, as I know only too well—sometimes to my cost—by my hon. Friend the Member for Reading, West (Martin Salter). Both the hon. Gentleman and my hon. Friend have garages full—
My hon. Friend no longer has a garage full of fishing gear, which will be a relief to Mrs. Salter, I am sure, who will take advantage of the additional space that has been created in the Salter household.
Again, I offer my warm congratulations to the hon. Member for Broxbourne. This debate gives me, as the Minister with responsibility for fisheries, an opportunity to acknowledge the value of recreational fishing to the economy, and also to outline some of my Department’s work in recognition of that value, and of course the pleasure that I know from first hand it brings to the 3 million people in England and Wales to whom the hon. Gentleman referred. I recognise the importance of anglers as stakeholders in the management of fish stocks. I am also clear that we must take proper account of the needs of recreational anglers as we develop and implement our fisheries policies.
It is important to focus on a range of areas in angling. The hon. Gentleman concentrated on coarse and game angling, and I shall concentrate my comments on that. If time allows, I may talk about sea angling.
Coarse and game angling are among the most popular sports in England and Wales, and they are big business. Freshwater angling makes an important contribution to the economy. Accurate figures are hard to find, but the Environment Agency and the Department for Environment, Food and Rural Affairs recently commissioned a detailed study, “The economic impact of freshwater angling in England and Wales”. The key findings of that study, which was published at the end of last year, were that expenditure by about 1 million licensed anglers on freshwater fishing trips totals £1.18 billion per annum. As the hon. Gentleman said, that involves some 37,000 jobs and household income of around £980 million. Those are large figures. Research shows that average annual expenditure by coarse anglers on permits, tackle, travel and other costs is £859 per angler. We are therefore talking about a successful multi-billion pound industry, which is particularly important to rural communities.
One of DEFRA’s public service agreements is to ensure that people have access to the natural environment, and what better pastime is there than enjoying angling in the wonderful English countryside? Whatever the true figure, angling provides not only an important contribution to the economy, but access to the countryside and the aquatic environment, as well as contributing to a healthy lifestyle.
The popularity of freshwater angling is increasing, which is good news. The number of rod licences taken out in England and Wales has increased by about 10 per cent. over the past decade, and currently stands at 1.2 million, with the majority of licences—typically between 750,000 and 850,000—being taken out by coarse anglers.
The rationale for the development of the Government’s policy on angling and the management of salmon and freshwater fisheries remains the salmon and freshwater fisheries review group report, which was published in March 2000, and to which the Government responded in February 2001. The overall aim of the Government’s salmon and freshwater fisheries policy is to promote conservation, restoration, and rational management of salmonids, eels and freshwater fish stocks.
Under the Environment Act 1995, our delivery partner, the Environment Agency, has a statutory duty to maintain, improve and develop fisheries for salmon, trout, other freshwater fish and eels. Conserving freshwater fish is required by the UK's international commitments. Research has shown that the presence of fish is valued not only by anglers, but by other interests in fisheries, and the general public. Encouraging the development of fisheries is consistent with the Government’s policies to benefit the general public by encouraging rural development and farm diversification and helping to create a fair and healthy society.
Will the Minister give way?
I will not give way, because I have a lot to say.
DEFRA, with the Environment Agency, contributes to the UK’s obligations to the European habitats directive that covers several freshwater species and habitats. Continued and effective management of fisheries is therefore essential to defining and achieving good ecological status, as required by the water framework directive. That is important because not only do fish contribute across the full ecological range from being a food source for other top predators, but their presence or absence is an important indicator of water quality. The loss of the fish population would have a serious impact on the freshwater ecosystem and those reliant on it. Without a healthy and abundant fish population, anglers would cease to fish and those industries dependent on angling would collapse, so it is vital that we maintain water quality and ensure that fish stocks remain abundant.
We were generally pleased with the results of the 2004 Environment Agency report, “Our nations’ fisheries”. It noted that salmon and eel stocks are depleted, but that coarse fish numbers are increasing and have improved markedly on those observed a decade ago when many rivers were grossly polluted and their fish communities were restricted to just a few fish of a limited number of species. With the money raised in net and rod licence duties, the Environment Agency does an excellent job, not just in maintaining, conserving and enhancing stocks, but in enforcing and promoting angling.
I am aware that the Environment Agency has developed the Lee fisheries action plan in the constituency of the hon. Member for Broxbourne. It was published in 2005 and produced in consultation with key stakeholders. The plan identifies six key environmental themes relating to challenges facing fisheries in the Lee catchment area, and is just one of the many examples of the Environment Agency's good works.
The hon. Gentleman referred to the need to ensure that people have regard to the tradition of angling catch and release in this country. I am sure that he will welcome measures in the draft Marine Bill to give the Environment Agency the power to create byelaws to stop people taking fish for the pot rather than maintaining the tradition of catch and release that now encompasses all areas of angling.
The hon. Gentleman referred to cormorants, and he will be aware that we changed our policy in September 2004 to allow licences to be granted to fisheries managers to reduce the number of cormorants at a site, as well as to continue the strategy of shooting a small number to reinforce non-lethal scaring when appropriate. That has had a positive impact, and cormorant numbers in England have declined by 18.1 per cent. since the licensing was introduced. The problem is to achieve a balance, and we must ensure that cormorants are not jeopardised.
The hon. Gentleman referred to the pre-legislative scrutiny of the Marine Bill, and my hon. Friend the Member for Reading, West referred to the Severn barrage. We all understand the competing demands of climate change. The hon. Gentleman referred to particular species and the changing nature of our rivers, and we are sure that that is a consequence of climate change. We know that the Severn barrage could provide us with 5 per cent. of our electricity through renewable energy, but the decisions are difficult. The Severn and its tributaries, including the Wye and the Usk, are valuable spawning grounds, and contain environmentally and economically important populations of migratory fish, including salmon, shad and eels. The Severn tidal power feasibility study has identified that as a key issue when considering the impact on fish and fisheries. I assure the Chamber that that will be an important part of the consideration of the Severn barrage.
The study will take about two years, and it will cost around £9 million. It will be split into two stages with a decision at each stage. The first stage is likely to run until late 2008 and will focus on the high-level issues and reach an initial view on whether fundamental issues exist that would preclude a tidal scheme in the Severn estuary. Hon. Members’ points were well made, and it is important that they are considered in the general debate.
I have set out some of the national policies and measures to recognise the value of recreational fishing, and I look forward to the collaborative approach of a modernised management framework through the Marine Bill, which will cover inshore, freshwater and migratory fish, to deliver further benefits for anglers, stocks, key stakeholders and everyone involved in this wonderful sport that 3 million people in our country enjoy.
I warmly congratulate the hon. Gentleman. He presented his comments in a considered way, but demonstrated his expert knowledge, from which I have learned a lot. I am always learning from my hon. Friend the Member for Reading, West. Some of his advice is appreciated, and his gentle style is always appreciated.
Lyndale Group Ltd
With your permission, Mr Pope, there will be a slightly different format to this debate. Normally, the Member initiating the debate will speak at length and the Minister will respond at some length, but because this incident has been a shock to many of us, I shall outline the case and allow other hon. Members with a constituency interest to intervene. I accept that there is a limited amount that the Minister can say today, other than to offer us a meeting next week before the recess. It is interesting that this debate has followed one on fishing, because this matter is a fishy episode in the industrial history of this country.
Let me explain the background to the debate. A number of Members of Parliament have been approached by the Bakers, Food and Allied Workers Union because it is concerned about the treatment of its members by Lyndale Foods Ltd. At this stage, I pay tribute to the union for its vigilance and the active support that it has provided to its members who were formerly employed by Lyndale within that company group. The union has been assiduous in its work at a national level through its general secretary Joe Marino, the regional officer Ian Hodson and its local representatives. The union has a long tradition and history of representing its workers effectively and has displayed that tradition during this particular episode.
I decided to call this debate because the events at Lyndale Foods Ltd have had such an impact on so many workers and their families. Many people, including Members of Parliament, feel angry about how those workers have been treated. I wish to highlight the need for new legislation to prevent such events ever happening again and to protect workers from that sort of exploitation.
Let me talk about the history of the matter. Lyndale Foods Ltd was placed into administration on 9 June. It operated bakeries across the north-west under a range of brand names: Hampsons in Bolton, Peter Hunt’s in Bolton—a savoury products supplier—Sayers the Bakers in Liverpool, and Wimpy in Runcorn. Included in that list are two production facilities—in effect, factories: Hampsons bakery in Bolton and Sayers bakery in Liverpool. The Lyndale Group itself was based in Sale. The chief executive of Lyndale was a Mr. Michael Quinlan and the chairman was Mr. Sandy Birnie. On 1 May 2008, Sayers the Bakers Ltd was registered as a company. On 9 June, just a month later, Lyndale Foods Ltd was placed into administration and 40 shops were closed. At that stage, 450 jobs were lost at the Liverpool Norris Green factory. The profitable parts of Lyndale Foods Ltd were bought by Sayers the Bakers Ltd, which is registered to Mr. Michael Quinlan and Mr. Sandy Birnie—the former chief executive and chairman of Lyndale.
The company did not consult with the recognised union—the Bakers, Food and Allied Workers Union—despite it being clear from leaked documents from the Lyndale Group board meeting on 28 July 2005 that the directors had been considering and discussing such changes for nearly three years. I shall talk about the presentation given to the board of Lyndale on 28 July 2005, which looked at the strategic options for the future of the company. It looked at the current production facilities at Hampsons and Sayers and described both sites as landlocked. The presentation also said there was some duplication of the product, that vehicle movement was difficult and that there was limited parking. It went on to consider the individual sites in turn. In relation to the Liverpool site, which is located in the constituency of my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing), it looked at the overall area and discussed the potential for planning permission for either retail or residential development, subject to access to Broad lane. The residential value of the site was thought to be £2 million. That value was conditional on staying within Liverpool itself. Although the company has clearly been planning major changes within the organisation and possible major closures and sell-offs, it has had no consultation with the union since then.
Does my hon. Friend know if any Member of Parliament with constituents affected by the closures has been consulted by Mr. Quinlan and Mr. Birnie?
Since the company’s proposals came to light with the announcement of liquidation, we and the union have thoroughly circulated information to MPs. We have also circulated information through the House and have tabled an early-day motion on the subject. Since then, it has come to light that not a single Member of Parliament with a constituency interest—constituents working where these factories are located—has been consulted. There has been no word, no offer of a meeting and no correspondence. The only information that has emerged has come from the union and individual workers making their representations.
Does my hon. Friend agree that although it is bad that Members of Parliament have not been consulted, it is much worse that the employees were effectively given no foresight of what was going on? Some of them literally walked into work in the morning and were escorted off site. In particular—I think my hon. Friend is moving towards this—there is a real suspicion that the company planned to move into administration. If that is the case, there is a real question about whether the company was trading while it was insolvent. That is a very serious question that the company has to answer.
My hon. Friend has raised a number of deep concerns and suspicions about the likelihood that the company has acted in bad faith in all its dealings. Members of Parliament are suspicious because in the normal run of things, if there is a planned or even rumoured closure in a constituency, we would expect the company to involve the relevant MP in some discussions. I agree with my hon. Friend: the first port of call would have been to consult the union that represents the work force. That did not occur, which confirms our suspicions that this was a planned event, as demonstrated by the options paper in 2005.
My hon. Friend is making an eloquent presentation of the problems, but I have to say that on 8 April, Sayers did in fact write to me. However, I am afraid that the company has not kept the promises made in that letter, which states in relation to the Liverpool site that
“Sayers will commence formal consultation and discussions with our staff and their Unions on up to 150 redundancies”.
As far as I know, that has never happened, and I have had talks with representatives from the BFAWU. The letter also states:
“The operational review excludes our retail shops and, consequently, the shops within Liverpool should not be affected.”
I do not know whether my hon. Friend is aware, but since then, 18 shops on Merseyside have been closed. Sayers has not kept to its word on that or on conducting consultations. In fact, on 7 June—two days before the Lyndale chairman and chief executive bought Sayers the Bakers Ltd, as it became known in Bolton—it sent cheques to the staff. All those cheques bounced. I do not know whether my hon. Friend is aware of that, but it is an episode of what amounts to corruption on the part of these people.
That confirms exactly the pattern of behaviour that we have experienced throughout this process: lack of consultation, lack of information, lack of dialogue with the union and a lack of proper dialogue with individual MPs. Sayers has broken its word to MPs and to its own staff.
The presentation that the board had in 2005 looked at individual options and made proposals on a single new bakery in either Bolton or Liverpool. Clearly, the rationalisation process was considered at that stage. In relation to the single new bakery, one of the issues considered was whether some of the existing terms and conditions of current employees could be overcome.
An advantages and disadvantages summary was given to the board on the potential for a single new bakery. One of the disadvantages that it sets out is that negotiating terms and conditions may be costly and protracted. It accepts the loss of a skilled work force, so it is quite clear that the company was trying to get rid of its existing work force and, I suppose, to restructure in the most ruthless way without consultation, dialogue and discussion. I fear that, as has been said, the aim was to ensure that it avoided its responsibilities, even in terms of individual payments of wages to members of staff.
Is not the consequence that the company does not have to pay its own redundancy costs out of any assets that it has accumulated through buying up smaller companies and that the Government—the public purse—have to meet that cost?
Let me come on to that. I think that the Government now need to get involved in the case because clearly the company has used a device for avoiding its responsibilities, which will eventually fall on the general taxpayer.
To continue the history, the announcement in June 2008 of administration and redundancies was interesting because the representatives from the bakers union were in conference at that point in Bridlington. All remaining sites have been rebranded as Sayers the Bakers. Let us examine the loss of jobs. The Sayers Norris Green bakery—factory—closed with a loss of 211 jobs. Of the 40 shops that closed, 19 were in Merseyside. Overall closures included 39 shops trading either as Hampsons or Sayers, and the one Wimpy shop in Runcorn.
Sayers Ltd will now operate from a single bakery—factory—in Bolton, exactly as planned in one of the options set out for the board in 2005. That was not notified to anyone by way of consultation until the act was virtually done in April and finally done in May. Overall, Sayers will now employ 1,500 staff and operate 158 stores. That includes 60 stores in Merseyside, employing more than 500 people.
The administrator, up until yesterday, was looking for a buyer for Peter Hunt’s, the Bolton-based savoury products supplier employing 240 workers. As of yesterday, Peter Hunt’s closed and the staff were asked to leave the site. They were told that the staff costs and the liabilities of anything up to £2.7 million were a deterrent to the sale of that asset as a going operation. Clearly, that is another way in which Mr. Quinlan and Sandy Birnie will ensure that they make a profit in their new company, having avoided their responsibilities to their existing workers.
Initially, 450 workers were made redundant as a result of the insolvency of the Lyndale Group. I take it that the events at Peter Hunt’s take the figure up to nearly 700 workers. Legally, under the Employment Rights Act 1996, all employees are entitled to claim arrears of wages, holiday pay, notice pay and redundancy. Those claims are made to the redundancy payments office and are capped at £330 a week. That means that the liability falls on to the state and taxpayers.
Most of us have been in redundancy situations—for example, as trade unionists, we have negotiated redundancy settlements. In the normal redundancy process, particularly if people are making plans over a three-year period, it would be possible to negotiate some form of settlement with the company that involved natural wastage, protection of the maximum number of jobs and beneficial terms above and beyond just the simple state redundancy payments. Of course, then the liabilities would fall on the ongoing concern—that is what this company has avoided throughout.
There has been some harsh treatment of individual employees. As my hon. Friend the Member for Manchester, Central (Tony Lloyd) said, people have been walked off site by security guards. Expenses claims and wages have not been paid in some cases. In one case in which payments to a credit union through salaries have supposedly been made, they have in fact not been made since January. There are matters for investigation relating to how those staff have been treated.
BDO Stoy Hayward LLP was engaged by the Lyndale Group before administration to act as business restructuring consultant. In the normal run of things, if people are looking at future changes, they will employ consultants to advise them on how best to go about it. There is nothing wrong with that. BDO Stoy Hayward made recommendations to the board on how the Lyndale Group could be restructured. Again, there is nothing wrong with that, but when the Lyndale Group went into administration on 9 June 2008, BDO Stoy Hayward acted as its administrator, so naturally there are concerns about potential conflicts of interest. We understand that there is nothing illegal about that, but it is generally seen in business circles as bad practice, and I believe that there is a conflict of interest. A company that is advising on restructuring suddenly becomes the administrator to facilitate that restructuring at a cost to the work force.
I understand that BDO Stoy Hayward has refused to say how much the company now has by way of liabilities. It confirms that it is well under water. In the published accounts of September 2006, Sayers had debts of £9 million and an operating loss of some £2 million. However, I think that it is a recorded fact that the company, when Lyndale took over, disposed of an awful lot of assets. I wonder whether it is possible for us to ascertain what happened to the value of those assets. Were they simply taken out of the company as profit for the shareholders? If so, there must be a question about whether that was a deliberate raid on those assets at the expense, ultimately, of the work force and other creditors.
My hon. Friend makes a very pertinent point. It relates to the fact that we need to do an investigation into the role of Stoy Hayward. If it was advising the company on the best mechanisms for restructuring and to put the company in the best financial situation, was it also advising the company that it would be better to go into administration and, as a result, did it get the contract as administrator to manage the whole process? My hon. Friend is alluding to the fact that that has been used as a device throughout. It is a complicated device and could have been used effectively, I think, only with professional advice from someone such as Stoy Hayward.
We need to open up the books. As my hon. Friend said, we need to find out what assets have been realised. What liabilities are there really and how will those liabilities be disbursed? I have some doubts about whether the people who advised the company on how to use that device can be relied on to ensure that we receive a full and accurate statement of the assets and to give advice on how those assets should be distributed fairly, because I do not believe that up until now they have acted fairly.
Let me run through the effects of what has happened so far and talk about a way through this and what we would like to see from the Government.
We cannot go through this debate without pointing out that the work force at Sayers in Liverpool are very loyal. Many of my constituents who are employed there have been with the firm for 30 years. Indeed, one employee has been there for 45 years. They deserve to be treated with dignity. The Government should do all that they can to ensure that those workers are treated with the dignity that they deserve.
I fully concur. It is not just a loyal work force; it is a good product. None of us is asking for a boycott or anything like that, because we want the company to survive, but it could have survived effectively, efficiently and profitably if it had consulted its work force. We know that we are in periods of change, and the union would have been involved in managing that change to ensure that the company continued to provide a service to our communities.
It made my wedding cake.
That is another story altogether.
Let me go through the effects of what has happened. The job losses have very severe implications for some communities. At the moment in the area represented by my hon. Friend, there are 2,719 people unemployed. The unemployment rate where this factory is based is 7.6 per cent., which is the 20th highest in England. That number of job losses in the Liverpool and Merseyside region will have a major impact.
In personal terms, there has been real brutality. Security guards marching people off the site at which they have worked for years is just unacceptable in the modern day and age. There are lost wages and lost overtime. I believe that the work force and the union have been treated with contempt by the management, and the taxpayer will now pick up the burden. This is not the only example. There is an example in my constituency, Varig Airlines, where exactly the same happened. A company supposedly goes bust and then the next day is operating in the same way with the same managers and has run away from its liabilities.
I believe that we are dealing with a scam. It was planned over time by the same personnel who are now benefiting from it—Mr. Quinlan and Sandy Birnie. The advisers, who are now the administrators and who are benefiting from it, helped to plan it. I believe that an inquiry should be set up into how the company entered into administration. It should consider the company directors’ liabilities. Questions should be asked. Was the company trading while insolvent? Was a device used to avoid responsibility? Was the management buy-out merely a front?
People have been hurt and have lost out—not Mr. Quinlan or Mr. Birnie, and not Stoy Hayward, but the workers themselves. The inquiry should consider all such matters. We need to consider whether a change in legislation is necessary to prevent this happening again. We need to review the law, perhaps changing it to prevent companies from evading their responsibilities.
Will the Minister meet a delegation of MPs from the area and representatives of the Bakers, Food and Allied Workers Union as a matter of urgency? The summer recess is in a fortnight’s time, and we would welcome meeting the Minister to discuss the case and to see what action can be taken before we rise.
I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing a debate on such an important issue. I thank my hon. Friends the Members for Bolton, South-East (Dr. Iddon), for Manchester, Central (Tony Lloyd) and for Liverpool, West Derby (Mr. Wareing) for their contributions.
My hon. Friend the Member for Hayes and Harlington referred to the basic facts. Last month, the Lyndale Group announced some 450 job losses. This week, a further 200-plus job losses were announced at the Peter Hunt division of the group. That was alongside a management takeover of a company that will now trade as Sayers the Bakers, and a series of shops remain in business. I understand that by trading under that name, it will safeguard about 1,500 jobs.
I should make one thing clear at the outset. Job losses such as these are not only bad news for the area, as my hon. Friend said, but will obviously be damaging for the families of those affected. At the very least, it will lead to insecurity and uncertainty and, in some cases, more serious consequences for the family budget and the ability to make ends meet.
In the few minutes that remain to me, I wish to pay tribute to the long service of those who have lost their jobs, as did my hon. Friend the Member for Liverpool, West Derby. I assure them that the Government will do what they can at this difficult time.
I do not want to go over the story again, but I shall set out the Government’s position in such circumstances. I have to be honest and say that we cannot prevent firms from running into trouble. We cannot protect companies from the competitive pressures of the economy. However, we have a role to play if there are large-scale job losses such as this. Jobcentre Plus should be involved as early as possible. It is committed to providing a professional and, I hope, constructive service to employers and employees in such situations.
My hon. Friend the Member for Hayes and Harlington set out some of the history of the matter. I shall give my understanding of it. On 9 May a meeting took place between the group’s chief executive and the Northwest Regional Development Agency to discuss the possibility of future funding. Jobcentre Plus attended at least part of that meeting. It was hoped that Jobcentre Plus would be able to attend a further meeting, but I understand that that did not happen. However, a meeting took place on 30 May between Jobcentre Plus and the company’s human resources department, at which a support package was discussed, and Jobcentre Plus sought further information. However, Jobcentre Plus was somewhat surprised by the announcement on 9 June outlined by my hon. Friend. As he said, the management buy-out of shares was announced on the same day.
I set out that timetable in order to make the point that the earlier Jobcentre Plus is involved the better.
The Minister referred to a meeting earlier this year. Would he be surprised to hear that during a presentation to the board on 9 July 2005, there were discussions about assistance from the development agency? That was three years ago.
I understand the point that my hon. Friend makes. Now that it has happened, it is important that Jobcentre Plus works with other local agencies, such as the learning and skills council and the city council, which has work-based education and training services, to help the workers involved. I realise that none of that will give people back their jobs. However, it may help those affected to find alternative employment or training.
The point needs to be made clearly. We understand that assistance can be provided by Jobcentre Plus. We used it extensively, and it was a great help. We also have links with colleges. However, this was being planned three years ago. There were three years in which to engage in discussions. That would at least have provided people with a future rather than having to suffer this brutal treatment.
I know that others would have liked to be here today. My hon. Friends the Members for Blackpool, North and Fleetwood (Mrs. Humble), for Blackpool, South (Mr. Marsden) and for Bolton, North-East (Mr. Crausby) were equally angry that the company did nothing for three years, but covertly planned this operation without consulting the unions, or even their own work force.
The accusation that my hon. Friend makes is one at least of bad faith. I understand that. However, my hon. Friend the Member for Manchester, Central said that it may go beyond bad faith. I should point out that if it is believed that the directors went beyond bad faith and did something contrary to the law, the administrator should be informed. He has a duty to report to the Secretary of State if it appears to him that a director has engaged in conduct that would render him unfit to be concerned with the management of a public company.
What should happen if there were allegations that the administrators themselves had been involved?
My hon. Friend asked whether we could meet before the recess. I am always happy to do my best to accommodate such requests. I shall not engage in diary management in the middle of a debate, but I shall not be disappearing immediately the recess starts and I shall endeavour to meet hon. Members.
When jobs are lost there is often bad feeling, and understandably so. Questions are asked about whether the situation could have been better handled, and whether things were done in the right spirit. However, there is a difference between that and making accusations that there has been a breach of the law. In such circumstances, the Insolvency Service’s company investigation branch and various parts of the Department will be involved, and breaches of the law would be of interest to them. I leave that thought with my hon. Friend.
I am coming to the end of my time, but I want to reiterate what was said about redundancy payments. It is correct to say that the Government have a role. People should not be left high and dry without redundancy payments. The redundancy payments office in Edinburgh is working hard to ensure that the workers receive the full statutory entitlement as speedily as possible. Claim forms have been issued to former employees. I understand that approximately 300 forms have been returned to the Edinburgh office by the administrator. The office expects to have paid the majority of those by the end of this week. The staff are working as quickly as possible to ensure that the workers get at least the statutory payments to which they are entitled. In February this year, that amount was increased to £330 per week.
I understand the pain of the employees involved, and I am happy to meet hon. Members if they wish to raise further issues.
It being Two o’clock, the sitting was adjourned without Question put.