Tuesday 25 November 2008
[Mr. Jim Hood in the Chair]
Fire Services (Hertfordshire)
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Ian Austin.]
It is a delight to serve under your chairmanship this morning, Mr. Hood.
This debate is about firefighters in Hertfordshire. Many hon. Members from all parties met their local fire officers when the fire officers lobbied Parliament on 13 November. The lobby took place principally to raise concerns about the deaths of firefighters in the UK since 1978, but the fire officers also wanted to discuss operational concerns.
Not all colleagues can participate in this debate. My hon. Friend the Member for Welwyn Hatfield (Grant Shapps) and other hon. Members would have liked to attend, but they have other engagements. Regrettably, my hon. Friend the Member for Hemel Hempstead (Mike Penning) is in Afghanistan with the armed forces parliamentary scheme, but I know that he feels strongly that firefighters in Hertfordshire provide a hugely valuable service. That was never more appreciated than when our brave firefighters tackled the massive explosion at Buncefield, which was the biggest fire in peacetime Europe. He wants me to tell the Minister that he shares the concerns that I will raise today about the pressure facing firefighters.
I am sure that the Minister recognises that those in the fire service who are expected to deliver the service feel a great deal of anger and frustration. Such feelings are also felt by members of the public, who have seen cuts and closures in the name of rationalisation and local efficiencies. I will not address the closures that have impacted on my constituency, because I know that other hon. Members, such as my hon. Friend the Member for Hertsmere (Mr. Clappison), will voice their concerns about the loss of local services. My hon. Friend has campaigned vigorously against the closure of Radlett fire station.
As the Minister knows, I continually argue that Hertfordshire and, indeed, St. Albans do particularly badly under the Government’s current funding formula. That has serious implications for the funding of our local services and has led to so-called efficiencies. Given the real-term cut in funding that will take place for all county council services next year, there is a continuous need to find year-on-year efficiencies in Hertfordshire. As a floor authority, we expect to receive an increase of 1.5 per cent. Our fire and rescue authority is unable to raise its own precept, because it is not a separate entity, so it has even less control over its financial destiny. Although the fire authority is exempt from Gershon efficiencies, the total county council budget is not. There are pressures to cut budgets and make savings, which is already happening.
Today is an opportunity for the Minister to address our concerns and give us a progress report on some of the outstanding policy recommendations that were made to the Government in relation to fire services. We are waiting for those recommendations to be implemented and for a decision to be made. The debate is timely, and I shall pose a series of questions to which I would like the Minister to respond. The number of firefighters who die on duty was falling, so why have more died on this Government’s watch? Linked to that, how can we tackle concerns relating to emergency planning and training issues? Why are the Government pressing ahead with regional fire control centres? In addition, when will the Government implement a policy of statutory obligations on flooding?
Every year on 28 April, trade unionists mark workers’ memorial day with a call to remember the dead and to fight for the living. This year, firefighters and the Fire Brigades Union had special reason to observe it, because, sadly, they had to commemorate the highest number of deaths in a single year since at least 1985, and three of those deaths were in Hertfordshire. Consequently, the FBU made recommendations to the Government in a report entitled “In the Line of Duty”. I agree with the FBU and think that the Government should look at some of the issues raised by the report.
Exactly what constitutes an on-duty death, because that has never been clearly defined? Often, it is defined as being a death that occurs when a firefighter is in uniform or doing a shift. Included in that are, for example, firefighters who are killed in road traffic accidents while travelling in an appliance or fire service vehicle en route to or returning from an incident. That might be extended to include retained firefighters who are killed when responding to a call or returning from attending an incident.
Brave firefighters usually selflessly head forwards into danger when we, the public, are mindful of our own lives and safety and head in the opposite direction. The least that we can do is ensure that those who lay their lives on the line for us are truly accounted for and that lessons are learned from serious incidents. That should involve publishing UK-wide figures for all firefighter fatalities, major and serious injuries and near misses in a single annual publication. A national independent fire and rescue service investigation unit should also be established. It is worth considering the FBU’s call for a widening of the definition of reportable incidents to the Health and Safety Executive to include work-related road traffic accidents, heart attacks or other life-limiting situations that are incurred as a result of working in an occupationally hazardous job. Those may be work related, but they are generally excluded from the on-duty figures, although many people think that they should come under the category of an on-duty death.
Currently, the only Government source that covers the whole of the UK for the period under review is the annual “Fire Statistics, United Kingdom” report. However, those figures refer to fatalities only from fires and therefore do not fully capture firefighter deaths that might be attributed to other causes. We need to learn from incidents, but to the Government’s shame, which is the true way to put it, no formal process has been implemented to deal with matters arising from significant health and safety investigations, coroner’s rule 43 letters and inquiries, such as the one into Buncefield. The Minister should tell us today why such a process has not been implemented.
There is a large gap in the fire service’s processes and guidance and in the information that is vital for operational response. There has been a lack of national, central risk-critical operational guidance for some years now, and only recently have the Government started to develop a mechanism to deal with that important issue. Why have the Government been so slow to deal with the matter and shown such a lack of urgency?
The chief fire and rescue adviser’s unit has been established. It has sufficient resources to advise Ministers, but, bizarrely, it has insufficient resources to cover the role and responsibilities of the old fire services inspectorate. I am given to understand that the Department for Communities and Local Government is so short of resources in the unit for fire and safety policy that it is considering outsourcing and commissioning national fire service policy work. Will the Minister confirm whether that is the case?
There was a consultation on a possible centre of excellence for the fire and rescue service, as envisaged by the Bain review, which took place more than five years ago. A centre of excellence may have gone some way to meeting the concerns about central guidance, capacity and policy. However, sadly, there was no agreement on the funding of the centre and little indication of how it would work in practice. So, the fire service missed out yet again on an opportunity for improvement and on having an agency similar to the one used by the police. Even more worrying—this is linked to the lack of central guidance—has been the demise of Her Majesty’s inspectorate of fire services, which means that fire and rescue services are assessed by the Audit Commission. Although the Audit Commission is an expert in audit, it has no professional expertise in fire and rescue, unlike the inspectorates of other services.
My hon. Friend has rightly mentioned the absence of a national operational guide, but representations from my firefighters in Hertford have brought to my attention the point that basic operational training—the thing that they need for their safety—comes second to other matters, such as long-term contingency planning. Given the tragic deaths in the county and nationally, does she share my fear that that set of priorities is wrong—particularly for firefighters themselves?
I completely concur with the observations of my hon. Friend. As I shall mention later, I have had contact with people who work in the operational field and who have drawn exactly that conclusion.
Will the Minister tell us whether he intends to remedy that deficiency? Crucially, we need to learn from when incidents go wrong. For example, on 2 February 2005, two Hertfordshire firefighters died at a fire in a block of flats at Harrow court, Stevenage. Bravely, the firefighters had rescued one victim and were attempting to rescue another when they were both killed. The report into the incident found that the deaths would almost certainly have been prevented, if Hertfordshire fire and rescue service had ensured that adequate procedures, training and resources were systematically in place. The report also found that adequate procedures, training and emergency response resources would have significantly reduced the life-threatening risks that faced the firefighters who attended the incident. There is a need for centrally-issued, substantial, safety-critical national guidance on the issues that have arisen from recent fatalities.
We need rigorously to assess the concerns about the distress signal unit that firefighters raised with hon. Members when they met at the recent lobby. As I am sure that the Minister is aware, that unit is worn by firefighters with breathing apparatus and emits a loud sound if the firefighter does not move for 20 seconds or so, which provides a warning and a location for firefighters who are lost, trapped or injured. The battery has lower temperature resilience than the unit—55° C compared with 75° C. Yes, the battery was tested in isolation and not within the unit, but firefighters are deeply unhappy about the uncertainty surrounding the reliability of that equipment in the event of a serious hot fire. It should be fully appraised as a matter of urgency, if we are to ask people to use it, and I hope that the Minister will ensure that that happens.
The FBU believes that there should be guidance for initial attendance, risk assessment, incident command, breathing apparatus, compartment fires, high-rise fires, backdraught, flashover and heat stress. That is a long list, but as I am sure the Minister is aware, firefighters’ anger is growing about the lack of urgency surrounding those matters. Relevant training courses should also be provided.
Will the Government consider imposing a duty on employers, landlords and other responsible persons at selected high-risk premises to submit in writing their fire risk assessments to the local fire and rescue service? The public find it somewhat strange that that does not happen. Such a move would provide more information for risk mapping and identify potential areas for enforcement action and operational planning.
Our local branch of the FBU is anxious that Hertfordshire learns lessons from fire-related deaths and has made a number of recommendations to Hertfordshire fire and rescue service. It recommends that all firefighters receive regular training in all aspects of active fire safety measures. I shall go on to say why the FBU believes that that is not happening. We should ensure that there are sufficient firefighters on the initial attendance, so that one firefighter can be detailed as forward commander.
I have been told about a worrying situation in which there were not enough firefighters. The firefighters were expected to wait outside a property until the second engine arrived. In the event of a blaze, the public would not understand why firefighters were waiting for the correct numbers. Of course, firefighters do not wait in such circumstances, which puts them in danger. We should ensure that all firefighters receive regular training in all aspects of compartment fires and ventilation, particularly in high-rise buildings. We should ensure that all firefighters receive regular training and monitoring in all aspects of high-rise procedures and that initial crews take the correct equipment up to the bridgehead. Will the Minister consider those requests?
We also need to address the issues relating to hot fire training. Before 2006, Hertfordshire had a single real fire training unit that burned wood and chipboard. In 2006, Stevenage borough council placed an abatement notice on that facility, because of the pollution, and mobile units were purchased to take its place. Those units came into service in 2008. However, concerns have been expressed to me and other hon. Members that the units are used only to train new recruits and not to train existing firefighters, some of whom have told me that they have received no hot fire training at all since 2001. That was put down to financial constraints, but whatever the reason, does the Minister believe that the situation is satisfactory?
I particularly want to talk about retained duty firefighters, who experience a particular set of issues relating to training and safety. I was contacted by a retained duty firefighter, Mr. Bill Liggins of Wheathampstead, who works part time with Hertfordshire fire and rescue service alongside his full-time job. Believe me, we need retained duty firefighters. Mr. Liggins is concerned because whole-time duty system firefighters do 18 weeks training, whereas retained duty system firefighters do only four weeks. The WDS firefighters do a 42-hour week in which they are expected to train for eight hours; the RDS firefighters do only a three-hour drill night. He asserts, quite logically, that those cannot and do not equate, but when the two types of firefighter turn out to fires, the dangers that they face are the same. He believes that the RDS firefighters need more training on weekends and at drill nights by specialists.
The service has introduced national vocational qualifications to recognise competency, but they are not paid for, and RDS firefighters have to pay for them themselves. WDS firefighters do qualifications at work, but the service says that RDS firefighters should do them during drill nights. As an RDS member, Mr Liggins is concerned that they just do not have enough time both to train and to study for qualifications.
RDS firefighters have historically had hand-me-down equipment from the WDS. Bizarrely, firefighters who met hon. Members the other week told us that uniforms go missing in the abyss of the cleaning systems and that they rarely get the same one back. The RDS has been allocated some new fire engines, but they do not carry full equipment—disc cutters, chemical suits and air mats. Again, that has to do with training implications and is principally driven by cost. As I have said, Hertfordshire county council is hard-pressed financially, and it has asked Hertfordshire fire and rescue service to try to cut £1.1 million every year for the next three years, which must have implications for training budgets.
The Minister must accept that there are huge concerns about the levels of financing and training offered to serving WDS and RDS firefighters. If the regionalisation of our fire services were scrapped, that funding could be better spent. Why are the Government pressing ahead with regional fire control centres? I have a deep unease about moving services further away from local expertise and knowledge. Conservatives have consistently argued that that scheme should be scrapped. It is a costly, wasteful and misguided approach to delivering local services dressed up in a cloak of so-called efficiency savings.
According to my local county council:
“The burden of the Regional Control Centre project on local Fire and Rescue Services is becoming an increasing concern. There are hopes that the project and financial management are an improvement on the management of the New Dimensions programme. The shortcomings of the New Dimensions programme were recently highlighted by the National Audit Office. Local workload and burden is not being met by sufficient New Burdens funding and the fear is that local priorities like Community Safety may have to be reduced to meet the workload of Regional Controls.
The East of England Regional Control Centre in Cambridge will be in the last operational wave, and far from providing greater financial efficiency is likely to cost the Hertfordshire taxpayer considerably more.”
Lesley Morris, who works in command and control in Hertfordshire, also wrote to me to make exactly that point. She said that
“sadly this project is not wanted by anyone within the fire service”—
contrary to what the Government say—
“and we have real concerns that this will also be putting firefighters lives at risk due to losing the professional, highly trained personnel we have within control. This government says that with the new technology we will be able to mobilise the nearest appliance to an incident therefore creating a better service—well in Hertfordshire we already do that BUT with highly skilled professional people at the end of the phone who know the topography of Hertfordshire inside out.”
Lesley also told me that
“government says that with caller ID we will know exactly where the caller is calling from—but it’s worth remembering that the person putting in the call is not always the person who is in trouble and they are not always in the same location. What about local dialects??”
She was of the view that any delay, for whatever reason, in mobilising appliances puts more pressure on our firefighters once they are at an incident and therefore puts the public at risk. She asked that the Government consider her expert opinion:
“With the mobilising systems we have in Hertfordshire and many other brigades around the country surely it would have made sense to enable us to link to other brigades in…extreme busy periods but to keep the personnel in the locations we already have. This would have cost a fraction of what the project has cost and the money saved could have been put into frontline services and training”.
If regional control centres are so badly needed, how did Hertfordshire’s control room cope with the biggest fire in peacetime Europe? During the Buncefield incident, Hertfordshire fire control coped professionally and comprehensively with hundreds of calls to that incident alone. The regional fire control project is officially three years late and the costs are 14 times the original estimates. The new centres were to start opening in November 2006, but are now not due to start opening until October 2009. Indeed, local rumour says that that date is optimistic—unless the Minister tells us differently. I hope that he will tell us that the centres are to be scrapped.
In a written answer regarding the original cost estimates for regional fire control centres, the then Minister responsible for fire services, who is now the Under-Secretary of State for Transport, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick), said that consultants Mott MacDonald
“estimated project costs at £100 million, comprising project management costs, technology costs, accommodation costs and redundancy.”—[Official Report, 27 October 2005; Vol. 438, c. 484W.]
That original estimate jumped to £1 billion, with the latest Government answer confirming that the cost will rise to £1.4 billion. It is worth noting that the entire UK fire service costs only £1.7 billion a year to run, so the business case for the scheme certainly has not been made and, more importantly, the firefighters who are being asked to perform these tasks are left unconvinced.
It is worth remembering, as my local force has pointed out, that during the floods of 2007 control rooms throughout the country were able to cope with the massive number of calls that they received. At times of emergency with spate conditions, many staff simply turn up at control rooms to help, which will not happen once controls are regionalised.
The Government’s answer is that neighbouring control rooms will take the overflow of calls. However, weather systems can travel the country quickly, so if one control is busy it will switch to the next and so on. Have the Government considered what will happen when nine rooms instead of 46 are busy? It could lead to a catastrophic failure where our fire control rooms cannot answer calls from the public when they are in trouble.
The number of staff predicted to be working in these control rooms ranges from six to 12 covering six counties. The Hertfordshire control room has a minimum of four staff at any time. I therefore question the logic that the change will make our fire service more resilient. Why spend billions of pounds fixing a system that is not broken, especially in these difficult economic times?
Will the Minister tell us why the plans are so delayed? Will he confirm rumours that the project is still beset by technical problems? Given that front-line fire stations and firefighters are threatened by cuts, is he prepared to reconsider spending that money on front-line fire services, in order to keep it low-cost, efficient and—more important—local? Is it not time to scrap the project and revisit the closures that have dogged local services?
The Minister knows that there is no statutory obligation to respond to flooding, but he should try telling that to the public as they battle flood waters. Flooding has always been the sort of incident to which firefighters respond. In St. Albans on Saturday, firefighters rescued an elderly lady from a flooding incident in her flat. Two weeks ago in London Colney in my constituency, the fire service arrived promptly to pump out flooded areas. It was the first port of call for many residents. It is an ongoing problem in many constituencies beset by flooding.
My constituents expect the fire service to attend, so why does the Minister not ensure that the Pitt review is implemented? The area-wide floods of 2007, and the possibility of more events like that, have changed the outlook. The Pitt review made a number of recommendations, including greater responsibilities for the fire service. Hertfordshire has firefighters trained in the use of boats and working in water, but fire services will need more resources to match the recommendations of the Pitt review and to meet the increased challenge. That includes national assistance from fire services across the country, which is already in place. Will the Minister finally commit the Government to recognising the additional pressures of dealing with flooding, and undertake to implement the Pitt review?
I congratulate my hon. Friend the Member for St. Albans (Anne Main) on securing this debate. After the lobbying of Parliament, a number of Members were keen that there should be such a debate, so that we could raise concerns, and I am delighted that my hon. Friend has succeeded.
I pay tribute to the Hertfordshire fire and rescue service, which does a tremendous job. It did extremely well at Buncefield. I, too, benefited from its services when I had a small fire at home. The service does a good job on prevention and advising the public how to avoid fire; indeed, what it does to persuade people to use smoke alarms is particularly important.
On 2 February 2005, there was a tragic incident at Harrow Court flats in Stevenage. Two firefighters lost their lives there—Jeff Wornham and Michael Miller. I know the Wornham family—a popular local farming family, committed to public service. Jeff’s father Robert is here today—Robert is chairman of the parish council. It was a tragedy that Jeff should have lost his life. He showed tremendous bravery in going into that building on that night. Everyone was proud that he was given the George medal posthumously. However, as his father said, we all wish that it had not been posthumous.
It is against that background that I come to the debate. I fully accept that Hertfordshire fire and rescue service has made improvements. I understand that the number of property fires is down by 25 per cent., accidental dwelling fires have been reduced by 13 per cent., arson is down by 36 per cent., and fire fatalities are down. However, there is continuing concern as a result of what happened that night in 2005. The Fire Brigades Union inquiry into what happened was critical of the procedures, and the training and resources made available, and concern was expressed that there had been previous incidents elsewhere and that safety critical advice was somehow not being passed on to the firemen as it should.
The FBU report, “In the Line of Duty”, was prepared by the Labour Research Department. It is notable that the 1996 incident at Blaina, in south Wales, is mentioned on page 30 of the report because what happened in 2005 showed similarities with what happened nine years earlier. On both occasions, firemen attended in small numbers, managed to rescue one person and then went back in; it was a delayed backdraught that caused the fatalities. Our concern is that the sort of advice that should come from such occasions is not being spread around to the firefighters.
The overall message of the FBU report seems to be that at the end of the 1990s relative safety had been achieved for firemen, as there were hardly any fatalities at that time, but that more recently, between 2003 and 2007, there were 21 fatalities. The situation seems to be getting worse. The report notes the poor recording of fatalities—not all loss of life being properly recorded—and the non-recording of near misses, which are often useful for learning lessons. It also mentions the lack of research into the causes of deaths and near misses; finally, it talks of inadequate risk assessment processes. The report says that there is no system at national level to ensure that lessons are learned and guidance is spread.
I asked the Minister a parliamentary question on the subject, which he answered on 18 November. He said that
“a framework for the future development of operational guidance has been developed, including a priority programme of work…This programme has begun and includes the involvement of a wide range of stakeholders. As part of this framework, an additional four pieces of operational guidance has recently been published”.—[Official Report, 18 November 2008; Vol. 483, c. 381W.]
That seems to be a rather leisurely process.
We seem not to be getting the sort of guidance mentioned by “In the Line of Duty”—something comprehensive that should be available quickly. It speaks of having
“safety critical national guidance on the issues arising from recent fatalities.”
The report gives a long list of items that should be covered, including minimum standards on the initial attendance, which is particularly important to my constituent because that was the background to the incidents at Blaina and Stevenage. The report also mentions revising generic risk assessments, minimum standards for training and many other aspects.
I therefore have some questions for the Minister. First, is the programme not rather leisurely, and could we not have what is recommended in the FBU report—something substantial, and soon? Secondly, on the question of how fatalities and near misses are recorded, is it so difficult to have a comprehensive national system that works? Surely, that is done in a range of other areas. Thirdly, what about proper investigation? One of the report’s recommendations is that a new body should be set up to deal with investigations, to ensure that we understand why a fatality or a near miss occurred.
The Minister might say, “We’re on to that already, but will deal with it slightly differently”, which, if so, would be an acceptable answer. However, those three points—on recording deaths and near misses, investigating them properly and providing proper safety critical advice nationally—seem to be the nub of the proposals in the report and make obvious good sense. I wanted to press those points in my short contribution today. What will the Minister do about them?
I, too, congratulate my hon. Friend the Member for St. Albans (Anne Main) on securing this debate and on presenting her case in such a comprehensive and well informed way. I have no hesitation in supporting her and my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) on every one of their points. I also join them in paying tribute to the Hertfordshire fire and rescue service and, in particular, to the courageous and dedicated firefighters in Hertfordshire.
Like my hon. Friends, I recently had the opportunity to meet those firefighters, when they visited the House on 13 November in connection with the report, “In the Line of Duty”, to which my hon. Friend the Member for North-East Hertfordshire referred. They were keen to highlight the issues that he raised this morning and, in particular, a matter of which I had not been aware: the steep increase in the number of firefighter deaths over recent years—sadly, as he said, that includes three firefighter deaths in Hertfordshire, and I join him in his appropriate tribute to those courageous men who lost their lives in the line of duty.
The firefighters were keen to highlight the following concerns in the report:
“The trend in firefighter deaths was downwards until the turn of the century. However there has been an alarming upturn in recent years. Since 2003, at least 22 firefighters have died while on duty, significantly more than in the previous period.
At least 44 firefighters have died in fires since 1978. However, firefighter deaths at fires had effectively ceased by the turn of the century. From February 1996 until October 2002 there were no recorded fire deaths in the UK.”
It is worth repeating those statistics again and again, because the Government are incredibly fond of targets for other deaths related to health and safety. I find it alarming that they have not addressed the increase in firefighter deaths, but I hope, following this debate, that might change. In all other aspects, the Government pride themselves on reducing deaths, so I hope that today will not be a missed opportunity to put the matter right.
I agree with my hon. Friend. As I said, the firefighters were keen to raise that concern with me, and I look forward to the Minister’s response.
I also look forward to the Minister’s response to another point that the firefighters were keen to make—my hon. Friend the Member for North-East Hertfordshire also mentioned it—about the way in which firefighter deaths are categorised. It is important that we have an appropriate way of categorising the deaths of men who, when they go out on calls, are putting their lives at risk.
Does my hon. Friend share my concern that given that the number of fires is falling the fact that so many more people are dying is even more worrying? It suggests that despite a smaller number of cases, the risks have increased.
That point stands out from the facts, although, to be fair, we need to hear from the Minister on this very important subject, because other factors might be at play.
I am aware of the heavy responsibilities that firefighters face in my constituency. Running through, or near, my constituency is a concentration of infrastructure, especially transport infrastructure, including the three main north-south rail routes. Local crews attended the Potters Bar derailment in 2002, and I pay tribute to their prompt attendance and bravery on that occasion. Crews from my constituency, including one from Radlett, also attended the nearby Buncefield fire. Furthermore, the M1 and A1 run north-south through my constituency and the M25 runs across it, and firefighters often have to attend incidents on those motorways. In fact, one of the firefighter deaths in Hertfordshire occurred during attendance at a motorway incident. It is very dangerous for firefighters to attend motorway or main road incidents.
I agree with the comments of my hon. Friend the Member for St. Albans about funding. Hertfordshire county council was hit relatively hard by the Government’s local government funding formula. It was a relative loser—as she said, it is a floor authority—and although the formula was put in place some four or five years ago, the effects are still being felt. Sadly for Hertfordshire residents, those effects continue to be felt at this time of wider economic difficulties, when we know that economies might have to be made.
Against that background, I shall deal with a matter of great interest to many of my constituents—many of them have asked me to raise it today—Radlett fire station, which was closed two years ago. What can only be described as a very vigorous campaign was mounted by Radlett residents and others to keep the fire station open, and a 7,000-name petition was delivered to Hertfordshire county council in connection with the closure. The council considers petitions of 250 people to be significant, so to say that concern in Radlett is very widespread would be an understatement.
For many of the concerned residents in Radlett, and elsewhere in my constituency, the closure of the fire station is not the end of the matter, and public concern has not lessened in Radlett and nearby communities since the closure. For example, there has been close scrutiny of attendance times for fire appliances to fires in Radlett and the surrounding area, especially Borehamwood, which had also been served by the Radlett fire station. In particular, residents are taking a great interest in the time taken for second appliances to reach fires—a significant point.
I concur with my hon. Friend’s comments, especially on monitoring by local residents who scrutinise arrival times. I pay tribute to those residents who have remorselessly been accessing that information under freedom of information legislation. They have serious concerns about arrival times, especially of second vehicles. The concern of the local community is demonstrated by the fact that people are going to so much effort to prove what they believe is happening on the ground.
My hon. Friend is absolutely right. As I said, concern over the past two years has not lessened.
Among the many issues concerning residents is that of attendance times of second appliances at fires, especially domestic fires, because second appliances are very important. Although an appliance might now come from Borehamwood, others have had to come from much further afield to attend fires in Radlett and Borehamwood. The support our fire and rescue campaign—SOFAR—to reopen Radlett fire station has reached its own conclusions.
My hon. Friend the Member for St. Albans referred to the great interest that SOFAR takes. The information it has given to me states:
“Our conclusion is that the statistics are showing that the Fire Service is failing to meet its targets in the area previously supported by Radlett Fire Fighters.”
That is SOFAR’s conclusion, and it takes a great interest in the matter.
Hertfordshire county council may take a different view, and there has been lively communication between the two organisations. It is important in the circumstances for the county council to be receptive to the views of local residents in Radlett and Borehamwood, and there should be two-way dialogue between the groups. This is my message: I hope that the debate continues and that the two sides keep talking to each other, and that each listens to what the other has to say. For its part, Hertfordshire county council has some important points to make that local residents need to take on board but, equally, Hertfordshire county council needs to listen to local residents, because their concerns remain. A campaign that was aimed at keeping the fire station opened has now become a campaign to reopen it. For local residents, it remains a very important local issue.
I put those points before the House because my constituents want me to give vent to that important issue. I pay tribute to the fire and rescue service in Hertfordshire and to individual firefighters. I agree with the wider points that my hon. Friends made in the debate, and I look forward to the Minister’s response to the residents of Hertfordshire as a whole.
I, too, congratulate the hon. Member for St. Albans (Anne Main) on securing the debate, which is timely, given the recent national lobby. Fire services throughout the country will be listening carefully to the Minister’s response, because the issues that have been raised have wider implications and do not affect Hertfordshire only. The debate is also timely because, as I realised when travelling through King’s Cross, we are close to the anniversary of the King’s Cross fire, which resulted in severe loss of life many years ago and in significant changes to equipment and fire safety.
Basically, the problem in Hertfordshire boils down to two things. First, as contributors to the debate have made clear, Hertfordshire county council is under significant financial pressure. The financial outlook, as we heard yesterday, does not look particularly rosy. Local authorities all over the country will be concerned about how their settlement is going to affect their ability to meet ever-rising cost pressures. The system of local government funding makes it difficult for local authorities to deal with their funding pressures, because the bulk of their expenditure is on staff costs, which increase above the rate of inflation.
Exactly the same is true with the fire service, and I know from my constituency that there are great pressures on it. Much of that pressure owes to the fact that 80 per cent. of its budget is for staffing costs. It is therefore difficult to make the cut anywhere other than on the front line, which in key emergency services such as the fire service is of great concern.
We know from local news and council reports that the pressures have already resulted in cuts to services, but there has been great progress on, for example, fire service call-outs, which have dropped by 7.5 per cent., and smaller fires, which have fallen by 21 per cent., notwithstanding the small fire in the home of the hon. Member for North-East Hertfordshire (Mr. Heald). Clearly, that is a response to the emphasis that has been placed on fire prevention. I have visited my local fire station several times and spent time on the doorstep with firefighters to push the safety programme forward. I saw at first hand the impact that they can have, as well as a number of homes that did not have smoke alarms, for example.
The hon. Lady draws attention to the number of times that firefighters are called out to fires, but does she share my concern that the number of times that they are called out to deal with flooding does not necessarily appear in the statistics? We are therefore getting a skewed view of exactly what fire services deal with.
The hon. Lady is absolutely right. Flooding seems to be an ever-increasing concern, which I know from my fire service’s experience in Boscastle. The flooding there was probably the most significant incident that it ever had to deal with.
Fire call-outs are not the only thing and, as I was saying, the work that firefighters do on the doorstep is important. I saw at first hand people who probably would not have opened their door to anybody else, doing so because they see firefighters as people they can trust. The firefighters were able to install fire safety measures straight away. I would not want to underestimate the impact of that work, but there needs to be a balance.
On the pressures on local authorities, I have already mentioned the wider financial situation.
Does the hon. Lady agree that it is imperative that the Government bring forward to 2009 the review of the formula spending share that was scheduled for 2010, given the pressures on revenue budgets in fire and rescue services throughout the country?
That review is long overdue. For councils that are bumping along the floor, it has continued to cause significant difficulties. I can say that, too, from the experience in my constituency.
In Hertfordshire, however, there are other things to take into consideration, which the Minister, especially as he represents the Department for Communities and Local Government, may be able to comment on. First, what about the council’s exposure to the collapse of the Icelandic banks? I know that the council is exposed to the tune of about £28 million. Clearly, if those resources cannot be reclaimed in a timely way, that could have further impact on a range of front-line council services.
There is also a resource problem with the Conservatives’ approach. They are calling for a council tax freeze, which, in effect, would mean real-terms cuts to services. In addition to calling for the wider review of funding, the Conservatives need to look at the impact that that would have on their own services, given that the budget cuts that we have already seen in fire and rescue services have resulted in the closure of fire stations such as Radlett.
The Fire Brigades Union said that there have been delays in making improvements, which was highlighted by Government audits, and that funding has been unavailable to address matters highlighted in coroners’ reports. The FBU also said that there has been a lack of personnel to conduct risk assessments in communities, cancellation of essential training and outsourcing for contracts for the supply of vital safety equipment. The situation is already difficult, but the people of Hertfordshire should have real concerns about their funding. Some of it, of course, is determined by the central allocation, but questions should be asked about the allocation of the council’s resources.
I am grateful to the hon. Lady for coming back to the essential point on the funding allocation. I am sure that she is fully aware that Hertfordshire, being in the east of England, is a net contributor to the Chancellor’s coffers, and that we get so very little back. I am sure that my council tax payers would welcome not paying any more than they already do as net contributors to council tax, and I am sure that she would welcome a transparent system that sought to ensure that we had a fair allocation system, rather than us constantly being asked to be the cash cow of the local area.
I absolutely agree that we need a fairer, more transparent system. That requires fundamental changes to how local taxation is raised and spent, which is why the Liberal Democrats have been talking about local income tax, which would make things clearer. I am not entirely sure how a one-off central grant, which is what the Government are claiming to offer, will achieve transparency. Council tax payers in Hertfordshire will rightly be annoyed about being net contributors, but, as the hon. Lady pointed out, they are concerned about resources for their public services. That is a balance that council tax payers have to strike, and they have to decide whether they are prepared for further service cuts, which Conservative Members say they do not want. There is a contradiction that must be resolved.
The debate is not just about a local situation; there are national issues—not just of funding, but of the co-ordination of training, the establishment of standards, the making available of guidance and the collection of data. As to training, when firefighters came to see me at the national lobby, they pointed out that there has been a change of emphasis towards fire safety and away from training to deal with larger incidents. They explained that that makes it difficult for them to make time for such training to deal with large fires. They also talked about their great difficulty in obtaining training to understand the wide and widening range of equipment that they are asked to use.
The most recent addition at my local fire station is an emergency response unit that can deal with chemical spills, for example. The firefighters said that it was difficult for fire stations with whole-time cover to make time available for training in using the hundreds of items of equipment for firefighting and for dealing with road traffic accidents, flooding and chemical spills.
Things are even more difficult for retained firefighters. I spent a day with retained firefighters who were doing their initial training, and was gobsmacked when I learned how much ground they must cover in two weeks. As the firefighters at the national lobby explained to me, they are concerned that there will be a knock-on effect on their ability to turn out. There is a reliance on retained firefighters not just to turn out and man a tender; it is necessary also for them to be trained to use the equipment.
Will the Minister comment on the number of occasions on which fire stations have been unable to turn out with the equipment firefighters want to use, not because there are not enough firefighters, but because not enough of them are trained to use the equipment needed for a particular incident?
The experience in Hertfordshire provides a microcosm of the experiences I have been describing. Despite a reduction in the headline figures relating to fires prevented and call-outs, this is an area where there have been significant fires and, sadly, fatalities and injuries have resulted. That seems to me to be representative of the wider story that the FBU was trying to tell in its national lobby: there is a headline impact on the number of fires and call-outs, but insufficient time is being dedicated to allow firefighters to respond to the larger incidents.
Guidance is another issue that arises, and the FBU makes recommendations in its report “In the Line of Duty”. It points out that in 2004 the Central Fire Brigades Advisory Council was abolished, and raises concerns that since then there has been no systematic issuing and development of guidance. It suggests that a new body needs to be established to take on that role. I am not convinced of the need for a separate body, although I am open to being convinced. Does the Minister have any comment to make on whether any existing bodies could take on that function?
As to data, we know largely from requests made under the Freedom of Information Act 2000 that more firefighters are dying and that the official figures are lower than the levels recorded. What can the Minister do to ensure that the definitions of reportable deaths and of minor injuries are widened and clarified to allow systematic reporting of incidents resulting in fatalities, as well as of other deaths of firefighters while they are on duty but not necessarily fighting fires? In addition, what can he do to ensure that near misses are recorded? The point of collecting the data is to understand how situations arise and what can be done to prevent them. Understanding near misses is as important as following through with information on what has happened when things go wrong.
The hon. Member for St. Albans raised pertinent issues on fire control. I have been concerned about the apparent continuing delay in the roll-out of the regional fire control centres. That adds to my cynicism about the prospect of the regional fire control centres doing a more effective job than existing fire control centres. I have asked several questions about that matter. On one occasion I asked why, if the Government say that centralisation is needed, they do not go the whole hog and put everything in one place. The response from the then Minister was that that would not be sensible because a terrorist hit could take out that one fire control centre. That is true, and it seems to me to be an argument for spreading control centres out as widely as possible.
A huge amount of expertise will be lost. The people who work in fire control in my constituency will not relocate to Taunton, where the new fire control centre is to be built on the flood plain. Resources are being spent; once again, an information technology system is being set up that is running over budget and over time. The resources could be much better spent on the front line.
There is a case for getting the correct balance between focusing on prevention and ensuring that firefighters have access to the training they need to use equipment that enables them to deal with fires and an ever-widening range of other incidents such as road traffic accidents and flooding, which has become a particular problem. Firefighters will be best able to respond, and the Department will be best able to ensure that they have the right equipment, only if there is proper reporting of information on the risks taken by firefighters whey they go out to do their job every day, and the impact of those risks.
I would like to hear the Minister’s response to all the recommendations in the report—for a common and consistent reporting mechanism for fatalities and major injuries, the widening of the definition of reportable incidents, a national independent fire and rescue service investigation unit, centrally issued guidance to ensure that firefighters know that they have back-up, national standards, and systems to enable lessons to be learned from the fatalities that occur.
The report shows a need for Government action, and I hope that the Minister will provide reassurance to all hon. Members who have raised concerns and the firefighters who came to the lobby.
It is a pleasure to serve under your chairmanship, Mr. Hood. I warmly congratulate my hon. Friend the Member for St. Albans (Anne Main) on securing the debate and on her eloquent and well researched remarks. She is passionate about the issue and has responded as a good constituency Member of Parliament to last week’s debate and lobby, when the Fire Brigades Union came to the House. I also pay tribute to my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), who brought a personal touch to the debate when he related the experience of his constituent and his family, and the bravery of that gentleman. I support and congratulate my hon. Friend the Member for Hertsmere (Mr. Clappison) on his principled and tenacious campaign on behalf of his constituents to save Radlett fire station.
The issue is immensely important, not least because, as we have heard, 22 firefighters have been killed in the past five years, and the trend seems to be getting worse. It is interesting that one of the mantras repeated constantly by the Minister’s predecessor, the hon. Member for Gloucester (Mr. Dhanda), concerned the number of fire-related deaths being the lowest since the 1950s. I do not necessarily query that. It is the case, and is the result of demographic and social changes and changes in education and community engagement. I congratulate the Government on that success, but the corollary, if I may quote Matt Wrack, the general secretary of the Fire Brigades Union, whom I met last week with Mick Shaw, the president, is that there is
“a policy vacuum—a neglect of up-to-date central guidance on firefighter safety.”
If, as my hon. Friends have said, overall fire deaths are falling but firefighter deaths are rising, there are some big issues.
It goes without saying that I pay tribute to Hertfordshire fire and rescue as well as to the Fire Brigades Union, not only for its report, “In the Line of Duty”, but for its work in exposing the shambles of the regional fire control centres and destroying the intellectual case for that policy. I will refer to that later.
I draw the House’s attention to early-day motion 2489 on firefighter safety and data collection, which I tabled and which has been signed by 61 other hon. Members from all parties. It is a straightforward early-day motion that calls for more safety-critical operational guidance for fire authorities, draws attention to the deficiency in data collection mentioned by my hon. Friends and urges greater clarity and standardisation in the recording and investigation of firefighter fatalities and injuries. It stands as a record of the commitment of Her Majesty’s Opposition to this pressing issue.
My hon. Friend the Member for St. Albans raised concerns about flooding and resilience funding, which we discussed two weeks ago in this Chamber. The reason why Project Fireguard has collapsed is that fire authorities take the sensible view that resilience is essentially a national issue that should be funded nationally. It is incumbent on the Government to move quickly and to decide, finally, whether it should be a statutory duty for fire and rescue authorities to attend to flooding. If not, the Government should decide where to site funding to facilitate proper reactions to flooding incidents across the country.
It is important to discuss the practical operation of the Fire and Rescue Services Act 2004. Mention has been made of the integrated risk management plans. In the experience of many long-standing firefighters, union officials, local councils and fire authorities, the plans are being used as a fig leaf for driving through revenue cuts that remove retained firefighters, appliances and stations. In a debate on 18 March this year on Humberside fire and rescue, we saw that that is what is happening in practical terms. We should review integrated risk management plans, relate them to the everyday on-site training that firefighters receive and use them properly in terms of risk assessment.
On funding, as I have mentioned, we need to bring forward the review of the formula spending share from 2010 to 2009, not least in the light of yesterday’s pre-Budget report and the fact that this Government have all but bankrupted this country. That is an important issue that the Fire Brigades Union and others will take forward.
Why is there such a lack of risk-critical operational guidance? Why have we not updated it using avenues such as the national chief fire and rescue adviser, Sir Ken Knight, or the operational guidelines from the Department for Communities and Local Government? As the Minister will know, his predecessor and I debated the national fire and rescue service framework in June. That would have been an opportune moment to review firefighter training, but it was not addressed. More emphasis is placed on diversity, quotas and tick boxes than on firefighter safety. I do not think that that is the right set of priorities going forward over the next few years.
We come to the subject of regional fire control centres. Where do I begin? Yesterday morning, I visited the new regional fire control centre at Blackbrook business park in Taunton. It has been built on the edge of a flood plain. There has been massive opposition to regional fire control centres, not least in Gloucestershire, where the fire element of the tri-service centre in Quedgeley has been ripped out and a £6 million private finance initiative scheme disabled by the obsession for regional government started by the right hon. Member for Kingston upon Hull, East (Mr. Prescott), the 2004 vote against the regional assembly and the vote not to go ahead with the merger of police forces. Fire control centres are the only behemoth of regional government still being pursued by this Government.
Given that the then fire Minister told us in 2004 that regional control centres would cost only £100 million and would definitely generate £30 million, or 30 per cent., in revenue savings over the period to 2017, the figures are horrendous. Some £55 million has been spent so far on consultants and £50 million on local and national project set-up. That is £100 million already. Some £190 million has been spent on IT and £342 million on premises. We are heading towards £700 million, and not one regional control centre is yet open, nor is one likely to open.
I challenge the Minister to give us a date for the new cut-overs. He has delayed them in the south-west and throughout the country, and he has refused to tell fire authorities when they will happen. He knows that they must happen before 2012, because of the Olympics—senior chief fire officers have said that it will not be a tenable situation if the fire control project is not online by the time of the Olympics. He will also know that, as I have said, the cost basis rationale for the project is dead and buried, as is the resilience basis. All the technical improvements that Ministers trotted out constantly and wrote to hon. Members about in the summer are happening anyway. For instance, in Avon, 19 of the 20 technical improvements that have taken place would have happened anyway, without a regional control centre and all the related costs.
I challenge the Minister to have the courage of his convictions in his new role and to say to the Treasury, “This is a disastrous project. It’s impacting in the post-comprehensive spending review period on real front-line services and on revenue funding. Kill it off; pull the plug.” He would have our strong and emphatic support, as well as that of the hon. Member for Falmouth and Camborne (Julia Goldsworthy), I am sure.
Incidentally, I am sure that the hon. Member for Falmouth and Camborne will support the Conservatives’ push for greater transparency. In government, we would seek an Australian-style grants commission that would exercise fairness and transparency in allocating revenue grant funding, unlike the present Government, who seem to make it up as they go along. However, I am slightly concerned that the hon. Lady is confused about how it will all be paid for. I thought that the Liberal Democrats had killed off local income tax, not least because it is electoral poison in most of the south of England, including—dare I say it—in the south-west and Cornwall.
For a lot of people, the fundamental confusion arising from the system of local government funding is due to the fact that in a lot of cases about 80 per cent. of what is spent is provided by central Government grants. Surely the drive is not just to have a clearer central Government grant system. I thought that the hon. Gentleman’s party was committed to localism and ensuring that more is raised and spent locally. Once one goes down that path, it is clear that most people feel that council tax is not fit for purpose. It rises every year above inflation.
I hope that the Liberal Democrats have more clarity by the time we reach the general election, because people will want to know. They will want to know the point of voting Liberal Democrat anyway, given that it will be a clear choice between two competing visions, but I assure the hon. Lady that we have a clear and well-argued policy, which we will articulate in our general election manifesto.
The issue of regional control centres is integral to this debate. My hon. Friend the Member for St. Albans has mentioned the Pitt review. The Pitt review specifically does not advocate regional control centres in the conclusions that it reached after examining the widespread national floods in the summer of 2007, despite being “invited” to do so. That is an important point.
My hon. Friends asked what might happen in a new regional control centre set-up if there were a catastrophic outage—for instance, if a hacker were to place a computer bug throughout the IT system. Can anyone imagine the ramifications of all nine regional control centres, including the one for the London fire brigade in Docklands, crashing at the same time? Of course, that is something that none of us wants to happen, but it is something that we need to think hard about in terms of a risk assessment. At the moment, there would be 45 other potential fire control centres to pick up the slack in the event of a serious terrorist incident, a pandemic or major floods. That would not be the case if we had nine or 10 centres interlinked by a common IT network, which is a very serious concern.
The New Dimensions programme has been mentioned. I know that the Minister will want to have some time to put his views forward and to answer the questions that my hon. Friend the Member for St. Albans has put. In the spirit of consensus, I want to give the Minister an opportunity to use two specific avenues to try to address the particular issues that my hon. Friends the Members for St. Albans, for Hertsmere and for North-East Hertfordshire, as well as the hon. Member for Falmouth and Camborne, have raised today.
One avenue is the report into the very sad circumstances of the firefighter deaths at Atherstone on Stour, which the Minister will know about. That report is due by the end of this month or early December and it will obviously raise the profile of firefighter safety. It will be a golden opportunity for the Minister to examine the key issues that have been raised today. The other avenue, of course, is the Minister’s official response to the National Audit Office report on the New Dimensions programme, which is also concerned with issues of resilience.
Those two avenues will perhaps give the Minister the opportunity to look at resilience, training, achieving a level of consistency and the policy vacuum that the FBU has alluded to, and also the potential disaster of regional control centres. Let us trust local professionals and respect their expertise, and let us see some flexibility from the Government in assuaging the concerns that my hon. Friends have articulated so well today.
I begin by congratulating the hon. Member for St. Albans (Anne Main) on securing the debate. The issues that she raised are all very serious and, by and large, she raised and discussed them in a temperate manner. In fact, every contribution to the debate, even the last one by the hon. Member for Peterborough (Mr. Jackson), has been made in a reasonable and calm manner. I say that because the hon. Gentleman and I normally have knockabout in debates, but it is appropriate that when the father of a brave firefighter—a hero—is in Westminster Hall we all behave in a manner that respects the fire service and firefighters.
I know that one of the reasons that the hon. Member for St. Albans secured this debate is the recent Fire Brigades Union report, “In the Line of Duty”, to which she alluded, and the subsequent lobby by firefighters, which was referred to by other colleagues too. The report covers a wide range of issues. Although I will address some of them now, I am sure that hon. Members will understand that I cannot deal with all the points substantively in the short time available to me.
The contribution by the hon. Member for North-East Hertfordshire (Mr. Heald) was very important; he made some excellent points. There are two options that I can take today: I can either respond in a knee-jerk manner to the points made in the FBU report, or I can consider them. There were some very serious points. The hon. Gentleman referred to just three of them: the process for recording deaths, the investigative processes that are in place, and the safe strategic guidance.
I have discussed the report with the general secretary of the FBU and important points are made in it. However, I cannot then be criticised for being lackadaisical or for lacking the conviction to take the report seriously, if I have considered the report and want to respond in a proper manner. I hope that the hon. Gentleman will bear with me as I respond to the points that have been made.
The hon. Member for Peterborough, who is the spokesman for Her Majesty’s Opposition, gave me two avenues to try to show that there had been a cultural change. Once again, on the one hand we consider reports and try to find an opportunity to make announcements yet on the other hand we are criticised and accused of being lackadaisical.
For reasons that I hope will be clear, I will not go into too much detail about the FBU report, although I will touch on some of the points that have been made.
The point that I was making was that in an earlier answer to me, the Minister described a framework for future development of operational guidance. I was not really suggesting that he was lackadaisical, just that it seemed a rather leisurely process and that there might be a need for a little more expedition. If the framework is something worth doing, let us get on with it. I would be very grateful if the Minister could explain what the framework is and what is happening about the issue of operational guidance, because that seems to be at the core of the debate.
I will be coming to that issue later. However, in short it is a system whereby the adviser, stakeholders and the Government work together, and not a command control system whereby we inflict and impose guidance. Instead, we will be working with key stakeholders to ensure that the system is acceptable, which is the right and proper way to do things. I will talk about the framework in a moment, if the hon. Gentleman will bear with me.
I want to kick off by putting on the record that I believe that we have a fire and rescue service that we can be proud of. Day in and day out, members of the fire and rescue service put their lives on the line—we heard examples of that earlier today. In fact, my family were saved from a big fire many years ago by brave firefighters, so I personally am hugely grateful to firefighters. Firefighters serve the community with true professionalism, courage and dedication.
The statistics show that the fire and rescue service is making a difference. Accidental fire deaths have fallen to their lowest level since the 1950s. The latest verified figures for 2006 in England show that 233 people died in accidental fire deaths in the home, but the provisional figures for 2007 are potentially looking even better. They show an 18 per cent. reduction, to 190 accidental fire deaths in the home.
The hon. Member for North-East Hertfordshire queried why the number of deaths of firefighters has been going up when the number of incidents was going down. One death, or one injury, is too many, so I feel uncomfortable talking about figures going down. In fact, the hon. Gentleman is not right. The number of injuries to firefighters has been falling steadily, as has the rate of injury per incident, so I would just like to put it on the record that his assertion is not quite right. However, as I have said, any death is still unacceptable and we are taking the FBU report very seriously, including some of the FBU’s recommendations. I hope that the hon. Gentleman will bear with me, as I will swiftly return to those recommendations. I will try to use the avenues or pegs that the hon. Member for Peterborough has given me as I respond, but please bear with me.
On a related issue, the Minister will know that in February the FBU also reported on data on attacks on firefighters. He will also know that there was a significant discrepancy between the official recorded number of attacks, as recorded by the Department for Communities and Local Government, and the number obtained under freedom of information provisions. In any review that he conducts on firefighter safety and training, will he also look at the collation of data in respect of physical assaults on firefighters?
Only last night I was reading about the impact of antisocial behaviour on firefighters. May I drop the hon. Gentleman a note on the issue? If he is still unhappy after receiving the note, I will be happy to discuss the issue with him. It is serious and we must ensure that we deal with the pernicious evil in our society, whereby people who go into fires, risking their lives or even losing them, have antisocial behaviour inflicted on them.
As I said, one death would be one too many, but thankfully the statistics are going in the right direction. The service, in partnership with the Government and county councils, has been putting measures in place to support the reduction of deaths. However, as we all recognise, the kind of challenges that the service faces and the conditions in our communities are changing. As the tragic events of 7 July 2005 showed, we have to contend with a new type of terrorist threat. Last year’s floods were the worst in living memory and in years to come climate change is likely to make such extremes of weather more common.
I take the point that was made by the hon. Member for St. Albans about recording. We need to record properly what the fire and rescue services do, otherwise it is not fair. I hear her point and I will ensure that I try to deal with it. I would like to drop her a note about that too, because we would not want to use old systems of recording when it comes to working out how efficiently and usefully firefighters are using their time. I would be grateful if I can come back to her on that point.
We have come a long way since the Fire and Rescue Services Act 2004, when we did away with national standards of response and gave the fire and rescue services new flexibility to make local community safety plans that were tailored to local needs, and empowered fire authorities to use resources for a wide range of emergency responses. I hope that the hon. Member for Falmouth and Camborne (Julia Goldsworthy), who speaks on behalf of the Liberal Democrats and who is all in favour of empowerment and devolution, welcomes that system rather than stringent national standards.
We have experienced emergencies such as the terrorist threat and the Buncefield fire in Hemel Hempstead. I pay tribute to the hon. Member for Hemel Hempstead (Mike Penning), who is in Afghanistan. He has championed the concerns articulated by the hon. Member for St. Albans, and I know that he is a mouthpiece for constituents who are rightly concerned. Such emergencies and that of widespread flooding have demonstrated the benefits of mutual aid arrangements in giving an effective response while avoiding unnecessary duplication of specialist resources. As we respond to new challenges, we can surely make the most progress by finding common ground, listening to each other and learning. That is vital to the debate.
The hon. Lady mentioned the three-year settlements for fire and rescue authorities. We are committed to sustainable funding for all fire and rescue authorities, which will allow them to build on modernisation and fund the various efficiency initiatives that are being implemented. As has been said, in the three-year local government settlement announced at the beginning of this year, Hertfordshire county council received an increase of 2 per cent. for 2008-09 on a like-for-like basis. Provisionally, it will receive increases of 1.75 per cent. in 2009-10 and 1.5 per cent. in 2010-11. As has been mentioned, that is protected by the floor dampening mechanism, which means that in each of those years respectively, it will receive £36.7 million, £32.2 million and £21.1 million more than it otherwise would have.
We must accept that Hertfordshire county council has responsibility for fire and rescue and other services throughout the county, not Ministers.
The Minister is right in the figures that he has used about the floor. However, they reflect the fact that Hertfordshire county council suffered a redistribution of funds away from it through the Government’s original mechanism, which distributed greater funds to other parts of the country. Hertfordshire county council was left on the floor, which is a protective mechanism. Local residents are still feeling the effects of that decision, about which the Government were warned at the time.
I am glad that the hon. Gentleman intervened. I have the figures for the past 10 years, and interestingly the smallest increase was 1.9 per cent. in 1998-99, when we were tied to Conservative spending limits. From then on, there have been increases of 3.9 per cent., 5.4 per cent., 6.2 per cent., 7.3 per cent., 6 per cent. and 4.9 per cent. Opposition Members were not to know that this debate would come a day after the shadow Chancellor’s shocking speech, but God knows what would happen if we had a council tax freeze in the hon. Gentleman’s constituency and county over the next two years. God forbid that the shadow Chancellor be allowed to have his policies prey upon the people of Hertfordshire. Frankly, the hon. Gentleman should thank his lucky stars that he has the current Chancellor in the job rather than the shadow Chancellor.
Hertfordshire county council has responsibility for fire and rescue services throughout the county, as well as for other services. Formula grant is an unhypothecated block grant, which means that there are no restrictions on how the county allocates it to the services that it provides. Deciding on the allocations is a local matter, and the council is best placed to decide on local priorities for the communities that it serves.
I was surprised by the criticism of efficiency savings by the hon. Member for St. Albans. I thought that her party, and the shadow Chancellor, were all in favour of efficiency savings. In fact, we are criticised for not going far enough in requiring county councils, other local authorities, and by extension fire and rescue services, to make such savings. I do not resile from asking all public servants to do so, and I do not apologise for that. Taxpayers’ money is finite.
I turn to the matters raised in the FBU report, which the hon. Lady mentioned. She raised the crucial matter of firefighter fatalities, which was one of the key concerns that the FBU raised. Although any firefighter fatality is a tragedy, thankfully the number of fatalities remains very low and the number of injuries to firefighters is falling steadily. Of course, we will continue to work closely with stakeholders to ensure that lessons are learned.
It was extremely unfair of the hon. Lady to suggest that lessons were not being learned or that there was somehow a sham in relation to either the Buncefield incident or the 2005 incident that the hon. Member for North-East Hertfordshire mentioned. He was right that in that case, the breathing apparatus crew rescued an occupant. When they learned that a further person was inside, they went back inside in search of the second reported person. That was when they suffered their injuries. It is worth taking the time to record that, so that they are thanked properly. There is a Health and Safety Executive investigation, and we will take it seriously, respond to it and work with key partners to learn lessons.
On Buncefield, the hon. Lady will know that the hon. Member for Hemel Hempstead would not allow the Government not to take action—she knows him too well. Further work is taking place, and four separate reports have been published and their recommendations implemented. I hope that she will shortly see the fruits of some of the changes that have been made, if she has not already.
The hon. Lady mentioned training. My Department, the Chief Fire Officers Association and the Local Government Association continue to work together to provide support to fire and rescue authorities to ensure, as employers, that staff are trained to undertake their roles effectively and safely. Looking forward, we are keen to work with the service to ensure that training is effective. We are planning research to support continuous improvement in service delivery and share good practice. It should be noted that notwithstanding the difficult times and the policy of some parties to make cuts, we have provided some £50 million of funding for the Fire Service College since 2002, including £15 million to provide a state-of-the-art resilience training facility.
The Minister said that he did not want to give his full response to the FBU report “In the Line of Duty” today. How does he intend to respond to it, and when?
My officials are currently going through the report thoroughly, as am I. As soon as we are in a position to respond to it, we will. I have spoken to the general secretary of the FBU once, and will be speaking to him again this week. As soon as I make progress, I undertake to alert the usual channels and the hon. Gentleman about the time lines involved. It was worth the hon. Gentleman’s raising the matter, and I will not resist his chasing me up every few weeks to see what our response will be. That chivvying is right and proper, especially in discussing such matters.
We have spent more than £7.5 million on work force development projects, to provide training programmes and e-learning facilities and to establish a centre for leadership for the fire and rescue service.
I cannot end without mentioning FiReControl—I do not think that the hon. Member for Peterborough would forgive me. He is right that there is a £1 billion fire and resilience programme for England’s fire and rescue services, and I believe that the case for a new national network of control services to handle emergency fire calls is clear. Every area and every constituency in England will benefit from enhanced resilience. Under FiReControl, eight key capabilities will be provided to each and every fire and rescue service, ranging from automatic caller location from land lines and mobiles to real-time information on the location of the resources out on the road and in-cab computers for firefighters, loaded with vital safety information. The hon. Member for St. Albans claimed that no one in Hertfordshire wants that, but that is not the case. Only 10 of the current 46 control rooms have six or more of those eight capabilities, and only two have all eight. They will benefit from being part of a national network that, unlike the present system, can back them up and deploy the right response if they get extremely busy.
Floods have been mentioned. During last year’s floods, we all saw the magnificent response of the professionals in the fire and rescue service and the other emergency services. We saw what a brilliant and professional job they did in tough circumstances. It brought home to me and to many others, including our independent adviser Sir Ken Knight in his report on the floods, the need for a national network able to respond to local, regional and national incidents. In short, the need to give the fire and rescue service the tools to face 21st-century challenges such as climate change and the threat of terrorism supports the need for FiReControl.
The fire and rescue service has undergone a period of unprecedented modernisation and change since 2003. It has risen to the challenges admirably, and I believe that it will continue to do so. I welcome the opportunities of my new role as the fire service Minister, and I shall continue to work with the service. I once again congratulate the hon. Member for St. Albans and thank her for raising important issues. If there is any point to which she does not think I have done justice, I ask her to get in touch and I will respond by letter.
I am glad to have the opportunity to lead this debate on Equitable Life. There can be few hon. Members, if any, who have not been contacted by constituents affected by the Equitable Life saga. Given the scale of interest, I am pleased but not surprised to find myself so popular in Westminster Hall today. It is good to see such a high turnout.
When Equitable Life was forced to default on its obligations to policyholders in 2000, we saw the breakdown of the world’s oldest mutual life insurer—a humiliating moment for a venerated institution. The shockwaves caused by the failure of a body as huge as Equitable Life are considerable. The report of the parliamentary ombudsman, Ann Abraham—“Equitable Life: a decade of regulatory failure”—is the 13th such report to be published. The post-mortems that have taken place over the past eight years have found fault with this Government and with the preceding Conservative Government. Beyond the blame games, however, one thing is clear: Equitable Life policyholders continue to press their case in the hope of seeing justice done.
The hon. Lady has brought an important subject to the House before it prorogues, so I congratulate her. Is she aware that some Equitable Life policyholders are elderly pensioners, who will die before they can see justice done? Does not that place a new sense of urgency on the Government to act?
The hon. Gentleman is quite right that the issue is urgent. In fact, 30,000 policyholders have already died since 2000 and the situation gets worse every week that goes by. It is incumbent on the Government to make a swift response to the report.
In opening today’s debate, I will highlight the Government’s cynical tactic of delay on Equitable Life and their responsibility to support the role of the parliamentary ombudsman. I will also look at the case for Equitable Life compensation in the context of the bank bail-outs.
The ombudsman’s report contains 10 findings of maladministration—against the Department of Trade and Industry, the Government Actuary and the Financial Services Authority—and makes two recommendations: that a full apology should be given to policyholders and that
“the Government should establish and fund a compensation scheme”.
The language used in the report pulls no punches, and its recommendations are clear, precise and straightforward.
I pay tribute to my hon. Friend for securing the debate. Does she agree that it is even more timely, given the support that the Government have given to individual savers in the Icelandic banks, which, while laudable, has compounded the sense of bewilderment among victims of Equitable Life?
My hon. Friend makes a good point, which I shall come to later. The Government have spent years adopting a siege mentality towards Equitable Life, but the ombudsman has shown that they cannot hide for ever. Ministers must now accept the ombudsman’s recommendation that wrongs should be remedied.
Does my hon. Friend agree that this is a matter not only of justice for those who have lost money through the Equitable Life debacle, but of the credibility of the ombudsman? If the Government cannot respond to such clear direction from the ombudsman, there is little point in having an ombudsman and we should accept that the whole system is defunct.
My hon. Friend is absolutely right; the very credibility of the ombudsman is at stake here.
That is exactly the point that I wanted to make—about the credibility of the ombudsman. I congratulate the hon. Lady on securing the debate. Will she agree to lead a delegation of cross-party MPs to meet with the ombudsman and show him the extent of feeling on the issue in the House? I should say, her.
I would very much like to lead such a delegation to the ombudsman—Ann Abraham. I also— [Interruption.]
Order. I know that there is great interest in the debate and a lot of hon. Members are in attendance, but I hope that hon. Members will restrain themselves and allow the hon. Lady who has secured the debate to make her case without putting her off with comments or laughter.
Thank you, Mr. Hood. Before I move on, I would like to pass on the apologies of my hon. Friend the Member for Richmond Park (Susan Kramer), who cannot be here today due to a long-standing constituency engagement. The Minister will know that she has taken a keen interest in this matter. She made what I thought was a sensible request for him to agree to a meeting with a group of hon. Members who have a large number of Equitable Life cases involving constituents to allow them to put their thoughts to him. I hope he will respond positively to that request.
The Government’s response to Equitable Life is overdue, not only in terms of the parliamentary ombudsman’s report, which they said they would reply to this autumn, but in terms of time. It is nearly eight years overdue, because ever since Equitable Life came near to collapse in 2000, they have tried to put off, postpone, defer and delay the actions needed to bring this sorry saga to a close. As I have already mentioned, Ann Abraham’s latest report is the 13th report on Equitable Life since 2001. We have heard from the Treasury Committee, Lord Penrose, the Corley Institute of Actuaries, the European Parliament and many more. And still, the Government have failed to act to help Equitable Life policyholders, despite now facing a charge of maladministration from the ombudsman.
Lord Penrose was handed the task of reporting on Equitable Life, but was given terms of reference that prevented him from finding anyone to blame. That was an opportunity missed for closure on the case. Furthermore, when the then Financial Secretary, the right hon. Member for Bolton, West (Ruth Kelly), made a statement in the House on the publication of Lord Penrose’s response, she made a point of the fact that the report did not blame regulators or recommend compensation, despite being fully aware that those were outside the terms of reference given to Lord Penrose.
Again, the Government tried to wriggle out of taking responsibility for dealing with the situation. Far from bringing closure, the Penrose findings prompted the ombudsman to seek to change the law so that she could pursue a more thorough, wide-ranging report, going back much further than her initial investigation.
Ann Abraham initially stated that she hoped to complete her investigation by 2005, but the report took four years to produce. That was not helped by Government obstruction. In 2006, the ombudsman revealed that she had been delayed by nine months, waiting for the Department for Work and Pensions to comply with requests for information. Surely, that is unacceptable.
After a long wait, the ombudsman’s report arrived in July. The Government promised to reply by the autumn, and when pressed on that at business questions, the Leader of the House said:
“The parliamentary ombudsman took four years to construct her report and, as the hon. Lady said, the Government have been considering it for four months.”—[Official Report, 30 October 2008; Vol. 481, c. 1043.]
That is not quite the full story, however, as a draft copy of the ombudsman’s report was issued to all interested parties in February 2008. Assuming that Ann Abraham did not radically alter the conclusions of her four-year work between February and July, the Government have been aware of the report’s contents for the best part of a year.
I congratulate the hon. Lady on securing this important debate. Is she not surprised that during that four-year period, the ombudsman, who is an inestimable woman, was unable to indicate how any compensation scheme might work or give any indication about the overall cost and where it might fall, and that even simple information such as the number of people affected is not included in that lengthy report? Can the hon. Lady account for those lamentable lapses?
The hon. Gentleman knows that this is a complex matter and that 55,000 documents were submitted to the ombudsman by Equitable Life alone. Her task was to find where the blame lay and what should happen next. I believe that it is up to the Government to deal with the details of finding out how to implement such a compensation scheme and assessing how much should be paid to each individual. Every individual will have lost a different amount.
I am grateful to the hon. Lady for giving way and I add my congratulations to her on securing the debate. Does she agree that those who have suffered as a result of this saga would probably be prepared to accept, as does the ombudsman, that the full measure of their loss is unlikely to be repaid to them, but that what they find impossible to understand is why some measure of compensation could not have been worked out by now and paid to them by the Government, who should accept their responsibility?
Certainly the Government need to accept their responsibility. The timetable laid out by the ombudsman is that the entire affair should be done and dusted in a little over two years, which most people would see as a fairly swift outcome, given that there has already been eight years of waiting. We all want to hear whether the Government will take the recommendations on board.
There are many Members here today, and we are grateful to the hon. Lady for giving us this opportunity to speak for constituents who have lost out.
Further to the point about the level of compensation, is it not ironic that this is the day after the Government were able to make such a huge amount of money available in the pre-Budget report? Comparing the compensation that we are talking about with the amount of money that the Government were prepared to throw at their problems yesterday, it seems even more incomprehensible that they cannot find it within themselves to create a compensation scheme.
The hon. Lady is quite right. In fact, she anticipates my next point.
Another opportunity to respond was missed in yesterday’s pre-Budget report. The Chancellor found money for a £12 billion cut in VAT and for borrowing at record levels, but again failed to address the situation faced by Equitable Life policyholders. Sadly, unless the Minister has something considerable up his sleeve, I doubt that we will be stunned by far-reaching new comments today.
One reason why I was so pleased to secure the debate was that the Government have been reluctant to discuss Equitable Life in the House. Before the summer recess, the Liberal Democrats tried for three consecutive days in July to secure an urgent debate on the matter. For three consecutive days, our request was denied. Now, finally, we can have a debate, although it strikes me that one of the issues up for discussion ought to be the definition of “autumn” to which the Government officially adhere.
Most people judge the seasons by calendar months, so autumn is September, October and November. Technically, there are still a few days to go, but with House business already programmed, there is no sign that the Government will meet their deadline. Incidentally, in addition to the Equitable Life response, MPs’ expenses were also due to be published this autumn, but we now hear that publication may not be before next July.
Does the Government’s definition of autumn also apply to Equitable Life? Given that they seem to have such bizarre definitions of the seasons, perhaps they might issue their own calendar so that we know where we stand. Better still, the Government could end the delay now by accepting the ombudsman’s recommendations in full and delivering a Christmas present to all those who have been affected.
I congratulate the hon. Lady on securing the debate. I declare an interest as a person who has lost much and will, no doubt, lose more as a result of the Government’s handling of the issue. Why is she surprised by their fiddling with the calendar, as they seemed to redesign the dates for the beginning and the end of the economic cycle? Surely, it is all part of a pattern. The cheapest thing they could do, which they will not, is simply apologise.
The hon. and learned Gentleman is right to say that an apology should be forthcoming. The Minister could make a start on that today.
The Government’s tactic of delay has backfired. The result is a clear, comprehensive report by Parliament’s own referee, which contains two simple recommendations that must not be ignored.
Also, as was pointed out earlier, we should not forget that 30,000 Equitable Life policyholders have died since the events of 2000. For those people, it is already too late: justice delayed has been justice denied.
I congratulate the hon. Lady on securing the debate. She has not yet mentioned letters from the ombudsman and the Treasury. I have every sympathy with those who have been affected. The ombudsman stated in her letter:
“I have suggested that this scheme to remedy relative losses suffered by those who have complained to me, and those in a similar position to those complainants, should be established within six months of any decision by Government and Parliament to do so.”
The ombudsman went on:
“Once established, the scheme should take no more than two years to complete its work.”
Surely that should be the centre of our considerations.
Order. The hon. Gentleman must resume his seat. Interventions should be short.
Thank you, Mr. Hood. Regardless of any compensation scheme for relatives, it is plainly obvious that justice for policyholders who have died is no longer possible.
According to the ombudsman, the fallout from Equitable Life could have been mitigated if action had been taken earlier. She states that
“there were lost opportunities to address critical issues earlier”.
No more delays, no more dodging the issue—the time has come for the Government to face up to their responsibilities to Equitable Life policyholders.
As I mentioned earlier, the Equitable Life case has serious implications for the office of the parliamentary ombudsman. It is in the interest of the health of our democracy that we have an authoritative ombudsman to whom the Government listen and respond, but that is something that Ministers have been reluctant to support.
An exhaustive 18-month investigation by the ombudsman found the Government guilty of mis-selling occupational pensions to 125,000 people who lost their company pensions without warning or any chance to protect themselves. The Public Administration Committee, the European Court of Justice and the High Court judicial review all agreed that the Government should have protected those people’s pensions but failed to do so. The Government continued to resist pressure to pay compensation until December last year, when they finally agreed a compensation package of more than £3 billion.
Another of the ombudsman’s reports, in June 2007, looked at tax credits. Appropriately entitled “Tax Credits: Getting it wrong?”, the report contained severe criticisms of the Government’s use of waivers in respect of overpayments, calling them “unfair and inconsistent”. The ombudsman sought to correct faults in a system that causes stress and misery for people such as a constituent of mine who was overpaid by £5,300 and then told that the money had to be repaid within 12 months. In spite of the ombudsman’s criticisms, the Government continue to defend their over-complex tax credits regime.
Members of the Government have not always had such a frosty relationship with the ombudsman. Compare the cases that I have outlined with the situation when the Prime Minister was in opposition. An ombudsman investigation was instigated by his party into Barlow Clowes, which collapsed in 1988. It was he who argued that the Government of the day should support the ombudsman over charges of maladministration by the Department of Trade and Industry.
When Lord Penrose published his report in 2004, parallels were drawn between Equitable Life and Barlow Clowes. Speaking in the House after publication of the Penrose report, the right hon. Member for Bolton, West stated:
“It has been put to us that as the then Government provided redress in the Barlow Clowes case, we should do so with respect to Equitable, but there are major differences between the two cases… In the case of Barlow Clowes, there was a finding of maladministration; for Equitable, there has been no such finding.”—[Official Report, 8 March 2004; Vol. 418, c. 1257.]
Now there has been such a finding, how can the Government possibly justify failing to act?
However Equitable Life conducted itself in making guaranteed promises in respect of pay-outs, it seems that the charge of maladministration should in fact be for the Government themselves for failing, through all their bodies, to regulate and control the activities of Equitable Life. It is now incumbent on them to act.
Order. Interventions should be brief.
Many thanks, Mr. Hood. I agree with my hon. Friend. In fact, I think that the title of the ombudsman’s report, “Equitable Life: a decade of regulatory failure”, makes the point incredibly clearly.
The report is a clear, detailed, high-quality piece of work. Four years of effort have gone into its 2,800 pages, with Equitable Life itself providing more than 55,000 documents to the inquiry. The report uses words such as “maladministration”. It calls the DTI “complacent” and sympathises with
“a justifiable sense of outrage”
among policyholders. That is not language that Ministers should ignore. Clearly, the Government’s working relationship with the parliamentary ombudsman is dysfunctional if statements as strong as those do not prompt action. That in itself is a situation that needs to be addressed.
I thank my hon. Friend for her generosity in giving way. Another strong statement is:
“I have lost more money than I care to think about from my pension due to this deception.”
The person who said that was Gordon Brown—not the Prime Minister, but one of my constituents. Does she agree that that Gordon Brown is a little closer to the truth than the other one?
My hon. Friend’s constituent makes the point very well indeed.
My hon. Friend raises an important point, because if the report were to be ignored, people would simply ask, what is the point of the parliamentary ombudsman? The role would be fatally undermined. That would be a sad situation for Parliament, a blow to our democratic system and a shameful state of affairs for this Government to have brought about.
Before the hon. Lady moves off the question of the precision that the parliamentary ombudsman brings to the task, does she agree that the most important statement to be made in that respect was that there was at least a period during which the regulators were in knowledge of the problem and purposely did not reveal it to the public?
The right hon. Gentleman is right. That is a truly shocking state of affairs.
Does my hon. Friend agree with the sentiments expressed by Tom Winsor, the former UK rail regulator, who suggested that the Government would take notice and compensate if only a small amount of money were involved, but because the amount is large—£10 billion rather than £10 million—they are not prepared to take any notice of the parliamentary ombudsman?
It certainly could be so, although I am not sure whether the figure estimated is as high as the one my hon. Friend uses. Whatever the reason, the Government cannot pick and choose on the findings of the parliamentary ombudsman. Surely, they need to accept the ombudsman’s adjudication on a range of issues, even when they do not like the answer.
The Government are under pressure to pay compensation to the victims of Equitable Life’s near collapse. In one sense, that pressure is entirely of their own making. The bank bail-outs of recent months have left the Government in a position in which it is impossible to justify a refusal to pay compensation. Equitable Life policyholders have been waiting eight years. With the Government guaranteeing savings in Northern Rock and putting a rescue plan together for Icesave investors, practically within a matter of hours, Equitable Life customers have been left asking why they are still waiting.
Of course, some cases require greater urgency and Equitable Life is a special case—it is not the same as the banks that have been bailed out by the taxpayer. But these actions will certainly add to the “justifiable anger” of policyholders referred to by Ann Abraham and that anger will be compounded by the sense that the Government have guaranteed savings that were much more high-risk than those in Equitable Life.
Equitable Life used to have a reputation as the Marks & Spencer of financial institutions. It was seen as a sound place to invest, not a high-risk venture. The same cannot be said of Icesave, which attracted people seeking higher returns on their money, with a higher element of risk. Equitable Life savers are furious to see these higher-risk investments prompt a rapid bail-out by the Treasury.
Ann Abraham has not put a figure on the compensation that should be paid, but the Equitable Members Action Group has calculated that the figure could be around £4.6 billion, which, incidentally, is the same as the sum required to guarantee deposits with Icelandic banks. In bailing out the banks, the Government have manoeuvred themselves into a corner on Equitable Life. Refusing to pay compensation to Equitable Life savers would be wildly inconsistent with their recent actions.
There are three things that the Minister must do. First, he must respond, not just to me in the debate, but to the ombudsman’s report, as promised to Parliament and more than 1 million Equitable Life policyholders. He must stop the delaying tactics and put an end to the years of missed opportunities, policyholders dying without redress and the continuing injustice. If he cannot respond to the report today, he must tell us when he will do so.
Secondly, the Minister must apologise. Ann Abraham is perfectly clear and correct when she talks about a “justifiable sense of outrage” among policyholders. The very least that they deserve is an apology from the Government and an admission that the Government were at fault for the charges laid at their door by the ombudsman.
Thirdly, the Government must set out a credible, transparent and independent process to enter into a dialogue with policyholders over compensation. Redress should happen quickly—the time scale set out by Ann Abraham is two and a half years to complete the process. That way, questions of means-tested hardship funds become irrelevant and justice is done for all.
I am sorry, but I want to conclude.
I end by reflecting on the impact that this has had on individuals, and I know that the experience of my constituents is mirrored by the experiences of others the length and breadth of this country. The Hunters are a retired couple from Milngavie—Professor Hunter is 86—who have seen the monthly return from their Equitable Life investment drop by half since 2000. Mrs. Hunter spoke of feeling “very let down” and “abandoned” when they lost out. She said they felt that they were “given no support” as the value of their investment plummeted. Even eight years after the event, Mrs. Hunter’s feeling of injustice is still apparent. She has been promised a copy of the Hansard report of this debate, which will be in the post as soon as it is printed. I know she would be grateful to read something in the Minister’s comments to give her hope that she and her husband will receive an apology and a compensatory sum for this Government’s “decade of regulatory failure”.
I, too, congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate. I also congratulate the members of the Equitable Members Action Group, whose professionalism is outstanding. They have gone through eight years of waiting and they keep on going, and they have provided us with regular—I would not say “monthly”—updates. I take my hat off to them. Some of them are watching the debate. Well done. Do not give up the fight.
As to why we have not had such a debate before, looking at how many hon. and right hon. Members are attending—probably the most I have seen for a 90-minute Adjournment debate—perhaps it is time that we altered how this place runs. Perhaps 100 signatures from among all of us could bring about a six-hour debate on such crucial issues, rather than one of 90 minutes. Given that the Labour Government established the parliamentary ombudsman, perhaps reports from the ombudsman should be binding on the Government. That is something I believe in having seen the blood on the carpet for the next four years after starting the occupational pension debate with ASW Sheerness in 2003. Eventually, we conceded on every single point. Had we conceded within six weeks of the issue arising, the members—125,000 people—would have settled for 50 per cent. As it was, they got 90 per cent. and we were left with a gap of £8 billion in the Department for Work and Pensions budget. It is the same in respect of Equitable Life: had we addressed the matter earlier, we would not be where we are.
I have just over 500 constituents with Equitable Life pension schemes and the issue affects the most people of any that I have ever dealt with. Of course, those people are all different, which makes the problem harder. Although Ann Abraham has said that it would take two and a half years to deal with, I am afraid that I cannot see compensation being paid that quickly. I ask the Minister to consider a hardship fund and a way of administering that as fast as possible. It is simply not fair to ask people in their late 70s and 80s to wait another two and a half years, by which time they may have died.
In respect of occupational pensions, there was a resolution for widows. I wonder whether the Minister will consider that too. After all, we are talking about people’s savings—and their savings have gone. It is tough talking to them. All hon. and right hon. Members have such people in their constituencies.
I do not want to repeat what the hon. Member for East Dunbartonshire has said, because much of it is accurate and I want other hon. and right hon. Members to have their say. But considering the matter as a whole, Equitable Life expanded sixfold in the 1990s—from £5 billion to £30 billion—by voting excessive policy bonuses. How on earth could the board do that? It paid out to retiring policyholders more than had been earned by their investment, so there was a policy lag. How on earth that was not picked up by the regulatory bodies I do not know. As a consequence of it, the policies of current Equitable Life policyholders are not covered by the investments of the past.
Equitable Life tried to change or alter the issue by offering a range of different products. However, when push came to shove, the company closed to new business in December 2000—and here we are, eight years on. The old directors resigned and the good bits of the business were sold off—the offices, the client list, the staff and unit-linked business. The new directors slashed policies by 16 per cent. in July 2001 and put in place a compromise scheme to deal with the guaranteed annuities, but that was not enough. Another 10 per cent. was cut off the value in 2002. By then, the society was entirely invested in fixed-interest stocks and could not take advantage of rising markets. It is now being run down and broken up, as everybody knows.
Despite Lord Penrose and despite the ombudsman, we have done nothing. It is important that the Minister not only responds to some of the accusations made by the hon. Member for East Dunbartonshire, and to what all hon. and right hon. Members feel, but considers doing so before the Christmas recess—not on the last day of this part of the House of Commons calendar, but next week or the week after. It is neither reasonable nor fair to leave it much longer.
I know that many hon. Members want to speak, but I ask the Minister to think of the morality of the situation. That is ultimately what the Government said about occupational pensions: they accepted the morality of the argument, but took five years to come to the dance floor and pay up. Will the Minister please tell us that there will be no more delay and that the Government will pay up?
I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing this important and timely debate. I have received hundreds of letters from my constituents in Shrewsbury highlighting their extraordinary frustration, irritation and deep concerns about the Government’s lack of action. For the record, I declare an interest. My mother-in-law is with Equitable Life, and has provided me with information for today’s debate.
I want to raise a specific matter with the Minister. With-profit annuitants are a small percentage of the policyholders—only 50,000 in 1 million—but their losses are estimated to be £6.2 billion, which is approximately 60 per cent. of total losses and claims for compensation by all policyholders. Unlike investors, who could have taken their money elsewhere, although admittedly by accepting a market value adjustment, WPAs could not. When they had purchased the annuity, they were locked in. WPAs are retired, old and often ill, and they cannot supplement their lost income in any way. Will the Government accept that they are a separate class of claimant and ensure that they receive their fair share of any compensation?
The Government’s line will almost certainly be to misquote Lord Penrose and to say that the society was
“the author of its own misfortunes.”
Lord Penrose said that, but it was heavily qualified. Why do the Government persist in misquoting him?
The Government will also argue that some losses incurred by policyholders were due to market forces and outside the Government’s control. No other comparable pensions company in the world failed at the same time. What was so special about the Equitable Life Assurance Society? Evidently, it cannot have been market forces. If the collapse of ELAS was caused by market forces, why did it fail uniquely?
Does the hon. Gentleman agree that the regulatory system was not fit for purpose when it came to controlling Equitable Life, and does he further agree that the Government have not been fit for purpose in investigating the matter since?
I totally concur with the hon. Gentleman. I am particularly impressed that the hon. Member for Sittingbourne and Sheppey (Derek Wyatt), who was a Parliamentary Private Secretary, has shown great courage in raising the issue with the Minister. That shows how, across parties, people feel so strongly.
I shall be brief. The Government will say that, yes, there was misregulation, but that it was only a partial cause of the losses, and that they will pay only a partial amount in compensation. In the case of WPAs, had there not been misregulation, the annuitants would not have bought such annuities. They are unique in that, unlike other sorts of annuity offered by the society, an ever-increasing proportion—up to 50 per cent.—is unguaranteed and can be withdrawn, and indeed was withdrawn in 2002.
Other sorts of annuity, such as guaranteed-level annuities, fixed escalating annuities and index-linked annuities, are all 100 per cent. guaranteed, and the society is legally obliged to set aside funds to meet current and all future obligations. Without that misregulation, WPAs would not have bought such annuities, and their income would have been guaranteed and completely isolated from market forces.
Will the Minister confirm that, in the light of that, no adjustment for market forces or company mismanagement will be applied to the claims for compensation made by the WPAs? The Government will try to argue that there is a limited public purse, that they cannot meet the full claim for compensation and that some form of means-testing should apply so that only the poorest receive any payment. The problem with that logic is that WPAs’ losses lie increasingly in the future, and will increase with the passage of time. Thus, someone who fails the means test today might qualify next year or later, but by then it will be too late. That is iniquitous and not warranted.
My final question is, will the Government confirm that they will pay compensation to claimants pro rata, irrespective of their current financial status?
I congratulate my hon. Friend the Member for East Dunbartonshire (Jo Swinson) on securing this important debate, and I echo my point that it is a great shame that it is taking place in this Chamber and that we have not all had a chance to contribute properly to it. I hope that the huge number of hon. Members here today will encourage the Equitable Members Action Group a little. I join in paying tribute to it for what it has done, and I hope that the debate brings justice a little closer.
I have three charges to level against the Government, who have fallen into three unpleasant habits. First, they have been mealy mouthed. Secondly, they have dragged their heels. Thirdly, they have put their hands over their ears and said, “La, la, la.” They have been mealy mouthed because they have not said sorry to start the process. How can they not accept that they should have said sorry many years ago?
The delay has been one of eight years, and there have been 13 reports just about something happening in the future. Finally and most seriously—this point has been made by other hon. Members—the Government have thought it acceptable to ignore the ombudsman’s recommendations. It has been powerfully stated today that that brings the whole system into disrepute, and I hope that that message goes out from this Chamber today.
I want the matter to be settled, because I have constituents involved, as have all other hon. Members. I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate. However, it is fair to say that the problems started in the early 1990s, and we must make it clear that the real blame lies with the management and the regulator at that time, who should have picked up the problems far more quickly. Does the hon. Gentleman accept that although what happened subsequently was wrong, we should examine the history and learn some lessons from it?
I think we all agree that what happened in Equitable Life was, to use a simple phrase, a dog’s breakfast, which was very much the fault of senior management, but our job is to scrutinise the Government. The Government failed to regulate properly and have not adequately responded. That is the point, not what happened years ago. I agree that successive Governments have been involved, but that is no justification for the Government dragging their heels in recent years.
Does my hon. Friend agree that the regulator is the responsibility of the Government, and that if they do not pay compensation in this case, there will be implications for regulation in every other industry? People will lose confidence in regulators if the Government are not shown to be responsible in this case.
Absolutely. My hon. Friend makes an important point. There is a lack of confidence in the regulatory framework, which can only be made worse by this sort of process.
What the vast majority of hon. Members are calling for loud and clear is the Government setting out a credible, transparent and independent process to enter into dialogue with policyholders to talk about compensation and explain how the ombudsman’s authority can be re-established, because it has clearly been undermined.
I thank the hon. Gentleman for giving way; he is being very generous. Does he agree that it is not so much the history that matters now, and that what matters to policyholders in my constituency is their future? They have been waiting far too long. There will be time to go over the history of what happened—why and so on—but what matters now is that people receive the compensation for which they have waited far too long. I sincerely hope that the Minister will take note of the questions that have been asked, and not hedge any of them, because policyholders in my constituency will be angry if they do not receive clear answers.
Of course the point is about individuals. It is important to remember that we are talking about individual people and the effect that this matter has on their lives. Let me quote some individuals in my constituency. In a letter to me, Mr. Wilson said:
“I am in my eightieth year and my wife is eighty two, both of us started work at fourteen years of age and never once in our working lives have we asked for, or expected, state hand outs… We do not ask for this now, but justice to right a wrong.”
Mr. John Morgan urged all of us in Parliament to call on the Government to do the decent thing before more pensioners die waiting for justice, as so many have done in the past seven years.
Mr. Lewis said:
“Both myself and my wife are two of more than one million Equitable Life victims who lost a substantial amount of our personal pension policy after Equitable closed its doors… I would add that we do not fit the bill as one of the illusory ‘fat cat’ rich professionals that it suits Gordon Brown to characterise Equitable Life investors as being.”
I am sure that we all wish that many other such voices could be heard in the Chamber today. I have many more cases, and there will be many thousands of others that people have raised.
The matter can be rectified—it should have been rectified a long time ago—by the Government finally stopping their delaying tactics and responding to the report.
Obviously, justice is important. People have saved and done the right thing, and they are being punished. When confidence in the economy is vital, is it not important that there is confidence in the Government, in savings and, more importantly, in preparing for old age?
Absolutely. The situation in which Equitable Life investors find themselves must be taken into account in the current financial situation.
It is time that the Government fully accepted the recommendations of the ombudsman and opened proper negotiations with Equitable Life savers. Crucially, it is time for the compensation process to start before yet more people die. The Government must stop whistling in the wind, open their eyes and ears, and get their hands out of their pockets so that justice can be done.
I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate. As she knows, this has been a live issue for a considerable period of time. I spoke about it quite a lot in my first year as a Member of Parliament in 2001-02, not least because one of my constituents, Sir Gordon Downey, was a leading light in the policyholders’ group, and he made contact with me at the time. The issue seemed to die off. There was a lot of debate in the early part of the century, and then again in recent months.
Like many hon. Members, I have been sent letters from 50 or 60 constituents who are desperate to know whether the Government will implement the ombudsman’s recommendations. Some have lost many hundreds of thousands of pounds. Although other losses have been much more modest, they are, none the less, more significant because they are suffered by people living on a fixed income.
The much-delayed report was very comprehensive and made it clear that policyholders should be compensated. After the ombudsman’s rigorous investigations, she gave all the parties concerned ample opportunities to contest her findings. She concluded that the regulators were guilty on 10 separate counts of maladministration. I believe that it is incumbent on the Government to honour that conclusion, because many of the regulatory failings took place on their watch, and to set up a proper compensation scheme.
It is easy to make comparisons with what happened in relation to Northern Rock and the other £37 million bail-out. From the Government’s perspective, I can see that there is a distinction to be drawn between depositors in banks and policyholders in organisations such as Equitable Life. Although I am not suggesting that the two are entirely comparable, I hope that the Minister will have some sympathy with the plight of Equitable Life policyholders. As the hon. Member for Leeds, North-West (Greg Mulholland) said, the matter would have been treated somewhat differently had it not been for the fact that the pensioners are regarded as mainly a middle class and relatively affluent contingent. I accept that depositors in banks should be treated differently, but what is unacceptable, as the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) pointed out, is the Government’s delay in making any decisions in relation to policyholders. Many are dying while waiting for resolution of this sad affair.
I have made my position on the matter clear to the shadow Chancellor. I asked that my party maintains its support for compensation should it be elected to Government. He responded by saying that he has called on the Government to admit their responsibility, issue the apology for which many have called and ensure that a payment scheme is created, which is what the ombudsman has demanded. My hon. Friend also stated that if the Government do not do that, a Conservative Government will do so as a matter of priority.
That is one of the most significant and helpful comments that has been made during this debate—that an incoming Conservative Government will do the business that the Government seem so reluctant to do.
I hope that I have made the point forcefully enough, but it has been reinforced by my hon. Friend.
I shall touch briefly on some of the heartfelt comments from one or two of my constituents. Mr. MacDermott of Motcomb street in Belgravia said:
“I cannot claim poverty but I can safely say that at 77, 1 might well have been happily retired rather than continuing working so as to provide for my wife and two university-aged children.”
Mr. Ronald Moss of Westbourne terrace in Bayswater said that he retired in 1996. In the following financial year, his gross monthly retirement income from Equitable Life was £413.82. Exactly 10 years later, the amount had dropped to £194.83, and that was an overwhelmingly large element of the money on which he lived. He is receiving 50 per cent. less in this decade at a time when the standard of living is rising by about 3 per cent. a year.
Mrs. Valerie Walsh of Bedfordbury in Covent Garden said:
“If I had received my full pension pot I would not now be struggling just about the poverty line.”
Because she earns that relatively modest amount it is impossible for her to claim any of the housing help and benefits that are available to lots of pensioners.
Mrs. Monica Harkin of Vincent square said that she left the Foreign Office in her mid-40s and was persuaded to transfer a civil service pension to Equitable Life, not in the expectation of a huge pension pot at the end of her 41-year working life but simply because it was a safe and well-run organisation. It has turned out to be a foolish decision. In addition to the pension, she invested a large amount in the society. Her combined losses, which became apparent at the point of her retirement, were astronomical.
I could mention a number of other constituents, but I know that other hon. Members want to speak. Most of the people who have lost out—those who are still alive because many have died during the squabbling—do not have the option of returning to the workplace to make their way in life. They are often in their 60s, 70s or 80s and the Equitable Life money was the most important part of what should have been a relatively relaxed and quiet retirement.
I hope that the Government will consider the issue as a matter of urgency. Figures have been bandied around—a £4.5 billion package has been mentioned. Most Equitable Life policyholders to whom I have spoken are quite realistic about the numbers. They do not expect to get everything back because it is difficult to quantify. None the less, the fact that it is difficult to quantify, as my hon. Friend the Member for Rugby and Kenilworth (Jeremy Wright) pointed out, should not mean that there is no opportunity whatever to obtain some compensation, which is urgently required by many of our constituents.
I have come to the end of the list of the hon. and right hon. Members who requested to speak in the debate. Thanks to their brevity, I am minded to take Front Bench speeches at about 12 o’clock. We have room for one or two brief contributions from Members who want to speak but did not put in a letter.
I had no intention of speaking this morning, but I want to put on record some of the elements of this case that have been brought to my attention both by the ombudsman herself and by the Treasury. First, however, I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on obtaining this important debate.
Of course, in discussing the matter, we must also reflect on what else is happening in Government where compensation is the nature of the beast. During the past few years, other eloquent cases for compensation have been made for people who felt aggrieved. I shall mention only one: Farepak. I know that my hon. Friend the Member for North Ayrshire and Arran (Ms Clark) has capably put that case to the House. If every instance of a problem in the private sector were to be relieved by Government compensation, I do not know what risk would be left in the private sector—it would be a big problem for compensation to be almost automatic in the event of the failure of a firm.
The hon. Gentleman says that there cannot be compensation in relation to all companies. However, why are the Government compensating people who have deposited in foreign banks in Iceland, but not those who have invested in a reputable British pensions company, such as Equitable Life?
I have every sympathy with the people affected. Constituents have been to see me and, of course, I have great sympathy with their cases. However, I have to say to the hon. Gentleman that there is, or should be, a calculated risk on the part of any individual who invests their money—particularly, in relation to certain cases that have come to my attention where members have invested on the basis that additional interest rates would be paid because of the calculated risk that they took. People have to accept that and, in the main, they do. Those who are reasonable and have been to see me about the subject seem to have had a fairly clear idea of what they were after. Lots of people realised that they were taking a risk when they made the investment.
I have the following questions for the Minister. When did the matter first come to the Government’s attention? Was it in 1997 or were they aware of it before then? In a letter to me from the ombudsman, she says that she was investigating the matter before December 2001, so it seems that the issue has been going on for some time. What was the role of the Financial Services Authority? As far as this and other issues are concerned, was it not the Government who introduced the FSA and were responsible for the introduction of the ombudsman service itself? I am sure that justice must be seen to be done, but people are aggrieved about what has happened.
Does the hon. Gentleman agree that it is not just about justice being seen to be done but about justice actually being done?
I say what I say. As far as I am concerned, it is a case of justice being seen to be done and that has to be addressed by the Government themselves.
I have one more point for the Minister. I have a letter from the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Burnley (Kitty Ussher), who was at the time a Treasury Minister. In the letter, she states that the length and complexity of the matter means that the Government will need to consider the report carefully during the summer,
“before giving its response to the House in the autumn”.
The autumn is gone; we need a response soon.
I am grateful to the hon. Member for Central Ayrshire (Mr. Donohoe) for being so brief. I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on her speech. She spoke of a cynical tactic of delay and a siege mentality. That is exactly what we have experienced from the Government. The parliamentary ombudsman herself described it as “iniquitous and unfair” that the Government failed to establish one single good inquiry in 2001. I would like to add some detail to the shocking litany of obstruction that I personally encountered when I was shadow Paymaster General and tried to deal with the issue.
One of the key strategies was, of course, to hold inquiries with restrictive terms of reference—for example, the Penrose inquiry. Unfortunately for the Government, the Penrose report found serious failings by the regulators and serious maladministration.
Another crucial obstacle put in the way of getting to the truth was the attempt to prevent the report we are discussing from ever being published. It is important that the public are reminded that the Government argued that the ombudsman had no statutory authority to investigate the regulatory failure and maladministration found in the Penrose report. That was because the Government Actuary’s Department was not listed as one of the departments for which the ombudsman had oversight. I was surprised by that so, in spring 2004, I consulted the Parliamentary Commissioner Act 1967.
I discovered that the Government could amend the Act by a negative resolution of the House to incorporate the Government Actuary’s Department—in fact, they could do it by a flick of a pen. I immediately wrote to the then Minister, the right hon. Member for Bolton, West (Ruth Kelly) and asked her to do so. I also checked out the matter with the parliamentary ombudsman and went to see her to discuss it. In fact, I went with the hon. Member for North Norfolk (Norman Lamb) and I thank him for his assistance in thinking the matter through.
I received a reply from the right hon. Lady that there would be no point in amending the 1967 Act—I challenged her on that in the House—because the ombudsman could not act retrospectively. My suggestion would, of course, involve retrospection. I found that curious, so I went back to the 1967 Act where I found another clause that permits retrospective investigation by the ombudsman. I raised the matter for a second time on the Floor of the House. Of course, I got a nil return. I am sorry that I have so little time to talk about this, but I would like to thank the hon. Member for Bolton, South-East (Dr. Iddon), I think—[Interruption.] No, I am sorry. It is the hon. Member for Norwich, North (Dr. Gibson).
The hon. Gentleman needs to put some different glasses on.
I have another pair, but I do not think they will be any help. I particularly thank the hon. Member for Norwich somewhere or other, who helped me to produce an early-day motion. I also thank the hon. Member for Twickenham (Dr. Cable) who is not in the Chamber today and my right hon. Friend the Member for West Dorset (Mr. Letwin) who is—I think I managed to get those constituencies right. I also thank the campaigners for EMAG—the Equitable Members Action Group—and the other pressure groups that have helped enormously. As a result of all that pressure, we were finally able to get the Government to concede and make an amendment to the 1967 Act in relation to inquiries by the parliamentary ombudsman. That is why we have the report we are discussing today.
I acknowledge that the Minister has an unenviable job. He will have to try to justify the unjustifiable—the accumulated detritus left by the previous holders of his job. I understand the difficulty of his position, but I strongly urge him to accept the need for compensation in principle as soon as possible. In particular, I urge him to take account of the plight of the late joiners, who were relying on assurances from the Government and their agencies that Equitable’s finances were okay and that Equitable was sustainable. They joined the organisation at a time when everybody should have known that Equitable was, in fact, in a parlous state. While the Government were giving those assurances, the Government Actuary’s Department was asleep on the job. The report makes that perfectly clear—asleep on the job just about fits the bill for the scale of the maladministration. We cannot go on like this; we must provide a reasonable level of compensation for those who have been so grievously hit. It is iniquitous that we have had to wait since 2001 to get as far as having the report.
I congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Field) on his excellent speech and his description of the sense of realism that informs so many of the letters we have received. That, too, should be borne in mind by the Minister. People accept that they will not receive full compensation, but they now need—
Will the hon. Gentleman give way?
I hope that the hon. Lady will accept that I cannot give way because I do not have time.
Will the Minister at least accept that we need some compensation, even if it is not full compensation, for the many tens of thousands of people who have been so badly hit by this maladministration?
[Ann Winterton in the Chair]
I congratulate my hon. Friend the Member for East Dunbartonshire (Jo Swinson) not only on securing the debate, but on the masterful way in which she put her case on behalf of many hon. Members from all parties who had the opportunity to hear her speak. However, it is shameful that it took a Liberal Democrat MP to secure the opportunity for us to make the case in a debate on behalf of our constituents, rather than the Government making time available in the main Chamber. As a constituency MP—I know this is true of every MP in the Chamber—I have received dozens and dozens of letters from constituents who are extremely distressed by the circumstances in which they find themselves, and dismayed that the Government have dragged their feet and been unwilling to show greater resolve.
It is worth remembering that it was due to failure of the management of Equitable Life that the company was allowed to get into the position that it did, but it is also right to say that regulatory failure allowed that to happen unhindered by the Government. The Government, through the Department of Trade and Industry, the Financial Services Authority and the Government Actuary’s Department, had responsibility for ensuring that the company acted properly and prudently. As has been said, there have been 13 reports on the failure of Equitable Life, all of which concluded that the company was not performing satisfactorily in the interests of those who were depositing money with it.
The hon. Gentleman will be aware that the parliamentary ombudsman described the regulators as “passive, reactive, and complacent”. Does he agree that one lesson that has to be learned from what has happened in this case and much else that we have seen in the financial sector in recent times is that we need far stronger regulation—indeed, we need a culture such that regulators have the confidence to intervene?
I take that point. In a way, the case was a dark sign of further regulatory failures to come. The hon. Lady leads me neatly on to the report, which has already been widely discussed, by Ann Abraham, the parliamentary ombudsman. As we were reminded, she entitled her report “Equitable Life: a decade of regulatory failure”. One almost does not need to go any further than the executive summary in the title of the report, because it tells us all we need to know. The hon. Lady said that the DTI’s oversight of Equitable Life had been described as “passive, reactive, and complacent”. The ombudsman said that the Government’s restrictions on earlier inquiries were “iniquitous and unfair” and that the FSA’s regulatory efforts had been
“largely ineffective and often inappropriate”,
and that there was a “justifiable sense of outrage” among policyholders that compensation had not been forthcoming.
Ann Abraham spoke recently before the Select Committee on Public Administration. If you will forgive me, Lady Winterton, I shall give a slightly longer quote. When giving evidence on 30 October, she said—this gets to the nub of the issue—
“The regulators were on the bank watching this pleasure steamer sailing over the edge or towards the edge of Niagara Falls. All of the information was there in front of them, and they could even see this boat taking on more passengers”—
that point was made by the hon. Member for Chichester (Mr. Tyrie)—
“But it was heading for disaster. But somehow, there was a sense, because it was Equitable, they were somehow going to do a miraculous U-turn. There was a sense that this was Equitable and it could not go down.”
Of course, that confidence proved not to be justified. It is an important point that savers were led to believe that they were investing their money in a reputable and safe institution. Some people, including an hon. Member who spoke earlier, might say that they should not have come to that conclusion. Nevertheless, people felt that they were investing their money in a reputable and safe institution, so their shock was all the greater when they found that was not the case.
The Equitable Life fiasco was caused by systemic failures before 1997—it is worth pointing out that there were failures for many years before the difficulty became apparent—but also by political failures since 2000. The behaviour of the Government in delaying taking action has been unacceptable. They must admit their regulatory failures and start to explain how they will negotiate with policyholders. The Minister has a perfect opportunity to do so in today’s debate. The Government have refused to redress the losses on the grounds that they cannot underwrite every company, but policyholders have lost out because of the Government’s failure properly to regulate Equitable Life’s undertakings. I accept that the company should shoulder some of the blame, as should the individuals responsible, but there is no point in having a regulatory system if it fails in its core task of regulating. There must be some accountability if the regulators do not discharge their duties properly.
The hon. Gentleman is now at the nub of the issue. Does he agree that there is a difference in kind between a structural problem with regulation and a case in which regulators know that the thing is going wrong and do not take the steps required to remedy it? Is it not the second case that we are dealing with?
I am grateful to the right hon. Gentleman for that extremely helpful intervention. Both the former case, which is less malign but still points to inadequacy on the part of those doing the regulation, and the latter are much to be regretted, and it is worth the Government acting on both, but that is particularly the case if the regulator knows that the situation is worsening, yet people are still allowed to put their money into the organisation. In that case, there is a greater moral failure as well as a regulatory failure.
Equitable Life was seen by our constituents and people throughout the country as a low-risk organisation. It has already been said that the Government have bailed out Northern Rock and Icesave—an organisation that was far more reckless in its practices, or appeared to be to the public who were putting money in, and appeared to be a much higher risk. Equitable Life, however, was largely invested in by people who were instinctively rather cautious. One might say that they typically represented the prudent values of middle England savers and therefore were seeking not to make a quick buck, but to find a refuge for their life savings.
Is there not another interesting distinction in respect of the Icelandic banks? I do not think that anyone is suggesting that the British Government had any culpability in the case of the Icelandic banks, yet compensation is apparently payable, but in this case, where the culpability of the regulators and the Government has been clearly shown by the ombudsman, they are reluctant to provide compensation.
My hon. Friend makes a brilliant point. It is wholly irrational for the Government to go down the path of compensating depositors with the Icelandic banks but not those who invested in Equitable Life. If the Government refuse to do that, a judicial review sought by the Equitable Members Action Group—during the debate we have heard much praise for its work—will cost the taxpayer much more.
I agree with the point that was made strongly by my hon. Friend the Member for East Dunbartonshire. The Government have shown bad faith again because although they promised to bring this matter before the House and bring it to a head in the autumn, here we are on 25 November—a month from Christmas—and there is no action at all. Had my hon. Friend not secured this debate, we would not have the opportunity to have the Minister before us today.
It is critical that the Government set out a credible, transparent and independent process to enter into dialogue with policyholders about compensation, and ensure that the ombudsman’s credibility is not undermined and that her role is strengthened, rather than becoming entirely redundant. The Government have already ignored the ombudsman’s reports on tax credits and occupational pensions, so this is my concluding big point: if the Government continue to behave in that way, it will surely have the consequence—unintended perhaps—of deterring people from investing their money in saving schemes for their retirement. It cannot be in our collective interest that people become increasingly reliant on state pension contributions because they do not trust private investments, due to their lack of trust in the regulatory system that underpins them. There is a wider interest for the Government in trying to ensure that people have confidence when saving for their retirement, but there is a more precise moral obligation on the Government to act on behalf of all those who lost money through Equitable Life, through no fault of their own.
I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate. She clearly set out the case, which has been made time and again, why the regulators let down policyholders in Equitable Life. I also congratulate all the other hon. Members who have taken part in the debate. I particularly mention my hon. Friend the Member for Chichester (Mr. Tyrie); without his hard work and investigation, we would not have an ombudsman’s report to debate.
Forcing the Government to accept that the Government Actuary’s Department should be included among the bodies that can be investigated by the ombudsman, and ensuring that the remit was retrospective, gave the ombudsman the opportunity to publish a critical, damning and well-thought-through report. The report offers my constituents and those of other hon. Members the justice that they have been seeking for so long; the recognition that they have suffered loss because of regulatory failure; and, above all, closure—that this long-running saga can at last be brought to a close.
In the four months that have passed since the Minister received the ombudsman’s report, we have had not one word from the Government in response. In the meantime, the Government have proved their ability to move quickly. For instance, others have mentioned the speed with which the Government acted to protect savers in Icelandic banks. However, when it comes to discussing the ombudsman’s report and tackling the problems of Equitable Life, they have been sitting on their hands.
That lack of response implies a desire by the Government to wriggle out of compensating policyholders for what the ombudsman described as a decade of regulatory failure. Why have the Government failed to respond over the last four months? They have seen the report, and were involved in the process of finalising it. They made their own submissions to the ombudsman over the years, yet they still have not reached a conclusion on how to respond to her findings.
It is time for the Government to respond to the report, to make the apology recommended by the ombudsman and to make payments to policyholders that reflect their losses. They may try to wriggle out of doing so, and they may use Lord Penrose’s words and say that Equitable Life was the author of its own misfortunes; but for a decade regulators failed to follow up the warning signs, and their failure to act resulted in opportunities being missed to force management to act properly and avoid the losses suffered by policyholders.
In his report, Lord Penrose was critical of the regulators as well as of Equitable Life. In chapter 19 of his report, he said:
“There was a general failure on the part of the regulators and GAD to follow up issues that arose in the course of their regulation of the Society, and to mount effective challenge of the management.”
In chapter 16, he wrote:
“The Treasury remained wholly passive, depending on GAD to initiate any action required...It is difficult to avoid the view that regulation was falling between two stools, the major player in discussions having no regulatory power, and the empowered regulator having little part in the processes that would have instructed regulatory action.”
In chapter 17, he stated:
“If GAD or FSA had considered that Headdon’s take-up rates could not be justified, one might reasonably have expected discussions before the Society submitted its return. It is difficult to identify good reason for inaction, possibly in the hope that the Society would have changed its mind by the time of the return.”
Those three extracts from the Penrose report demonstrate the failure of the regulators to deal with Equitable Life.
The failings found by Lord Penrose flow through to the ombudsman’s findings. She found 10 counts of maladministration. They included the regulator’s failure to challenge the fact that the same person occupied the roles of chief executive and appointed actuary, the lack of effective scrutiny by the GAD and the fact that the FSA failed to act on behalf of the Treasury from 1998, both before and after the House of Lords decision.
There can be no doubt that if the regulators had performed their role properly during that period, they would have protected policyholders from a management team that put the society and its members at risk. The regulators repeatedly failed to use the information they had to challenge Equitable’s management, and each time they failed to challenge management was an opportunity missed. I give one example from the ombudsman’s report.
The ombudsman’s fourth finding was that the GAD did not question or seek to resolve questions within the society’s regulatory returns for each year from 1994 to 1996 relating to four areas. She said:
“One consequence of this failure was that an early opportunity was lost to address the issue of the Society’s practice as to reserving for guaranteed annuity rates. Another consequence was that the Society’s liabilities were considerably understated.”
Understating liabilities and inadequate reserves presented the society in a better light than was appropriate. Instead of ringing the alarm bell, the regulators sat back and let policyholders suffer. That was only one of the many occasions when the regulators could have acted and prevented policyholders from suffering loss.
Having found maladministration and that policyholders had lost as a result, the ombudsman recommended compensation. There is no quick fix to determine how much compensation should be paid, but we accept that because of the maladministration payments should be made. We need to assess the scale of individual losses, but the Government need to move quickly. As we heard earlier, many investors are elderly and we should seek to reach a settlement sooner rather than later, so that they can see that justice has been done.
We also need to recognise that not all the losses suffered by policyholders were due to regulatory failure. At the time of the write-down in policy values in July 2001, other companies were cutting bonus rates because of poor market conditions, so payments should be made to reflect the relative loss that people suffered. As the ombudsman recognised, it is vital that payments made under the scheme should take into account the state of public finances. Although they have deteriorated sharply since she reported four months ago, the financial position of many Equitable Life policyholders will have deteriorated further.
I could go on for longer, but as this is the first opportunity for the Minister to respond to the House on the ombudsman’s report, I shall conclude. There is only one step that the Minister has to take today. He has to admit responsibility for the failure, issue the apology demanded by the ombudsman and create the payment scheme that she called for in her report. If the Government fail to do that, we will do it when we are the Government.
I congratulate the hon. Member for East Dunbartonshire (Jo Swinson) on securing the debate. I know from my postbag that the events at Equitable Life are of concern to the constituents of many Members. Indeed, the fact that 30 Members of Parliament have attended today’s debate clearly demonstrates the strength of feeling about the issue and its importance.
I do not propose to discuss the situation prior to the issuing of the ombudsman’s report, or the criticisms made by some hon. Members that the Government have acted in bad faith or have been dragging their heels—other than entirely to reject those accusations and say that such comments are unfair and uncharitable. However, I shall say something about the period since the ombudsman reported.
I shall summarise the background to the debate. Equitable Life is well known to many Members. Established in 1762 as the world’s first mutual life assurance society, it was a major player in the developing market for personal pension and additional voluntary contribution plans during the 1980s and 1990s. The society’s products were principally based on its with-profits fund.
Will the Minister cut out the guff and get to the point? When will the Government respond to the ombudsman’s report?
As I shall explain in a few moments, the Government will shortly respond fully to the ombudsman’s report.
From the late 1950s until June 1988, Equitable Life sold significant volumes of with-profits policies that included a guaranteed annuity rate. Those policies provided a fixed rate at which the policyholder was entitled to purchase an annuity on the maturity of his or her policy. After that date, all policies were sold without the GAR. During the 1990s, the GAR became increasingly attractive as the income that would be available from an annuity purchased in the market fell, for the first time, below the guaranteed rate, with resulting financial implications for Equitable Life.
Equitable Life’s policy of reducing terminal bonus payments to policyholders who exercised those valuable guarantees when purchasing their annuities was tested in the courts as a result of a growing number of complaints from policyholders. In July 2000, the House of Lords found the practice unlawful. In order to meet an estimated liability of £1.5 billion resulting from the judgment, the society decided that it was in the best interests of members to seek a purchaser. Following Equitable Life’s failure to find a buyer, the board of the society announced in December 2000 that the only realistic option open to it was to stop writing new business. The focus of policyholders’ concerns has been whether Equitable Life’s closure to new business could have been prevented.
Instead of reading out a summary of what we all know happened—it can found in the Penrose report, ministerial speeches over the years and, in more detail, in the ombudsman’s report—will the Minister get to the point? Perhaps he could read out the last page of his brief and tell us when the Government will respond to the report.
The hon. Gentleman has been very active in this matter, but it is right to set out the context. [Hon. Members: “We know the context.”] I assure hon. Members that I shall not dwell on it unduly.
Lord Penrose’s investigation, published in March 2004, concluded that Equitable Life’s own actions ultimately precipitated its financial difficulties in the summer of 2000. Lord Penrose also found regulatory system failures, but concluded that they were secondary. The parliamentary ombudsman’s second investigation into the regulation of Equitable Life’s with-profits fund, under the Insurance Companies Act 1982 regime, looked exclusively at the role of the prudential regulator and the Government Actuary’s Department. Given that the remit of the parliamentary ombudsman, set out in law, is limited to the investigation—
On a point of order, Lady Winterton. When a Minister continues to repeat previous ministerial speeches and puts on the record matters that are already on the record, at what point do his remarks become repetitious and out of order?
The hon. Gentleman has served in the House for a long time and knows perfectly well that that is not a matter for the Chair.
Thank you, Lady Winterton. It ill behoves the hon. Gentleman, who has only just entered the debate, to make spurious points of order.
Let me return to the point. [Hon. Members: “Get on with it.”] In July, the ombudsman published a substantial report that was the culmination of her four-year investigation, as we heard from hon. Members. I fully understand why, after such a lengthy investigation, Equitable Life policyholders, and Members, are keen to know the Government’s response.
We are particularly keen because the Government said that they would tell people by the autumn. We are well passed autumn, so when will the Government respond?
I shall explain, if the hon. Lady will allow me. She will know that I have been Economic Secretary since September, but the ombudsman produced her report in July, and we have been considering it since then.
For the record, will the Minister confirm whether he had discussions with the Chancellor on Equitable Life, and whether he asked the Chancellor to address the issue in yesterday’s pre-Budget report?
I have had discussions with the Chancellor on Equitable Life and on when we could make a statement in the House. Hopefully, I or the Chief Secretary will make one shortly.
Hon. Members will appreciate the significant factual and technical complexity of the issues investigated by the ombudsman and of the details of her 10 findings. As the House would expect, it has been necessary for the Government to take time to consider the report in detail. Instead of making partisan political points, the Government should get the detail right and respond in a mature and thorough way, which is what we plan to do.
I hope the Government will respond expeditiously. What does the Minister think are the costs to which other parties have committed themselves in order to compensate Equitable Life policyholders?
My hon. Friend makes a good point. I have not made an estimate of the Conservative party’s or Liberal Democrats’ positions. I have been trying to focus on how we can reach a decision on all the findings in the ombudsman’s report and produce a statement to the House.
Has the Minister instructed his officials to assess possible compensation payable to Equitable Life policyholders? Part of his final decision, which he will eventually put before the House, will depend on those figures and the Chancellor’s agreement. Has he done that investigation?
The hon. Gentleman will be aware that it is not Government practice to provide a running commentary on policy discussions with officials.
I have heard calls today for the Government to accept the ombudsman’s recommendations, including her central recommendation that the Government should establish and fund a compensation scheme with the aim of restoring policyholders who suffered a relative loss to the position in which they would have been, had the maladministration that she found not occurred. In considering those recommendations, the Government must weigh in the balance the interests of policyholders and taxpayers generally. However, hon. Members will appreciate that, until a decision is announced, I can say little more about the detail of the Government’s response, although it has been helpful to hear today the strength of feeling among them.
I mean no disrespect to the Minister. I mentioned in my speech what a difficult task he had on his hands replying to a debate on a policy for which he no doubt had no direct responsibility. However, does he not understand that making the kind of speech that he is making, with such blatant and continual obfuscation, tarnishes the respect for politics, politicians and the way we conduct our business in this place? That cannot carry on. He must at least agree to write to us, within a week, with the date on which we will receive the Government’s response.
I have great respect for the hon. Gentleman, and I hope that he appreciates that neither the Government, nor I today, have been guilty of obfuscation. I am trying to reach a position whereby we can shortly make a ministerial statement to both Houses. It is right that we respond, and we said that we wanted to do so by the autumn. I appreciate that we are getting close to the end of autumn, but we will make the statement very soon. I am sure that hon. Members will want to attend and to ask questions of the Government when we announce details of our full response to the ombudsman.
Serious Organised Crime Agency
I thank you, Mrs. Winterton, for the opportunity to discuss the information-sharing gateways of the Serious Organised Crime Agency and, in particular, the rights that attach to it following the transfer of some of the functions of the Assets Recovery Agency, which was wound up in April.
A wider debate on the general performance information available on SOCA and the ability of the House to scrutinise its activities effectively will be necessary at some point. There was a suggestion that the Select Committee on Home Affairs would conduct an inquiry into SOCA, but that has not yet come to fruition. My general concerns are the opaqueness of SOCA’s activities and the assessment of its performance, but such a wider debate is for another day, and for the whole House because of its seriousness, and I do not intend to stray into it in this debate. Rather, I have an opportunity to discuss the narrower, more technical matter of the information-sharing requirements that were placed on SOCA following the transfer of powers from the ARA earlier this year.
At the outset, I thank the Minister for the constructive way in which he has sought to address some of the points that I will discuss. I am grateful for the steps that he has sought to take, although, unfortunately, it has proved necessary to introduce an Adjournment debate properly to explore the things that need to be considered.
On 11 January 2007, the then Home Secretary announced the transfer of the asset recovery functions of the ARA to SOCA, with the training functions going to the National Policing Improvement Agency, with effect from 1 April 2008. That announcement preceded a highly critical report of the performance of the ARA by the National Audit Office in February 2007. The report made a number of recommendations on the functions of the ARA that the NAO said would be applicable to the successor bodies that took over its functions. The report included significant criticism of the case management database, which the NAO described as “poor”. The NAO stated:
“We had great difficulty in compiling a comprehensive list of cases and tracking their value and progress”.
The NAO said that the ARA had collected £23 million against cumulative costs of £65 million.
As I have said, the transfer of the asset recovery functions of the ARA to SOCA was effective on 1 April 2008. The measure was implemented by the Serious Crime Act 2007. In conducting its work, the ARA used information gateways for information that was disclosed to it by partner agencies to enable it to conduct its duties and to fulfil its responsibilities, and there were gateways that authorised the ARA to disclose specified information that it had obtained to certain other agencies.
The transfer of those powers was not addressed directly in the 2007 Act. Nearly two months after the transfer of the functions, the Government introduced secondary legislation to address the gap. Those measures—the draft Serious Organised Crime and Police Act 2005 (Disclosure of Information by SOCA) Order 2008, and the draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2008—were considered in Committee on 24 June 2008. The explanatory notes to those orders stated:
“It is the policy that those undertaking civil recovery functions shall have the same provisions applying to them as…ARA”.
That point was reaffirmed in the other place when their lordships considered the orders. Lord West stated:
“The orders merely ensure that organisations which inherited the Assets Recovery Agency’s work and functions can access the same information sources that were available to the agency and can disclose the same information onwards.”—[Official Report, House of Lords, 17 June 2008; Vol. 702, c. GC371.]
In Committee on 24 June, the point was reiterated by the Minister, who said:
“So, the orders ensure that SOCA and others that inherit the civil recovery functions have the same information gateways as were available to the Assets Recovery Agency. There is no change in policy. The orders are not giving SOCA or any other agency powers or functions that were not previously available to the Assets Recovery Agency.”––[Official Report, Fifth Delegated Legislation Committee, 24 June 2008; c. 4.]
During the consideration of the two orders, I highlighted the fact that one of the orders went beyond the rights that had been enjoyed by the ARA. The inbound order—it permitted information to be disclosed to SOCA—was limited to conducting asset recovery functions. However, the general outbound disclosure provision, meaning the provision on disclosure by SOCA to certain specified third parties, was not limited specifically to asset recovery functions, but applied generally to SOCA functions. I made that point in Committee and the Minister kindly said that he would look at the matter, as he has done previously when technical problems have been highlighted, and investigate whether the explanatory notes or statements on the statutory order were correct.
On my review and interpretation of the orders, there was an extension, and the approach was wider than asset recovery functions. The Minister e-mailed me 16 July 2008:
“The intention when the Assets Recovery Agency…was abolished and certain of its functions were inherited by SOCA was that SOCA should also inherit the same powers, including powers to disclose information. The Order’s operation goes beyond the narrow policy intention.”
“I do not want SOCA to lose an information sharing provision unless there are reasonable counter-arguments. I am therefore content for the gateway provisions to have their broad application, although I accept that this goes beyond the original stated policy intention.”
I countered by saying that although I understood the Minister’s points, I felt that our considerations, including statements and explanatory notes, did not adequately set out what the provisions actually achieved. I felt that the House should have that corrected and that a restatement should be made. The Minister made some reasonable points on whether SOCA should have general information gateways to disclose certain pieces of information on prevention of harm and financial crimes to other agencies to investigate, but I wanted people to have the opportunity to decide whether that was appropriate.
The point is that the situation was not as was stated. I therefore replied to the Minister on 22 July pointing out that that approach was not the way forward, that further consideration was appropriate and that one of the orders appeared to limit and restrict rights to asset recovery whereas the other did not. The Minister kindly took on board my points and said that he would revoke the order. He commented:
“These gateways, I am sure you will agree, are important for the fight against serious organised crime. In order to address your concerns we shall be laying a new Order revoking the existing one so as to allow for a full explanation and debate on the effect of the statutory instrument.”
The Minister, whom I entirely respect, was true to his word and tried to do that, so that we could have the debate. However, having tried to go down that route he was, I believe, advised—as I am sure that he will explain to the House today—that unfortunately, for various technical and procedural reasons, it was not possible to do so, and that the best means of debating the issue and putting it on record and correcting in some ways what had been said before was an Adjournment debate. That is why I am using the House’s time to correct some of what has been said and to achieve clarity. I do not believe that there was an intention to give a false impression or not to state the ambit and operation of the orders correctly. However, as a consequence of the statements and explanatory notes, an impression may have been given—I believe it was given—that the outbound order was more limited than it was.
The issues that we are debating are technical and procedural. It is important that SOCA should have the right powers to do its job effectively. Will the Minister explain how he believes the extension in question will help it with its activities, through the information gateway that the two orders provide? How has the power been used to date? Prior to June it did not exist. The Minister explained to me in a further letter of 6 October 2008 that
“SOCA did not specifically request an extension of their general gateways to cover onward disclosure in respect of protecting public health and the functions of the Financial Services Authority under the Financial Services and Markets Act 2000.”
However, he said that he believed that it would be
“inconsistent...to have different...gateways for different purposes”,
albeit that, as I have said, the inbound information gateway has that slight distinction.
Before I finish, there are a few more general points, one of which concerns the measurement of performance. During consideration by the Public Accounts Committee of the National Audit Office report, on 7 March 2007, the hon. Member for Tooting (Mr. Khan) now the Under-Secretary of State for Communities and Local Government, asked the Comptroller and Auditor General:
“Can you reassure us that when your unit”—
“is merged with SOCA and the other units, we will still be able to assess for example whether the costs spent on this unit exceed or is less than the assets recovered? Will we still be able to do that exercise?”
He followed that up with:
“One of the criteria of the PAC, and I know it is a crude one, to assess value for money is whether the cost spent exceeds the amount of assets recovered. When this unit merges, will you still be able to do that task?”
Sir John Bourn, the Comptroller and Auditor General, answered:
“Yes. It should have a proper system of management accounts which will provide that information and we shall see that it does have.”
I have recently received a parliamentary answer from the Under-Secretary of State for the Home Department, the hon. Member for Tynemouth (Mr. Campbell):
“Information on the application of civil recovery and taxation powers under the Proceeds of Crime Act 2002 will be published by the Serious Organised Crime Agency as part of its annual report. The presentation of this data will be aligned with SOCA’s reporting on its existing asset recovery powers and as such will not make use of older formats. SOCA has not inherited all of the Asset Recovery Agency’s asset recovery powers and, unlike ARA, SOCA will not be the sole agency exercising civil recovery powers. Any like-for-like comparisons with ARA’s past achievements will therefore be inhibited.”—[Official Report, 10 November 2008; Vol. 482, c. 810W.]
I take what is said in that answer, but the question remains whether there will be a level of transparency that allows an assessment of costs recovered and spent.
The National Audit Office raised certain recommendations, as I said previously, with recommendation (b) requiring that the case management system be developed. The NAO commented:
“Once this is established, the Agency should use the data collected to help inform case selection and prioritisation and to review its performance measurement regime so that it incorporates targets that are measurable, challenging and achievable, such as reducing the cost and time per case.”
A further parliamentary answer from the Under-Secretary confirmed:
“SOCA has implemented Recommendations (a) to (d) of the NAO report.”
On recommendation (b) he added:
“SOCA has case management systems in place which contain all relevant management information.”—[Official Report, 10 November 2008; Vol. 482, c. 811W.]
My question to the Minister today is not simply whether the case management is in place, but equally whether what are described as “measurable, challenging and achievable” performance measurements are equally in place and will be published so that there can be appropriate scrutiny.
A general issue of disclosure arises. I have covered some quite narrow issues in relation to the disclosure gateways, but I note from a statement yesterday from the Ministry of Justice that that Department proposes to
“confer a power upon the Secretary of State to permit or require the sharing of personal information between particular specified persons, where a robust case for doing so exists.”—[Official Report, 24 November 2008; Vol. 483, c. 39WS.]
On my reading, that announcement would appear to apply a very general and broad-brush approach to data sharing. Will the Minister clarify whether he has had any discussions with his colleagues in the Ministry of Justice about the application of what appear to be quite wide-ranging powers to SOCA or any other agencies, given that data sharing needs to be tightly defined for specific purposes?
I am most grateful to my hon. Friend the Member for Hornchurch (James Brokenshire) for giving me a minute or two on SOCA. The question in his excellent speech was the release of information, but my concern is that there is no information to release in many cases.
In answer to a question that I tabled, the Minister said:
“The Home Secretary’s priorities for SOCA in its first year included that SOCA should devote a higher proportion of its resources and activity to intelligence work than the agencies that it replaced and that Class A drugs and organised immigration crime, in that order, should be its top priorities. Organised immigration crime covers both the organised facilitation of immigrants to the UK (people smuggling) and trafficking of people for criminal exploitation, for example prostitutes or forced labour (human trafficking).”—[Official Report, 1 October 2007; Vol. 463, c. 2359W.]
Its involvement in information gathering and sharing was included in the annual report 2006-07.
In spite of that commitment, SOCA’s most recent report includes no mention of trafficking and no information about how many children are trafficked into the UK—dealing with that was one of SOCA’s original jobs. There are no statistics on human trafficking, and according to another parliamentary answer from the Minister, there is no intention to produce any more information. As for the number of trafficked victims found tending cannabis:
“Crown Prosecution Service (CPS) records do not hold information about the location in which an offence was committed.”—[Official Report, 7 February 2008; Vol. 471, c. 1372W.]
On the numbers of victims of internal human trafficking, the answer was:
“Data on trafficking victims are not yet recorded centrally.”—[Official Report, 10 June 2008; Vol. 477, c. 197W.]
In answer to the question how many children have been charged with cannabis cultivation, the response was:
“Charging data are not collected centrally”. —[Official Report, 17 June 2008; Vol. 477, c. 831W.]
It is not just a question of how to release the information, as my hon. Friend has rightly asked. Another problem is that SOCA does not have the information. Not only does it not have the information, but it has tried to bypass that fact by arguing that the UK Human Trafficking Centre in Sheffield is responsible for such matters. The Human Trafficking Centre does not have the information either, although £1.75 million will be spent this year trying to find it.
My argument is simple. I believe that SOCA has only 12 staff—it is a tiny organisation. However, if it has more staff than that, why can it not obtain the information that my hon. Friend wants, or the information that I want on human trafficking?
It is a delight to serve under your chairmanship, Mrs. Winterton, for what may be the first time. I thank the hon. Member for Hornchurch (James Brokenshire) for how he has worked with me to find a way through the matter. That shows that sometimes, when an issue arises through no particular fault, it is possible to work together to resolve it. I welcome this Adjournment debate as an opportunity to read some things into the record that I hope will be helpful to him. I thank him for his thanks to me and for his co-operation.
My right hon. Friend the Member for Leicester, East (Keith Vaz), the Chair of the Select Committee on Home Affairs, is here. I believe that the chair and the director general of SOCA have given evidence before the Committee. The hon. Member for Hornchurch asked whether they had been to the Committee, and I understand that they have.
I confirm that the chair and chief executive have been before the Select Committee. We will be calling them back to consider the issues.
That is an extremely helpful clarification. I am grateful to my right hon. Friend for making that point.
I shall make a couple of points in the few minutes available to me on the specific questions that have been raised. Notwithstanding the monetary issues that we can set against each other in determining whether the ARA did one thing or another, the importance of what it did—as well as the importance of much of the work on proceeds of crime going on in other agencies and within police forces—is that the business is new. It is an area of work that did not exist before, and in many respects, it is trailblazing. We all want it to be more successful, because we are sick of criminals gaining from their criminality, and we must therefore do more. There are many issues involved, not least of which is that many cases get stuck because of difficulties in court, which we are trying to resolve. However, important trailblazing is taking place.
The hon. Member for Hornchurch made a point about transparency, which is important and which we need to ensure. The hon. Member for Totnes (Mr. Steen) spoke about trafficking. If he is saying that he has been trying unsuccessfully to get the information and that it was not included in the annual report, I will take up the matter with SOCA to see whether I can get any additional information that might be helpful to him. I will copy the reply to you, Mrs. Winterton, to the hon. Members for Hornchurch and for Totnes and to the Chairman of the Home Affairs Committee.
I have had no discussions with the Ministry of Justice on the issue raised by the hon. Member for Totnes—frankly, I do not know what aspect of Ministry of Justice business he was referring to—but that would be subject, as always, to the Data Protection Act 1998, human rights legislation and so on. However, I have had no particular contact about that.
The Serious Organised Crime and Police Act 2005 (Disclosure of Information by SOCA) Order 2008 was introduced consequentially to the abolition of the ARA and its director. It ensured that SOCA, which took over some of the ARA’s functions under the Proceeds of Crime Act 2002, could disclose information in its possession to named bodies for the same purposes as the ARA. However, as the hon. Member for Hornchurch has highlighted, it goes further than that.
The order was subject to the affirmative procedure and was debated by the Fifth Delegated Legislation Committee on 24 June. The hon. Member for Hornchurch correctly identified during that debate that the additional provisions for the onward disclosure of information would apply to all SOCA’s functions—in other words, they were not limited to those inherited from the ARA under the amendments to the Proceeds of Crime Act 2002. As a believer in parliamentary scrutiny, I am grateful to him for discovering that, for securing that information and for bringing it before Parliament. It is an important demonstration of how the process can work, and he should be commended.
I accept that the matter was not explored fully in earlier parliamentary consideration, for which I apologise. The order was presented as providing the ability to disclose information obtained by SOCA in connection with the functions transferred from the ARA. However, during the debate, I accepted the point that the order also applies to information obtained by SOCA in connection with the exercise of any of its existing functions under sections 2 and 3 of the Serious Organised Crime and Police Act 2005, namely other matters relating to serious organised crime and information relating to crime. Accordingly, information that came into SOCA’s possession in the exercise of any of its functions can be disclosed onwards under the new provisions created by the order.
Hansard records that I agreed with the point made by the hon. Member for Hornchurch. It is on public record that I explained the full effects:
“it is not our intention to mislead the Committee on the transfer of powers to SOCA in the second order. We have extended the disclosure powers of SOCA and the directors because they have taken over powers from the ARA. The powers of SOCA will not be limited to its asset recovery functions.”—[Official Report, Fifth Standing Committee on Delegated Legislation, 24 June 2008; c. 9.]
The order adds to the designated functions for which SOCA may make a disclosure under section 33 of the Serious Organised Crime and Police Act 2005, namely for the purposes of protecting public health and for the functions of the Financial Services Authority. The hon. Member for Hornchurch asked me to clarify whether SOCA had asked for the power. To put it on record, the answer is no, but we were advised by our lawyers that we needed to ensure that SOCA had the power, which is why we introduced the order.
In subsequent correspondence with the hon. Member for Hornchurch, I offered to withdraw the order and lay another in similar terms. On further consideration, I was advised that that would not have been an appropriate use of the Committee’s valuable time, as the drafting and effect of any new order would be exactly the same as the one already made. However, I welcome the opportunity that he has provided to explain some of the effects of the order.
In my view, it is sensible and appropriate that SOCA’s disclosure of information powers should be consistent for all its functions. My officials have been in contact with SOCA and, although SOCA did not proactively request the additional purposes for which information can be disclosed, it agrees that its powers to disclose should be consistent across all the information that it holds, however that information came into its possession. That is a small further development in the tools available to fight crime.
Although SOCA did not request the additional power, if we are to put it on the same footing as the ARA for disclosing information that came into its possession in the exercise of powers under the Proceeds of Crime Act 2002, it is sensible to apply that to all its information. SOCA has also confirmed on a practical level that it would be difficult, perhaps impossible, to identify and separate which of its information was obtained under its functions under the Proceeds of Crime Act 2002 and which was obtained under its other functions. The free flow of information within SOCA makes it difficult to trace the original source, and to separate and handle information differently would impair the internal workings and operation of SOCA.
The order is sensible, proportionate and necessary. I apologise to you, Mrs. Winterton, and to the hon. Member for Hornchurch that it was not as accurate as it should have been when we first discussed it. I hope that this debate has gone some way towards putting on record what should have been said in the original Committee. I will do what I have said on finding out information for the hon. Member for Totnes. I also hope that the hon. Member for Hornchurch is satisfied.
Education Maintenance Allowance
I call Mr. Gordon Prentice, who has been successful in securing this debate.
Thank you, Mrs. Winterton. You say that I have been successful in securing this debate, but I have been somewhat overtaken by events. I raised the issue of education maintenance allowances last Wednesday with the Prime Minister, and when I put in for the debate I intended to call for the company responsible for administering EMAs to be sacked because of its incompetence. However, the Learning and Skills Council, with the approval of the Minister for Schools and Learners, has done that job for me. Nevertheless, I want to take the time available to me to talk about the lessons that might be learned from this fiasco.
Central Departments increasingly turn to the private sector and third sector partners to deliver important state services. Last year, I think the amount involved was about £79 billion, so we are talking about big business. Sometimes—too often, I think—things go wrong. Only a few months ago, we learned that the American firm ETS Europe, which lost the standard assessment tests contract, was worth £156 million over five years. The contract for delivering EMAs amounted to £80 million, so we are talking about huge sums of public money.
The EMAs are means-tested allowances of up to £30 a week paid to 16 to 19-year-olds to encourage them to stay on in education. They are really an incentive for young people to stay at college and stay in education who might otherwise go out to work because their families are not particularly well off, so the thinking behind EMAs is laudable. It was a marvellous policy initiative but unfortunately it has not been delivered well. There have been huge delays in getting the money to the students and that has had a huge impact on those young people, who rely on the EMA to pay for transport, lunches and other things that young people buy.
I congratulate my hon. Friend for raising this important issue, which has hit my constituents as it has hit his. He may be interested to know the answer to my parliamentary question about the average time it took to complete EMA applications, which is particularly important for the client group that we are talking about. The chief executive of the Learning and Skills Council wrote that the problems with EMA processing were such that the LSC could not be
“precise about the average time taken to process an application.”—[Official Report, 22 October 2008; Vol. 481, c. 464W.]
Does that not show not only that things were bad but that the LSC did not even know how bad they were? Furthermore, does my hon. Friend agree that the situation points to the need for proper monitoring and management of the successor arrangements?
Indeed, and I shall come on to that very point. That is why last Wednesday, when I put my question to the Prime Minister, I described Liberata, the company involved, as dysfunctional. It was completely dysfunctional and I will deal with that point in more detail in a moment.
I was mentioning the difficulties facing young people because of the problems. In Blackburn, just down the road from my Pendle constituency, it was reported by the BBC and others that Blackburn college had to tide over students with £10 Tesco vouchers. The National Union of Students got in touch with me to say that EMAs were so important for some students that if they did not get them this year there was a real danger that they would drop out of college completely.
The delivery failure was of galactic dimensions—it really was. We know from the Minister, who helpfully put the exchange of correspondence between himself and the LSC in the Commons Library, that 111,000 students were waiting for payments on 8 October, but that at one stage the backlog of students waiting for payments was more than 200,000; that was the figure given by Mark Haysom, the chief executive of the LSC, when he wrote to the Minister. The figure is now down to about 12,000, which is good. We can all breathe a huge sigh of relief, and I hope that the remaining 12,000 or so applications can be processed without further delay.
I am afraid that when I respond I will have to correct that figure of 12,000, so the picture is not quite as rosy as my hon. Friend thinks. I just wanted to point that out immediately, but I will correct the figure properly when I respond.
That will not affect the line of my argument at all, but we will come back to that point later.
What went wrong with the introduction of the new contract? The contract for EMAs originally went to the outsourcing company Capita in September 2004. I think that it was a five-year contract and, by all accounts, it was delivered without problems by Capita. In July 2007, the contract was re-tendered and the new contract brought together and consolidated a variety of learner programmes. It was obviously anchored by the EMA, but it also included sixth form child care, the adult learning grant, the learner support fund and so on. Those programmes were all brought together and the contract was awarded to Liberata. The LSC had commissioned a feasibility study in June 2006, which showed compatibility between the programmes that I have just mentioned. At that stage, the LSC clearly thought that the new combined programme, if I can put it that way, was deliverable.
Then everything started going pear-shaped. The problems were spotted early on. In July 2007, Liberata was awarded the new contract but later in 2007 people realised that things were not working as they should. On 19 November, the chief executive of the LSC, Mark Haysom, told the Minister:
“There have been processing and other related problems with the delivery of the helpline, assessment and payment functions for EMA since Liberata won the contract to deliver this service in July 2007.”
From the word go, therefore, the commissioner—the LSC—knew that things might not be delivered.
So there we are. The contract has gone back to Capita. The transfer of functions will take place this Friday, I believe, and Liberata will lose the revenues that it would have received from the rest of the contract. I think that the amount is about £60 million; the original contract was between £75 million and £80 million. Astonishingly, however, that dysfunctional company will not face any penalties.
I may have got this wrong, but it seems to me from reading the correspondence on the issue that the LSC is paying Liberata £4 million to transfer
“the physical IT assets and applications software”
to the new company that will be delivering EMAs, which is Capita. Instead of getting money back from the company that let down hundreds of thousands of students, the public purse is forking out an additional £4 million to make the transition easier. My friend the Minister explained that to me last week, stating that Liberata had employed
“significant numbers of additional temporary staff to deal with the backlog in applications. In doing so they have incurred extraordinary additional costs and it has been judged inappropriate to impose further additional penalties.”
That is the Government’s position, but I completely disagree. Penalty clauses are in contracts for a purpose. When a company, whether private sector, third sector or otherwise, does not deliver what it has promised, there should be penalties.
The acting chief executive of Liberata when all that was happening, Richard Webster, said that he hoped the Learning and Skills Council would not impose a £3 million penalty. He said:
“The issue really for us is, do we want to put £3 million back into improving the service or put £3 million into paying a penalty? We would like to see it going back into the service”.
Since it is no longer delivering the service, I see no reason why it cannot pay a penalty.
Even when the meltdown was occurring, Richard Webster was still talking things up as though everything was still manageable and hunky dory. On 31 October, he mused on the delays and difficulties and said:
“It’s like getting a new iPhone. The first day you get it, it takes time to get familiar with it…staff familiarity is now where it needs to be.”
That was complete moonshine. Staff familiarity was not where it was supposed to be, and I shall spend a couple of moments describing the situation in my constituency. In Nelson, the biggest town, Liberata created 100 jobs to administer the EMA. On 17 September, the Lancashire Telegraph, the big regional daily, proclaimed on its front page, “Jobs Lift-Off”—I have it with me as a visual aid. Everyone was happy that all those jobs were coming to Pendle—100 call centre jobs in Nelson. On 18 September, the chief executive of the local authority, Stephen Barnes, was quoted as saying:
“This is a fantastic example of Pendle Council working to bring more jobs to Pendle. The partnership is all about jobs and it is great to see that it is working”.
I like and respect Stephen Barnes, but he was led up the garden path like everyone else. Liberata was already delivering back-office functions for the local authority, and he and others must have thought that it could transfer that apparent competence to delivering a different programme, the EMA.
One of Liberata’s directors, Rod Haig, said:
“We are training our new staff now and already they are doing well learning their new skills…Our aim is to make as many of the jobs permanent as we can.”
That was complete baloney. Some of my constituents were recruited by Liberata and sacked five weeks later. One had been employed in white-collar jobs all his life and told me that in those five weeks, he had had four hours of training. There was no management supervision or control at all, and if people chose to, they could phone up their granny and have personal conversations in work time. They could put in for time and a half working on Saturdays or double-time working on Sundays with no supervision whatever. Papers sent in by students were strewn across the place and not properly filed away. It was an absolute disgrace.
Many people were hoodwinked into thinking that the jobs would be permanent, but when I wrote to Webster, the acting chief executive, he told me on 3 November that the jobs were always intended to be temporary and short-term. He even went on to say that the jobs were not really Liberata’s and that the people were employed by the LSC. Perhaps the Minister would like to comment on that, as it is a very strange way of going about things.
I shall say a few words about the BBC “Newsnight” programme that was transmitted last week. It was an exposé of the company, in which it was made clear by whistleblowers—former senior executives of that dysfunctional company—that Liberata knew in October or November last year that it would not be able to meet the terms of the contract.
It is not just the EMA that has suffered because of the company. We learn that earlier this year, the Financial Services Authority fined Liberata £525,000, more than 10 per cent. of its profits, because it failed to send out documentation that it should have sent to life and pension policyholders. Such sloppiness characterises much of its operations. It runs back-office functions for about 20 local authorities, although I believe it has lost the contract from Sheffield, and no wonder.
What is to be done, as Lenin would say?
Lenin or Lennon?
What happened was the very antithesis of good government. As you know, Lady Winterton, I am a member of the Public Administration Committee. We have a meeting tomorrow and an inquiry on good governance on the way, one of a number that we are running in tandem. A paper has been prepared for the Committee by the National Audit Office, and it sets out a template that we can use in various situations to see how something measures up to good government.
We need to know who was responsible for the failure and bring appropriate individuals to account. There should be an inquiry, perhaps by the relevant Select Committee, the Select Committee on Children, Schools and Families. I know that the Minister has been in touch with our colleague who chairs it, my friend the Member for Huddersfield (Mr. Sheerman). What we cannot do, or allow the LSC or anyone else to do, is let people shelter behind regulations and procedures and say, “We followed the regulations. We followed the procedures”, without acknowledging the bigger picture that the entire system was in meltdown, which should not have happened. In a reply to the shadow Secretary of State for Children, Schools and Families, a letter from the chief executive of the LSC, whom I have mentioned too often this afternoon, stated:
“The LSC carried out the procurement process in accordance with the Public Contracts Regulations 2006 using competitive dialogue. This allowed the LSC to work closely with both bidders—”
Liberata and Capita—
“over a number of months ensuring there was an understanding of requirements and potential solutions on both sides.”—[Official Report, 16 October 2008; Vol. 480, c. 1494W.]
If that happened, if people were listening and there was competitive dialogue, how on earth did we end up in the situation that we are in?
I also want to hear from the Office of Government Commerce, which apparently waved the process through. There is a gateway review to test such things, and if everything is robust and fits together, the project is waved through. That happened in this case, so we need the OGC to explain itself.
I mentioned the paper produced by the NAO. Its foreword states:
“Well designed programmes have three important characteristics: simplicity; realistic timescales; and customer focus.”
I believe that the administration of the education maintenance allowance failed on all three counts and we need to know why.
I congratulate my hon. Friend the Member for Pendle (Mr. Prentice) on securing the debate. It is an important topic that has affected many learners up and down the country. As he said, the experience has been wholly unsatisfactory.
The Government are committed to giving every young person the best possible standard of education, to bring out their talents and give them the skills for a prosperous and satisfying career. To achieve that ambition, we are committed to removing all barriers that hold people back from success. That is why we introduced the education maintenance allowance in the first place—to ensure that financial constraints are not a barrier to learning—and it has had some success.
Evaluation of the initial EMA pilots showed that the scheme led to increases in participation of 3.8 per cent. for 16-year-olds and 4.1 per cent. for 17-year-olds. That is why I am so deeply disappointed with the recent delays in getting grants out to students, and I can well understand their frustrations and the frustrations of my hon. Friend the Member for Pendle and my right hon. Friend the Member for Oxford, East (Mr. Smith).
Throughout this period, our first priority has been learners and ensuring that systems are put in place to process payments as quickly as possible. Paying the remaining grants continues to be my top priority. Since the beginning of September, I have received daily delivery statistics from the LSC, based on information provided by its contractor, Liberata. Last week, I wrote to the Chairman of the Children, Schools and Families Committee, my hon. Friend the Member for Huddersfield (Mr. Sheerman), and laid a written ministerial statement outlining progress and next steps, based on the information provided to me by the LSC, which was in turn provided to it by Liberata.
However, during the LSC’s work to migrate the contract and systems, it found that the method used by Liberata to calculate work in progress was not sufficiently accurate. I was informed yesterday evening by the LSC that the recent figure for outstanding applications provided by the LSC and cited in my letter to my hon. Friend the Member for Huddersfield dated 19 November and repeated in my written ministerial statement to the House is not correct. I am grateful for the opportunity to correct that now. A physical count by Liberata recorded approximately 26,200 applications that are in the process of being finalised as of 21 November—not 12,016, as stated in my letter to my hon. Friend the Member for Huddersfield.
That is unacceptable, but we are continuing to make progress. I am advised that 6,000 applications are being processed per day, with a net reduction of 3,000 per day. We expect the backlog of applications to be all but cleared in the next three weeks. I have written to the Chairman of the Children, Schools and Families Committee today to clarify the position. I wish to put those revised figures on the record now.
I have also written to the chief executive of the LSC—much mentioned this afternoon—asking for a full explanation why its contract monitoring did not reveal the problem sooner, and seeking reassurance that the new contract management arrangements that it is putting in place will avoid such problems in the future. I have asked it to review other figures and processes, to ensure that the figures that it provides me with are robust and accurate.
In the light of that further inaccuracy, does the Minister not think it would be wise to revisit the question of penalties? How is it possible for a private sector company to give misleading information constantly to a Minister of the Crown?
As I said, I have written to the chief executive of the LSC, who is the other party to the contract with Liberata. He will advise me what action he intends to take in response to the problems, and I will inform the House accordingly.
Our focus, first and foremost, is on dealing with the current situation. Notwithstanding the progress of recent weeks, the LSC has taken the decision to terminate the contract with Liberata, and to engage Capita to undertake delivery. I fully back that decision. The transfer of the EMA helpline, processing and payment service from Liberata to Capita will take effect from Friday 28 November. Capita will bring in a new senior management team to oversee the staff and operations in Coventry, Manchester and Darlington. The transfer will place us in a stronger position to resolve the helpline and processing problems, which will not only alleviate the current problems, but will help to provide a better service to students and learning providers in the future.
The LSC will work closely with Capita and Liberata during the transition period, to ensure that the transfer of responsibilities is as smooth as possible. In the mean time, we are continuing to encourage colleges to use the discretionary support funds, provided by the LSC through their local authority, to help students who need extra support while the problems are resolved.
My hon. Friend the Member for Pendle raised the question whether Liberata faces a penalty for its failure to deliver. I repeat what was said in the written ministerial statement: the migration of the contract results in Liberata losing future revenues of more than £60 million over the remaining term of the contract. In addition, following the failure of its IT system, which is at the root of all the subsequent problems, Liberata rightly took the decision to employ significant numbers of additional staff, including in Pendle, to deal with the backlog of applications. In doing so, it incurred extraordinary additional costs.
The LSC has therefore not judged it necessary to enter into negotiations about the imposition of financial penalties. The permanent secretary, as the accounting officer, and the Treasury have confirmed that the deal that has been done is in the best interest of taxpayers. Perhaps, over time, my right hon. Friend the Member for Oxford, East and my hon. Friend the Member for Pendle will want to return to the matter.
The situation arose from the failure of IT systems developed by Liberata to process applications, which meant that applications had to be processed manually. Owing to a rise in applications in September, a backlog of applications built up. As a result, a huge number of calls were made to the helpline, which struggled to cope. In view of those circumstances, it became apparent that Liberata was unable to manage the problem sufficiently. As soon as that became apparent, we took action to put contingency plans in place to ensure that the outstanding applications were processed as quickly as possible.
The Children, Schools and Families Committee has already announced its intention to investigate the issue, and I welcome that decision. My Department and the LSC will be looking carefully at this case to learn lessons that can be applied to future outsourcing of contracts and contract management. As I said, I have asked the chief executive of the LSC to reassure me that the new contract management arrangements are robust.
I am unable to answer many of the specific concerns relating to working practices in Pendle. Temporary staff, such as those recruited in my hon. Friend’s constituency, were recruited to address the backlog of applications arising from the technical difficulties. It was always my understanding that those workers were temporary, and I am disturbed to learn that they might have understood otherwise. The use of temporary staff was a sensible short-term solution to speed up the processing of outstanding applications and payments, and has led to the progress that we have seen to date.
Liberata notified the LSC of its intention to dismiss temporary staff, including those based in Pendle, on 21 October. I discussed that with the chief executive of the LSC when we met two days later. Despite the efforts then made by the LSC, Liberata followed through on its intention to dismiss staff. Although it was ultimately a decision for Liberata, it was an extremely disappointing decision and was against the wishes of the LSC and my Department. On the question of staffing more widely, it will be for the new contractor to determine appropriate staffing levels in the long term.
Why would Richard Webster write to me to say that the staff working in Pendle were LSC staff, not Liberata staff?
Again, because I am not a party to the contract arrangements directly, it is difficult to give a precise answer to that question. It may be that at some point in the past few weeks, the LSC agreed with Liberata that, in order to get staff back and get the processing up to speed, it would underwrite or perhaps even employ some staff in Pendle, in order to ensure that that happened. I cannot say that with certainty, but it would be my best guess.
I would like to speak about the procurement process, but time is running out. No student should be prevented from learning because of financial barriers or other constraints. When systems and processes go wrong and another barrier is put up, we must act quickly and decisively to break it down. The decision to terminate the contract with Liberata was not taken lightly. I am confident that it was the right decision. We will now focus on getting the system, and students’ education, back on track, so that they are able to achieve all that they are capable of, safe in the knowledge of the financial security that they are entitled to.
Supervision of Paedophiles
I am pleased to have secured this important debate. I thank the Minister for her interest and engagement. We have already had discussions, and I am sure that she will do what she can to ensure that lessons are learned by the various agencies involved. My remarks today will focus on the personal experience that two of my constituents have had of the current system of managing a paedophile in their local area.
David Cullen was a high-risk, highly dangerous paedophile, and well known to all the local agencies, yet he managed on numerous occasions to offend and reoffend, imparting desolation and destruction on families as a result. I find him a sickening individual, and I want everybody to be in no doubt at all that he caused so much heartache and distress.
Due to the horrendous experience of my constituents, I shall protect their anonymity and refer to them as Suzie Smith and her son. Hon. Members can judge for themselves whether the system worked for them. What I would ideally like from the Minister today is a pledge that a review or inquiry will take place into what has gone wrong, if anything, in this case. I hope that, in due course, recommendations can be made to ensure better handling and monitoring of paedophiles in future.
I am not here today to attack the police, social services in Abingdon or the Crown Prosecution Service. The work that they undertake is complex and fraught with difficulties, and I have great admiration for what they do, but that should not stop questions being asked when things go wrong. My task is to ask those questions and to see whether we can come up with answers and solutions. That is the only way in which things can be improved. I am therefore delighted by the reaction of the CPS, which I shall come to later.
However, I have been slightly less delighted by the reaction of Thames Valley police. I usually have nothing but praise for their work, and I am one of their greatest advocates, but I was taken aback by their reaction to my involvement in the case. I shall not go into detail, because I do not think that it would be helpful on this occasion, so all I will say is that I am here to represent my constituents without fear or favour and to ensure that their legitimate concerns are heard. I have listened to the view of Thames Valley police and read their briefings, none of which substantially differ in detail from the view put to me by the victim’s mother.
I am in no doubt that the police did not fully disclose information about David Cullen to Suzie and her son. I am also aware of at least one other family to whom information was not fully disclosed, as it should have been. If the police have other information, I would be more than happy to look at it, but the bottom line is that they have to be accountable, as do we all—I believe that they accept that. I know that the police plan to undertake a review of the case, which I welcome. However, independent scrutiny across all the agencies involved is necessary.
The story begins in June 2005, when Suzie returned to Britain from Spain with her four sons after leaving her husband because of domestic violence. She initially lived in a refuge, but was then housed in an Oxfordshire village north of Reading. In January 2006, she answered an advert in a local shop window asking for help for a widowed man who was responsible for two disabled children. As she had had several years’ experience running a business providing carers, she applied and met David Cullen. As is the case with paedophiles, Cullen had a believable—some would say heart-rending—story. He appeared to be a lonely man who was struggling to do his best. Suzie and Cullen became friends. At that stage, the only mention that he made of his past was that the local social services made his life difficult.
The authorities knew that David Cullen was one of the most dangerous men in Britain, as far as children were concerned. Even at that early stage, questions surfaced that require answers. There are legal restrictions on the case, so I shall not say all the things that I would like to say, but why did a court put this man in a position where he had ready access to young children, and little boys in particular? He used his status as a widowed carer to access kind and caring families with children. Thames Valley police and social services have confirmed to me that they suspect that he was using those in his care to access other children.
The friendship developed. Suzie was accompanied by her son when, for example, she took meals to Cullen’s house. On one occasion when that happened, her son was seen by a social worker who was in the house talking to Cullen. Apparently the social worker internally raised the alarm that Cullen, a convicted paedophile, was having unsupervised access to a young child. No contact was made with Suzie, and no attempt was made to track her down, as far as we know. Why would social services not have tried to warn Suzie that she was allowing her son to enter the home of a convicted paedophile with a known strong desire for prepubescent boys? If they tried, what form did the attempts take, and how determined were they?
In April 2006, Cullen told Suzie that he was having renewed problems with social services. She was sympathetic, because her former professional career gave her first-hand experience of social services. Then things became more serious, and Cullen told her that he needed to discuss something with her. He told her that several years earlier he had gone to a nightclub with a young man he believed to be 19 years old. When the club closed, they went back to the young man’s house and were becoming physically intimate on the sofa when the teenager’s mother burst in and caught them in a sexual act. Cullen said that the mother told him her son was under age. He said that he went to court, was prosecuted and, in his words, “put away”. He also confessed that he had convictions for other offences including fraud and theft.
Suzie broke off contact but Cullen craftily used disabled children to weaken her resolve. During that time, he was involved with the sea scouts in Henley. He was seen by a retired police officer who recognised him and alerted the police. As a result, an officer rang Suzie. He asked if Cullen had spoken to her, and she said yes. The officer never checked what Cullen had told her, but seemed satisfied with her answer. Social services then got in touch to ask the same question. Again, they did not ask her exactly what Cullen had disclosed in his chat, and they seemed satisfied that her children were not at risk.
It appears that both the police and the social services asked guarded questions about Cullen, whom they knew was a convicted paedophile. According to my constituent, they never gave her a clear and explicit warning about him until June 2006, three months after her son had been raped. That warning came only because the police were concerned about the safety of another boy and wanted Suzie’s help.
Finally, Suzie was told the true nature of Cullen’s convictions. When she told social services the version Cullen had given her, they said, “We knew that he had been lying to parents.” I find that disturbing. If they knew that he was lying to parents, as a paedophile normally would be expected to do, why did they not take action? When the police were asked why Suzie was not explicitly told about Cullen, they explained that he had human rights and that they had trusted him to come completely clean about his past. It appears that, to some extent, both the police and social services relied on nods and winks rather than a full-blown formal warning about the full extent of Cullen’s past. Suzie had been completely taken in by Cullen but the authorities did not appear to feel it appropriate to issue a detailed warning about his past.
We need to know and understand why that happened. There may well be a reasonable explanation, but we need to hear it. What was stopping the police and social services from giving such a warning? What human rights were involved? Why was a duplicitous paedophile expected to tell Suzie the truth? Which legislation got in the way of full disclosure to Suzie so that she could protect her son? Did the police and social services correctly interpret it?
When Suzie’s son heard about another boy in danger, he told Suzie that Cullen had been touching and hurting him and that he was afraid that he was doing it to another boy. There are further questions for social services about the other boy as well. He was already on the at-risk register but was apparently put in harm’s way despite his own family’s neglect and their relationship with Cullen.
I do not wish to apportion blame. Again, social services may well have a perfectly reasonable explanation. When Suzie’s son came forward, the police and social services were immediately called in, but it was six months after the rape that her son told them about it. According to Suzie, the police at first did not take this seriously and things were muddied by Cullen’s claiming that Suzie was blackmailing him about this. It was only when her son sent a letter to the CPS that a decision was made to charge Cullen. But it was not until January 2007 that he was arrested and charged. Incredibly, he was released on bail and within two days he had raped again. Why did it take such a fight to get her son’s case to be taken seriously when the police and CPS knew about Cullen’s background? Why, after being charged with a boy’s rape, was Cullen allowed out of remand within a few days to rape again? Apparently, Cullen was not even under surveillance.
Then the CPS decided that Suzie’s son’s rape case would lie on file as part of a deal with Cullen’s legal team. Shockingly, the CPS did not even consult the victim or his mother. I am pleased that the CPS has apologised for this, but on top of everything else, its action was a devastating blow to the family. It made them feel they were not believed by the police or the CPS. The CPS wanted her son’s case to lie on the file and never be heard in court as part of a plea bargain, but she fought, with my help, for it to be put to Cullen at his hearing, where Cullen pleaded guilty to raping Suzie’s son. Suzie feels that if I had not become involved and, as she put it, knocked a few heads together, she would not have got justice for her son.
In addition to the questions that I have asked, Suzie wants an inquiry into why a dangerous paedophile such as Cullen was allowed to live in the midst of a small village community with none of the families with children warned. What special precautions did the authorities take to ensure the safety of those families? If precautions were taken, why did those precautions have no effect? Why was Cullen allowed to have unsupervised access to young children when the police—an individual officer was, apparently, overseeing his case—and social services both knew he was a serious danger? Why was he allowed to drive round in a blacked-out multi-purpose vehicle, when his previous offences included incidents in cars? But most of all, Suzie wants to know why she was not explicitly warned of the danger that he posed to her children. Her son was abused on 25 occasions.
I do not expect the Minister to have all the answers, although we have spoken about this matter before today. However, I hope that she will focus on this family’s terrible ordeal. There is absolutely no doubt in my mind that mistakes have occurred and that lessons can be learned. But only those in government can act to make sure others are not left vulnerable to dangerous paedophiles such as David Cullen.
It is a pleasure, as ever, to serve under your chairmanship, Lady Winterton.
I congratulate the hon. Member for Reading, East (Mr. Wilson) on securing this debate on a vital issue for us all. I feel strongly about this matter as a parent and as a constituency Member of Parliament, and it is important that the issue has been raised. As he is aware, I cannot go into detail about this specific case, but I can say that there are clearly issues that he is concerned about.
I understand that there has been a decision by the local safeguarding children board to commission a serious case review arising out of those concerns. That has only just been decided, and I can give the hon. Gentleman no detail now. However, I pledge to make sure that the relevant Minister is informed, so that the hon. Gentleman is kept in touch with the outcome of that case so that he can keep his constituent fully informed. It is important that this process takes its course and that we find out from it whether there are wider lessons to be learned.
It is important to stress that this is an unfortunate case. Any child who is a victim of a paedophile is a real victim. Nothing can make it right for the young boy the hon. Gentleman has mentioned or for the other victims of this man. We have robust systems in place overall, and they work overall. There is no general crisis in the system of paedophile supervision, but we are not complacent. It is important to learn lessons from any incident where there has been a problem and a particular issue, such as the one that the hon. Gentleman has mentioned, but I do not believe that we have an absolute breakdown in the system.
The system is challenging to operate, because we work across the board with the multi-agency public protection arrangements groups. Locally, in the hon. Gentleman’s area, the strategic management board of MAPPA will work with the proposed review to learn about whether there any lessons to be learned in respect of future practice for the relevant agencies throughout the country. Any lessons that can be learned from this case that give a wider view on things will be taken into consideration. The hon. Gentleman has asked for a pledge that there will be a review or inquiry. I reassure him, his constituent and other victims of that man that that will take place.
I agree with the hon. Gentleman about the important work that the police, the Crown Prosecution Service and all the other agencies do in undertaking a difficult task. I am concerned about the hon. Gentleman’s comments about Thames Valley police. I have been in contact with the assistant chief constable for that force, who has confirmed that he is happy to continue to engage with the hon. Gentleman on this matter, as he has done in the past. I trust that that relationship will become one of honesty and openness, because it is important that we, as Members of Parliament, have such a relationship with our local police forces, with which we work closely on many issues. Of course, the hon. Gentleman is right to want to scrutinise all his local agencies, and we have no problem with that.
The Government are absolutely committed to protecting our children from harm. We have a rigorous system, which is among the best in the world. I am the European Minister at the Home Office, and I regularly represent our interests in Europe. It is clear from discussion in Europe that we are well ahead of the game. We have higher protection and monitoring standards than almost any other European country, and other countries around the world can learn lessons from what we are doing. We do not rest on our laurels. We recognise that we have systems in place that, on the whole, work pretty well.
The hon. Gentleman raised some specific points about disclosure. It is important to highlight some of the general issues in respect of disclosure. I shall mention some disclosure pilots that are taking place around the country. Generally, disclosure should be sufficient to enable the disclosed information about a person to protect anyone that it needs to. That is possibly the issue that the hon. Gentleman has raised in this case. I cannot talk about the individual case that he has mentioned, but that is the important general point.
Disclosure is based on the 2007 guidance on national multi-agency public protection arrangements, which means that disclosure must be considered where it will protect the public. The agencies that are part of MAPPA can make disclosures about offences, when necessary. That means that all the agencies that the hon. Gentleman has mentioned in his speech have guidance that allows them to make those disclosures. The Criminal Justice and Immigration Act 2008 makes that a statutory duty, and it is important that the process is applied proportionally.
The hon. Gentleman mentioned concerns about human rights. The legislation is clear—it allows disclosure to protect the public. As a Home Office Minister and an MP, I say that it is important that the human rights of victims are adhered to. I know that the local police would not have said that the human rights of this gentleman were an issue in respect of not disclosing information. Perhaps the hon. Gentleman would like to take that matter up directly with the assistant chief constable.
Disclosure, when it works well, is important. That is why the Government have introduced four pilots around the country. The pilots started in September, and we will be evaluating their progress in about a year. They are taking place not in the hon. Gentleman’s area, but on a force-wide basis in Warwickshire, Cleveland, Hampshire—a police force not far from the hon. Gentleman’s own—and Cambridgeshire. That will allow those responsible for children, who are developing a relationship or having contact with an adult, whom they wish to protect to make inquiries of their own to request information about that individual to make their own judgments about how to protect their own children or children in their care. This is a proportionate step to take in tackling some of the concerns that the hon. Gentleman has raised in relation to this case. It is right that we proceed gradually and steadily on a four-area basis. I am sure that the hon. Gentleman will follow closely, as a number of us will, how the pilots work and whether they can be extended to other areas, possibly including his own.
The Government’s overall approach to paedophiles and ensuring that children are protected has many parts. The police must have the necessary legal tools to manage the behaviour of child sex offenders. Multi-agency public protection arrangements have been in place since 2000, and their purpose is to ensure that all local agencies work together actively to manage the riskiest individuals and to share information whenever necessary. There is a lot of talk about not sharing information, but in this matter, whatever our views of other matters, I am sure that the House agrees that sharing information about dangerous individuals is vital to protect children.
There has been investment in expert agencies and individuals necessary to protect children and to bring offenders to justice, including a new Child Exploitation and Online Protection Centre, which has been in operation for two years since 2006, and there are specialist prosecutors in every area. Support for victims, including dedicated child abuse investigation units in all police forces, and special measures to help children give evidence in court proceedings are also important.
I have had dealings with my local protection team in Hackney—it is important for all of us to be involved locally—and I am impressed by the level of work generally in ensuring that victims are at the heart of what happens. There may be issues about the case that the hon. Gentleman has raised, but on the whole we generally get it right. The new rights for parents and carers are an important addition to the range of tools.
The sex offender register is important, and the comparison with Europe is stark. We monitor people when they have been put on the register, and they are kept track of because they must register their address if it changes, which gives the police and other agencies the opportunity to keep a close eye on what they are doing to try to prevent reoffending. We can also manage sex offenders who want to travel abroad, because we can impose foreign travel orders to prevent them from travelling, and we have the useful tool of sexual offences prevention orders, which place restraints on the behaviour of offenders who pose a risk of serious sexual harm. For example, an individual could be prohibited from visiting internet chat rooms, from circulating in certain areas or from being within a certain distance of a playground or someone’s address. There are important interim measures prior to prosecution, because we should not have to wait until someone has committed a crime and been put on the sex offenders register before we take action. It is important to have those interim steps in place to protect individuals. That, plus good disclosure, can do an awful lot on the preventive side, and we all agree that prevention is vital.
I know that the Minister cannot talk about the specific case, but I am a little concerned that Thames Valley police’s warning to Suzie was that she should speak to Cullen. In the light of what she said, that warning does not seem to have been sufficient under their powers of disclosure. Did they make a mistake?
We have a review under way, and it would be reasonable to ask the police, as part of that review, to consider specifically whether any disclosures that were made in the case to which the hon. Gentleman has raised, were insufficient in line with the law and the guidance. The question is reasonable, and I am sure that the hon. Gentleman will engage as well as he can with the review. The request is not unreasonable.
Local safeguarding children boards have undertaken to oversee the review locally. They involve local organisations that work together—the local authority, the police and social services—and have a legal duty to work to safeguard and promote the welfare of children in that area. They help to ensure that local agencies work together to prevent abuse and neglect, and if there are any issues about that working together in Reading—I am not saying that there are—the review should uncover that. The multi-agency public protection arrangements were established by the Criminal Justice and Court Services Act 2000. The agencies have a legal duty to work in partnership with each other so that there is a balance between sensible working and what is legally required
The Child Exploitation and Online Protection Centre has been in existence for two years. It is a law-enforcement agency that brings together police officers, child protection experts and IT specialists from across the public, private and voluntary sectors. I do not want to digress too much from the circumstances of the case that the hon. Gentleman has raised, but we all recognise that online grooming by paedophiles is serious and increasing. I hope that in time the national identity card scheme will help to prevent that, as the scheme in Belgium helps parents to protect their children from dealing with adults online. The centre brings together everyone with an interest in and knowledge of the area. It has a national remit, which includes gathering and co-ordinating intelligence on high-risk child sex offenders and helping to track them in both the UK and, crucially, overseas. We have seen recent headlines about people travelling from one country to another to carry out awful crimes.
We have introduced dedicated child abuse investigation units into all police forces, and rolled out specialist sexual offence officers and rape prosecutors in every area, which is a sensible step. We have also introduced special measures to help children give evidence in court proceedings. Nevertheless, there are cases when, rather than putting a child through court, the CPS is legally able to make a judgment on a better way of achieving the end that we seek—prosecution—without having to put a vulnerable child through the difficult process of a court action. It is right that the CPS can take such decisions locally, based on the detailed knowledge that it has gathered. Speaking as a mother—heaven forbid that it would ever happen to any of my children—the judgment is difficult. One wants the prosecution, but if it can be done in any way that does not expose the child to further harm, that should be considered. We should not rule out the opportunity for the CPS to make that decision, if there are concerns about particular cases.
In June 2007, we published the review of the protection of children from sex offenders following a comprehensive review of the arrangements for managing sex offenders and assessment of what more can be done to help to protect children from sex offenders. The review set out a range of actions to improve the management of sex offenders in the community. As a result, we have placed a duty on all MAPPA-responsible authorities to consider, in every case, whether information on a child sex offender’s convictions should be disclosed to a member of the public to prevent a risk of serious harm to a child. I hope that our pilots will give some comfort to the hon. Gentleman, if not in the particular case that he raised, that we have a well-planned way of ensuring that disclosure is further improved for parents and those caring for children when they are not aware of contact with paedophiles in the early stages.
Overall, we are proud of our achievements. We do things differently from other European countries and other countries around the world. We do not rest on our laurels, and every case in which agencies are involved rightly requires that we examine what has happened and that we review, check and ensure that everything was done that could be done. I hope that the review in the hon. Gentleman’s area will give him some comfort that the matter is being taken seriously, and that if there are lessons to be learned, they will not only be learned about local practice, but will be rolled out so that any issues that should be taken up nationally will be.
I am not into buck-passing, because I speak as a Minister and I take responsibility for that, but it may be appropriate for other Ministers to have contact with the hon. Gentleman on some of the issues around the case. I pledge today to ensure that if he has any concerns or queries about the case and contacts me in the first instance, I will ensure that he receives a proper response from the relevant Minister on the particular points that he wants to raise. I hope that that, with the review, will give him some comfort and assurance that the Government take the matter seriously. We will do our best to ensure that we learn any lessons from the case.
Question put and agreed to.
Adjourned accordingly at one minute to Two o’clock.