Tuesday 12 May 2009
[Jim Sheridan in the Chair]
Motion made, and Question proposed, That the sitting be now adjourned.—(Bill Rammell.)
I have been advised, Mr. Sheridan, that this is your debut as Chairman of proceedings in Westminster Hall. As a fellow member of the Chairmen’s Panel, I know that I speak for everyone in wishing you well in the post.
I am honoured to be a trustee of the Industry and Parliament Trust. As such, I was fortunate enough to lead a delegation to India. It was a two-centred visit—to Mumbai and Chennai. I shall go into detail about that presently, but I take this opportunity to thank everyone in the trust for the magnificent work that they do in these increasingly turbulent times for Members of Parliament, bringing them up to speed on a number of crucial issues.
I remind the House that the IPT is a registered charity. It was set up to foster understanding between those who create and maintain the industrial wealth of our country—including legislators, who unfortunately might be seen in many quarters as the sales prevention team. I would robustly resist that charge, but some believe that Members of Parliament do not live in the real world and that they have no understanding of what it is like to run a business.
More than 600 parliamentarians have participated in IPT fellowship programmes since the organisation was founded in 1977. I became an advocate of the organisation in the days when I was MP for Basildon; I was given the chance by the Esso organisation, and it was a wonderful opportunity. I am now doing a postgraduate course with Bank America.
The trip to India was the result of recent research undertaken by the IPT with business leaders in the UK, which found that they wished MPs to be more informed about various key issues. More than 66 per cent. of respondents stated that the emerging economies were a priority. The research also revealed that many parliamentarians were thought to lack sufficient understanding of the challenges and opportunities presented by new and developing economies. It is not for me to say how American legislators should pursue matters, but having recently been to China and India, I would say that more American parliamentarians could and should take the opportunity of visiting those two countries and learning at first hand how they are developing.
It was as a direct consequence of the findings of the report that a successful fellowship programme was run to China last year, in particular to Shanghai. I and a number of hon. Members were on that trip, and it was extremely valuable in every sense.
The objective of the IPT India fellowship was to educate parliamentarians on how United Kingdom businesses operate in emerging economies, and to show that Westminster could do more to help. I am pleased to tell the House that the visit provided us with the opportunity to experience India from a strictly business perspective, and to share our experiences and impressions of the challenges and opportunities faced by UK companies operating in Chennai and Mumbai. Today’s debate has attracted huge interest in various quarters.
I thank the excellent House of Commons Library. Members of Parliament have every cause to be grateful to the Library for its expertise. It has provided us with a magnificent pack on India, which covers every aspect of life there. I shall certainly shall use it as a bible on the subject.
Lionel Altman, who ran my Westminster office from 1984, died earlier this year. He was a serving member of the City of London council at the time, and I am delighted to have been contacted by the lord mayor of London and the corporation’s chairman of policy and resources, Stuart Fraser, who are interested in this debate. Indeed, the City of London will shortly be sending people to India to see what further business opportunities there may be there. I congratulate them on that.
The group that visited India included 10 parliamentarians. There is criticism that the House of Commons and the House of Lords do not always work in tandem, but that certainly was not the case for us. We were blessed in every sense that Baroness Coussins and Lord Janvrin were there. Those two individuals brought with them a wealth of talent and experience. As a result, our meetings developed in a way that would not have been possible had it been only Members of Parliament; we would then not have been able to engage in the challenging exchanges that we did.
Of the eight Members of Parliament involved, most are not able to be here this morning. They include the right hon. Member for Makerfield (Mr. McCartney), the hon. Member for Bridgend (Mrs. Moon) and my hon. Friend the Member for Romford (Andrew Rosindell). The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) is here, but he has to operate in a Trappist mode this morning, acting as Parliamentary Private Secretary to the Minister. I will certainly touch on the work of the British Council. My eight colleagues, all very different personalities, were a joy to be with, not only for the quality of the questions they put to our hosts but in the way the group gelled together. The IPT is an example of both Houses working together at their best, especially in providing all sorts of opportunities for UK plc.
We saw the demise of the British Raj in 1947, a long time ago. India has a population of 1.3 billion, and it is the world’s largest democracy. Poverty is widespread, with 62 per cent. of the population living in slums. Three of the world’s 20 mega-cities are in India. India’s is a fast growing economy, with a large, skilled work force and a burgeoning urban middle class. As well as Hindi and English, India has 16 other official languages; sadly, none of them has been mastered by the Member of Parliament for Southend, West. Gross national income per capita is only $950, which highlights the comparatively low-wage economy that makes India so competitive. India is a young country, with 70 per cent. of the population being 27 and under. By 2050, India will be the second largest economy in the world.
I am delighted that the hon. Gentleman mentioned the special relationship between this country and India. Does he agree that the best way in which we can help India is to trade with it? Is he aware that the director-general of the World Trade Organisation said that protectionism in the EU—I do not want to be characterised as a serial EU-basher—is a major problem for our trade with countries such as India? World trade could collapse by 9 per cent. this year. What can we do to ensure that we shift the EU’s trade policy away from protectionism?
I agree absolutely. In fact, shortly I shall enlarge on how we can create better opportunities for trading our goods and services. I shall talk about the British embassy consuls and the British Council. The delegation saw how Indian business women and men are very keen to do business with us; relations, in every sense, could not be better. I probably shall not be tempted to enlarge too much on the EU, but, given his responsibilities, perhaps the Minister will come up with some solutions on trade barriers when he winds up the debate.
The United Kingdom has a long-established and special relationship with India on which we should build. In our time-honoured British tradition, we introduced to India our own language, the art of bureaucracy, parliamentary democracy and cricket—just one of the sports that we invented and at which others occasionally beat us, although our recent performance against the West Indies was splendid. Parliament can greatly assist UK business in further maximising opportunities through forging strong and mutually beneficial relationships.
The fellowship, which met in March, organised some superb seminars bringing together experts able to give parliamentarians an insight into the journey that India has been on, where it is now and where it is likely to go in the future. It proved useful to have those seminars before the trip. Furthermore, I speak for everyone in thanking most warmly Virgin Airlines, which not only took care of our travel, but looked after us throughout our stay. The visit raised our awareness of what more British businesses can, and should, do in India, and how we parliamentarians can assist them. We were briefed by the deputy high commissioner and UK Trade & Investment in Mumbai and Chennai on their work in encouraging UK business to enter the Indian marketplace. In the lobby afterwards, I had a brief word with the Indian Foreign Secretary, and mentioned to him that we had had a very positive trip, because it coincided with some of the commissioners being over. I wanted to pass on our thanks via the Foreign Secretary.
We also gained a great understanding of how Parliament can better highlight India’s prospects in encouraging investment in Britain. I wish to make a serious point to the Minister that we picked up during our trip about the visa application process with which Indian business executives must contend in order to visit Britain. Various people said that there is a lack of business experience among the Foreign and Commonwealth Office people working on the UKTI desk at the Mumbai high commission. I hope that he will reflect on that point. UKTI and the UK India Business Council have important roles to play, and all their activities need to be closely co-ordinated.
The hon. Member for Sittingbourne and Sheppey provided us with tremendous assistance, and throughout our trip we were delighted with the work of the British Council. It was an education for me. Parliamentarians should be encouraged to take much more advantage of the opportunities that the British Council can provide in business, social activity, leisure and all sorts of other areas. I, for one, was very impressed with the networking skills of the British Council. We do not use it to its full potential.
Our visit could not have been better timed, given the recent comment and media coverage in the wake of the film, “Slumdog Millionaire” and its triumph at the Oscars. None of us realised that India was not especially proud of the portrayal of the Mumbai slums. Much more importantly, however, our trip also followed in the wake of the atrocities of the bombing and armed occupation of the Taj Mahal Palace and Tower hotel.
Our comprehensive educational visit involved spending time in a number of locations, attending presentations and visiting industrial sites to gain an insight into various sectors at a grass-roots level. We saw first hand how India has developed its own markets in education, manufacturing, high technology, defence, construction and pharmaceuticals. An additional emphasis was placed on the cultural and creative industries through a visit to Bollywood—this will put colleagues’ noses out of joint, but I was the only hon. Member signed by Bollywood.
I have been tempted to my feet by the hon. Gentleman’s comments that he was the only one to get a response from Bollywood. What role will it offer him? Furthermore, what role will he play in encouraging more exchanges between businesses and educationalists in Britain and India? That is very important for building confidence. Not only are British companies going over to India, but Indian companies, such as Tata and others, are coming over here; mutual business exchanges are already taking place. I hope that that will continue.
I agree absolutely with the hon. Gentleman. On a serious note about Bollywood, however, it is a very successful industry that presents all sorts of opportunities.
Our trip was in no sense a junket, and already action has resulted. Not only are we having this debate, but Baroness Coussins and Lord Janvrin have produced a wonderful report identifying a number of things to do to build on and develop business opportunities and cultural and educational links—I shall come to those shortly. Being accompanied by Members of the House of Lords was a blessing. Members of Parliament tend to come back from such trips full of good intentions, but we are busy people who have to respond to the daily news and so on. We felt that Members of the House of Lords would be less distracted, which has already proved to be the case. Thanks to Baroness Coussins and Lord Janvrin, we will make absolutely sure that the India fellowship, organised by the IPT, and our trip, have a positive outcome.
Throughout the trip, we were indebted to Sally Muggeridge and Sarah Hutchison for their support in, among other things, organising with businesses a wonderful programme of events. They would be the first to say, however, that the trip would not have been such a success without the wonderful team of other IPT employees. I am also indebted to the support of the chairman of the IPT, the hon. Member for Nuneaton (Mr. Olner) and the deputy of the IPT board of trustees. Highlights of our trip to Mumbai included a visit to the Bombay stock exchange, where we were given an excellent insight into Indian capital markets. We get star-struck by Wall street, so we were allowed to sound the gong to open trading, even though no one was actually listening.
That was complemented by a visit to HSBC and KPMG in which we discussed business opportunities in India and those companies’ impressive approaches to corporate responsibility and social enterprise. Cadbury showed us its activities in India and told us that chocolate is a great luxury in India. On average, a child consumes just one bar of chocolate a year. Hindustan Unilever outlined its distribution to rural areas and told us how its products encourage economic activity among the very poorest. Tata provided us with the opportunity to learn about the launch of the world’s cheapest car, the environmentally efficient Nano car, which is initially aimed at the Indian market.
The Indian economy is enjoying growth of 7 per cent.—albeit from a low base—with unit labour costs much lower than those in most other countries. Through its factory in southern India, the manufacturer Supreme is responsible for producing many of the recycled bags that we see in Boots and a number of other supermarkets and shops on the high street. It provides vital skills and employment opportunities for young women and men, who are often the only wage earner in a family.
A visit was made to a recently established business park to see the new and very high-tech engineering plant of the United Kingdom manufacturer, GKN. We were delighted when our hosts asked us to unveil plaques on trees, and I am told that those trees are still thriving. No visit to Mumbai by parliamentarians would be complete without visiting the high sheriff, who will shortly visit us in Parliament, which shows the hon. Member for Ealing, Southall (Mr. Sharma) that things are happening and are being followed up. The high sheriff of Mumbai chairs a leading engineering institution in which one third of the graduates are women. Finally, we explored the burgeoning film industry at Yash Raj Bollywood studios, which was, in every sense, wonderful.
Chennai—or Madras as it was known to the British—on the east coast of India provided us with a contrast and yet another opportunity to see many successful business ventures. While I was out there I visited a school, which, I am delighted to tell the Chamber, will be twinned with Belfairs school in Southend, West. I have to say though that, thanks to the British Council, I was already pushing at an open door.
The highly respected Indian Institute of Technology showed us its leading edge research projects in biotechnology and told us that a high volume of its graduates are employed in blue chip companies every year. BAE Systems has enjoyed successful business activities in India for many years, and, at a reception jointly hosted by the deputy high commissioner, Mike Connor, it provided us with a presentation of its current initiatives.
Sally Muggeridge and the hon. Member for Sittingbourne and Sheppey visited the Madras cricket club. They stood on the pitch at 8.30 am in 30 degrees of heat. I am informed that, sadly, no one saw a live elephant. Returning to Mumbai, we enjoyed a dinner and presentation given by Shell, which took place at the Taj Mahal Palace and Tower hotel in the very room in which guests had sheltered from terrorists during the siege of the hotel a few months earlier. Shell was an early entrant to the Indian market, starting with oil lubricants and building up a sizeable joint venture that now provides leading research into emissions management and climate change controls, which is vital in a country the size and scale of India.
We finished our visit at the Colonial Bombay yacht club with a briefing by Bombay First, which is modelled on our own London First. Standing by the gateway to India, it left us with a fitting memory of how India used to be in colonial times.
In conclusion, I had three aims when I applied for this debate. I wanted my colleagues to give their opinions of the value of the trip and say how, in the months and years head, we intend to follow up on the relationships that we formed during the visit. Secondly, in a humble and inarticulate fashion, I wanted to raise the awareness of what more British business can do in India and, thirdly, to set out how the House can help to build on the expertise. Even in such difficult times, with the state of the British and the world economy, more can be done. Does the Minister think that sufficient assistance is being given to encourage India to invest more in British business?
It was, in every sense, an honour and privilege to have been part of the delegation. We had some fun. Some of us occasionally wandered into the markets in different streets in India, and it is true to say that one or two of us bumped into tailors, and visited silk factories and the like. None the less, throughout the visit, we engaged in hard and constructive relationship-building work. We even managed to cope with the wonderful travails of our bus driver. The members of the delegation owe a huge debt of gratitude to all the businesses that supported us and made the trip possible and, above all, to the staff of the IPT who enabled us to follow such a magnificent educational programme.
I apologise to the Chamber because I am still suffering from what my wife describes as man flu. [Interruption.] My wife has assured me that it is not swine flu. However, she also said that I was a swine with flu.
It is a real pleasure to be involved in this debate and to welcome you, Mr. Sheridan, on your first outing as Chair of a Westminster Hall debate. It is important that life experience and qualifications are taken into account in the chairing of such debates, so my welcome to you is sincerely meant.
First, let me apologise on behalf of my right hon. Friend the Member for Makerfield (Mr. McCartney), who hoped to be here this morning but has been detained on other business. Later on, I will say something about him and his activities in relation to India, but now I shall try to follow the detailed contribution from the hon. Member for Southend, West (Mr. Amess), who was leader of the delegation.
I support all the hon. Gentleman’s comments about the Industry and Parliament Trust and the other bodies and individuals involved in the exercise, and I wish to place on the record on behalf of the whole delegation, and of the IPT itself, our appreciation of his leadership. He is variously known as an outspoken and sometime outrageous Member of the House, but I have to say that on this occasion he was outstanding in his leadership. He carried things off with dignity and was a good representative of the House on our visit.
I am a great supporter of the IPT, which, since 1997, has gone through various changes, and I pay tribute to Sally Muggeridge. During her tenure, the organisation has improved and become a major player in the House and between the House and industry more widely. In giving credit to the IPT, I mention specifically Sally Muggeridge and Sarah Hutchison, as the hon. Gentleman did, but they had a big team behind them to make us a real, working delegation that produced positive outcomes, not least this debate.
I also support the hon. Gentleman’s comments about Baroness Coussins and Lord Janvrin, who brought their specific life experiences and skills to the trip, which assisted the delegation and raised our awareness and understanding of what was happening. I was impressed that an expert on corporate social responsibility such as Baroness Coussins was prepared to develop her own thinking based on our experiences in India. That is the measure of a real expert: someone who can progress and who is not afraid to admit that they are changing their thinking based on new information.
Lord Janvrin is an old India hand and was able to give us a running commentary and explanation based on his experience as a diplomat in the country. He and Baroness Coussins were significant members of the delegation.
Perhaps it is wrong to point out individuals, but my right hon. Friend the Member for Makerfield was another significant member. The expertise and experience that he gained when carrying out his Government work as a trade Minister were appreciated by every single member of the delegation
The delegation included the Front-Bench spokespersons for the Conservatives and the Liberal Democrats, which led me to recognise perhaps not a failing of the House, but something that it might develop. It stands to reason that Ministers of any Government will have the opportunity to go abroad to see the implications of Government policy, but there does not seem to be a similar facility for the Opposition.
The IPT and other House bodies, such as the Commonwealth Parliamentary Association and the Inter-Parliamentary Union, give Opposition Front-Bench spokespersons an opportunity to test their policies, ideas and thinking against the actuality throughout the world, which is good for democracy in this country. It was interesting for those of us from the Government party to test our thinking, not only against the Government’s ideas, but against those of the Opposition.
The IPT takes a cross-party approach, but the interaction between parties on the delegation—I am sure it happens on every such delegation abroad—was really productive, not only for democracy generally, but in the interests of developing better policy in the House, which is good.
The hon. Member for Southend, West made a detailed contribution on the industry side of the exercise, but I want to concentrate on two aspects in which I have a personal interest: education and what we in this country would call charity. The Indians do not like the concept of charity and prefer the concept of giving back, meaning that what we take out of society we should, in some measure, return to those less fortunate.
On the giving back aspect, I should refer to my right hon. Friend the Member for Makerfield, who not only brought to bear his experience as a trade Minister, but is personally involved in the Women’s Interlink Foundation, which is based in Calcutta. The organisation rescues, rehabilitates and educates street children so that they have better prospects in life.
I mention that because my right hon. Friend is a good example of a Member of the House who does things that the public do not get to know about, and his commitment should be applauded. He and his wife, Ann, personally contribute many thousands of pounds from their family resources—not from expenses or anything like that—to the project. In the current climate, all parliamentarians, without exception, are accused of being greedy, but sometimes, somebody needs to stand up and say, “This is what parliamentarians do,” and my right hon. Friend and his wife are just one such example—there are many more in the House, from all parties.
I must declare an interest of my own: I am a trustee of the Kanka-Gajendra Foundation. My old friend and mentor, Professor Gajendra Verma, and his late wife, Kanka, have been quite influential in my life. I have learned a lot from those old Indian friends, who live near my constituency in Greater Manchester. When Kanka Malick died 18 months or so ago, her friends wanted to honour her life and achievements, so the foundation was set up, and I became a governing trustee.
The purpose of the foundation is to help with education and health issues in India and in the UK, and some of the projects have been staggering. They raised my awareness of how wide the gap is between Mumbai, which is an exceptionally developed modern, international city, and some of the rural areas, especially in the north of India, which have fundamental environmental and other problems.
When we, as parliamentarians and British citizens, get involved with charitable bodies—or giving-back bodies, as Indians prefer to call them—that is sometimes an exercise in satisfying our own egos. It shows that we are good people doing good things. Parts of India are as developed as anywhere in the UK or America, but the gap between the developed parts and those in need is staggering. It is not uncommon to see a five-star hotel or residence with a piece of tarpaulin against the wall at the end of the garden, under which a whole family live.
We felt quite ill at ease when we saw such poverty cheek by jowl with wealth. When we asked the wealthy owners of the buildings what they felt about the situation, we were surprised by their attitude. They said, “We live in a democracy. Those people have as much right to put their tarpaulin against the wall at the end of my garden as I had to put my house here.” Poverty is viewed differently in India from the embarrassment that we feel over it in the UK. It is important for us to understand such aspects of different cultures. In turn, it is important for different peoples to understand what makes us tick and why we do things the way we do.
From my experience of giving-back organisations in the UK and India, I believe that such work could be co-ordinated more effectively. There might not be such a role for Government, although there could be one for the Department for International Development, but there might be a role for organisations such as the British Council. They must try not to systematise or control the work, but to ensure that efforts from this country are directed more cohesively. That brings me to education.
My interest is in education, training and skills, or work-based learning as we now call it. I was invited to deliver a paper to an international conference in Kerala and Delhi. I visited Delhi just before I met up with the IPT delegation in Mumbai. I was surprised to find that although thinking on education, training and skills in our country and among our Government is well developed, we have much to learn from India. I was surprised at the co-operation between the Congress Government and the communist-run state of Kerala. We can learn from the ability of autonomous states to run education policy cohesively alongside the national Government.
I found that there is excellent potential not only for UK educational institutions to invest and do work in India, but for us to learn from the experiences in Indian education at federal and state levels. That taught me a wider lesson about industry, which other colleagues might comment on. Although our initial motive was to ensure that we as parliamentarians understood the concerns and aims of British industry in India, it became obvious that we had a responsibility to encourage Indian investment into the UK. Therefore, it is proper for us to look to the interests, needs and requirements of Indian investors, too.
I must declare an interest because I am from India originally. I came here more than 40 years ago as a young boy. I still have links with India and a passion for its development. I am pleased to hear about the experiences that hon. Members have had recently and over previous years.
I hope that hon. Members agree that there is a passion for migration among Indians. The passion is now not only for looking for jobs, but for investment, education and the learning of skills. The major bar to that is our immigration rules and taxes, and how officers treat business people and students who apply for visas or other ways of entering the country. Is it not time for us to look at the investment in Britain from the Indian subcontinent and adopt a more relaxed and flexible approach to visas and immigration policy?
I accept that wholly, but we must understand that there is an onus on the UK Government to act sensibly in relation to immigration. Acting sensibly must include the flexibility that my hon. Friend suggests. We must encourage the maximum number of students possible to come to the UK from, in this case, India. There is not only an educational but a political imperative for doing so.
I will conclude with this point because other hon. Members wish to speak. It became clear to me, and I am sure to other delegates, that although there is much to blame the UK for in Indian history—we are blamed for certain things—there is much that Indian people love about Britain. The hon. Member for Southend, West mentioned bureaucracy, legal systems and education. In general, there is a special place for the UK in the hearts of Indians.
Education gives not only expertise and skills: the more Indian people who are trained and educated in the UK, the more Indian people will return to India with an enhanced view of the UK and stronger affinity for it. In this day and age, that is important for diplomacy and in sorting out the world’s problems. If we influence our friends from other countries positively and understand what they have learned from their experiences, the world can only be a better place.
I am delighted to serve under your chairmanship, Mr. Sheridan. I congratulate you on your participation in the Chairmen’s Panel. I believe that this is the first event that you have chaired. It is a delight to follow the hon. Member for Eccles (Ian Stewart). I hope that he will find a way to continue to serve in the House after his seat is abolished at the next election; it would be a great loss to the House if he did not.
I have limited time and will start by describing a conversation I had with an unknown lady on the way to India. She attacked me verbally saying, “Why is this parliamentary delegation going to India? Is it not just a junket and a waste of taxpayers’ money?” When I assured her that it was not costing her anything as a taxpayer and that it was absolutely vital for Members of Parliament to get out around the world and interact and network with people in important countries such as India, she started to calm down.
One conclusion that I reached from the visit was that, unlike after my previous visit to India in the early ’90s, I have come back as a friend of India and the Indian people. India is a fantastic country. It is huge and diverse, and every statistic about it is mind-boggling, but it is, nevertheless, a fascinating country. One of our interlocutors said to us that it lives in three centuries all at once—the 19th, 20th and 21st. Perhaps that sentiment will have become clear by the end of my remarks.
I must pay tribute to my hon. Friend the Member for Southend, West (Mr. Amess), who led the delegation with great aplomb. He kept us all in order time-wise and in every other way, and he kept the whole programme running very well. I must also pay tribute to the team at the Industry and Parliament Trust—to Sally Muggeridge, the chief executive, to Sarah Hutchison and to all the IPT staff—because the visit was organised fantastically well.
Given my role as Front-Bench spokesman for international trade and international development, I tacked three days on to the end of my trip and went on a Department for International Development visit. I pay great tribute to Emma Spicer, the deputy head of DFID, who organised my trip to Pune, and to Michael Anderson, the head of DFID India, who accompanied me to slums in Kolkata and to Sunderbans—a swampy area on the Bangladesh-India border. Above all, I pay tribute to the redoubtable Shanatu Das, who turned out to meet me at 11 o’clock on a Saturday evening at the airport and could not have been more helpful throughout the entire three days of my DFID visit.
There are an awful lot of people to whom I need to pay tribute, but suffice it to say that it was great fun to be with my colleagues and particularly to have the benefit of our two peers, as others have said. We had a comprehensive visit, and it is difficult to name and thank everybody, particularly those who briefed us before we went to India and while we were there. Among others, they were Virgin, Reliance Life Sciences, Hindustan Unilever, Yash Raj Studios in Bollywood, which has been mentioned, ALMT Legal, Tata, Bombay Stock Exchange, HSBC, BAE Systems, Shell, KPMG, Cadburys, GKN and Supreme. Now one can begin to see how many visits and what an action-packed programme we had. I must say to the Minister that our high commissions in all three cities that I visited—Chennai, Mumbai and Kolkata—were incredibly helpful.
What have I learned from the visit? I think that people in this country do not realise what a diverse country India is, or how well liked the British are there. I could not get over the fact that, everywhere I went, the people were so friendly towards the British. English is a universally spoken language; it is the language of administration and trade, and I feel that the closeness between our two nations, despite our historical past, is amazing. In every sense, we are fostering links—whether trade, cultural or educational—and we must do much more in that respect. India has 1.2 billion people, which is 17 per cent. of the world’s population, and the number is growing. Some 70 per cent. of the population are living on less than $2 a day, 70 per cent. of the population are under 30 years old, and the average age is getting younger. It is a vibrant nation that is growing at 7 per cent. a year.
India still has huge potential in terms of its needs for education. Some 65 per cent. of the nation are educated, but that includes only a small proportion of people in some states. DFID is taking a very brave decision regarding its expenditure in India. It spends £270 million a year in India, which is more than in any other country in which it operates, and it is going to pull out of West Bengal, where there is 20 per cent. poverty, and concentrate instead on the four states with the greatest needs—Uttar Pradesh, Madhya Pradesh, Orissa and Bihar. Bihar is an incredibly poor state, with over 50 per cent. poverty, and people trapped by the Dalit caste system and the 47 per cent. literacy rate, so there is a huge amount of work to be done there.
What have I learned? On the day that we heard the statistic that British manufacturing has contracted by 0.1 per cent., which is the largest fall in one month since records began in 1948, here we have a country with enormous potential for trade. We learned that India has a highly developed educational system, which is now translating itself into producing some of the best research in the world, and India is applying that research to producing highly innovative goods. However, there are enormous dangers. We visited GKN and found that it was making medium-tech half shafts for cars of the same quality that would be made here but for half the price, and one wonders why GKN would continue to manufacture in this country. That is an enormous danger for us, because how are we going to continue to provide jobs in the future, when a country such as India is as competitive as that? It behoves all those in Government to think about that very carefully. The answer is that we have to get cleverer and smarter at what we do. We have got to educate our people better; we have to give them better innovative skills and better research; and we have to help our companies to apply that research better, otherwise we are going to sink further and further down on the world stage.
I am marginally critical of the way in which we operate in India regarding trade, and I think we could do a much better job. It has already been pointed out today that not one of our four UK Trade & Investment representatives in Chennai has any business experience. In Pune, where I went, which is the fastest emerging second-tier city—India has 20 second-tier cities with populations of more than 1 million, of which Pune is the fastest growing—we have only one UKTI representative. We need to clarify the role between UKTI and UKIBC—the UK-India Business Council—because there is some muddle as to who does what. There is more scope for clarity in terms of trade, and there are huge opportunities of which we need to take advantage.
This has been a highly informative debate, and I am delighted to see that the right hon. Member for Makerfield (Mr. McCartney) has now joined us. His contribution to the visit was huge, as a former Trade Minister, and we benefited from his knowledge. It is great to see him here, and I shall conclude very rapidly if he wants a couple of minutes in which to speak.
In conclusion, we had a highly informative visit, for which I am enormously grateful to the IPT and DFID. There is huge scope for increased cultural and educational links with India, and there is even greater scope for us to do more trade with India. It is a fantastic nation, which is emerging very fast. It is beginning to help itself to get out of poverty and all the other deep-seated problems that it has. The more that its finances grow, the more it will be able to help itself get out of poverty. We have seen some excellent corporate social responsibility work from all the firms that I mentioned, which are doing great things throughout India to help some of the poorest people in the world. Statistics on the average proportion of poor people in a country show that India is still poorer than sub-Saharan Africa. I am grateful to all those who organised the trip, and I now conclude so that the right hon. Gentleman may say a few words.
First, let me apologise to the Chamber. I had intended to come and contribute today. I thought that the concept of the visit, the work that we did there and the follow-up work brought out the best in British parliamentarians. It is crucial that, in the next few years, India is not seen as a partner of the past, but a partner of the future. We are all children of the Commonwealth, not of the empire, and there is a huge emerging nation of technological advances, pharmaceutical industries and other technology industries. It has an ability, within that region, to work with us as a partner on trade, trade investment, education and cultural issues, and in its role in the wider world in relation to peacekeeping and the United Nations.
We have a huge agenda. The work we did as a group in India built bridges and contributed towards potential and actual projects. Now we have come back, we must report to the Indian high commissioner on the work that we are doing and the contacts and re-contacts we have made with companies, universities and colleges. The Northwest Regional Development Agency, for example, has already made contact with some of the colleges that we met and has sat down with them to do proactive partnership working.
Some of the businesses in India have been put in touch with businesses in the United Kingdom to consider how they can work together. As Members of Parliament, we have since made contact as a group with individual organisations to build on what we have seen, particularly in relation to corporate social responsibility. We can learn from the ideas and work that has been done in India in terms of trade and development, education and training, health care and rural communities, and the empowerment of women and children. For me, it was a fantastic opportunity. I am grateful to the group for assisting with the debate, which has allowed us to participate with colleagues of different political persuasions. We may be different politically, but we were at one on the group in relation to the work that we need to do with India across the field.
I apologise again, Mr. Sheridan, for not being able to give a more comprehensive report, but I will put something in writing for you as the Chairman. Colleagues and I also hope to meet the Indian high commissioner soon to take forward the work that we did during our visit. I thank hon. Members for listening.
It is a pleasure to serve under your chairmanship, Mr. Sheridan, particularly as it is your debut outing in the role. I am sure that it will be the first of many. I congratulate the hon. Member for Southend, West (Mr. Amess) on not only leading the delegation, but securing the debate and introducing it so comprehensively. However, one and a half hours is a short time to discuss something as huge as India—the world’s largest democracy—and I am sure that we could easily have filled three hours, if not more.
I thank all of those who created the opportunity for parliamentarians to visit India and see first hand the experience of British businesses in India and those Indian businesses that are having such an impact on the UK economy. The Industry and Parliament Trust provides a vital link between business and Parliament. It was a fascinating and useful trip that greatly added to my understanding of both business and India.
As mentioned by the hon. Member for Eccles (Ian Stewart), I speak on foreign affairs for the Liberal Democrats and, indeed, this was my first experience of India. I was particularly keen to experience that country to widen my understanding of the foreign affairs role. A little bit of me fell in love with India. I have visited various countries and although India is often compared to China—both countries are talked of in terms of competition and in discussions about growth—I, frankly, found India much more inspiring. Many of the reasons behind that relate to the fact that India is the world’s largest democracy. The biggest difference between experiencing China and experiencing India is the freedom that individuals have. Both countries have huge problems, but the ability of ordinary Indians to be entrepreneurial and dynamic comes across from when one lands at the airport to when one walks down the street. Indeed, that also came across in all the meetings that we held.
In terms of an overall impression, India has obviously grown rapidly—by about 8 or 9 per cent. each year since 2003, although that is slightly dipping now. Wherever one goes in India, it is apparent that it is a country of contrasts: between rural isolation and urban sprawl, lavish riches and people who are literally dirt poor, and an economy driven by a vast array of young people, who also have a huge respect for wisdom and old age. It is a dynamic and bustling country and the sheer energy of it nearly knocks one down. There is a sensory overload of colours, noise and smells— particularly in a city such as Mumbai. Most of all, India comes across as a country that is keen to innovate and has entrepreneurial spirit. That is why it is clear that it is not only a key global power now, but that it will only grow in influence in the years to come.
I want to share what I thought was one of the most inspiring visits, which was when we went to see the sheriff of Mumbai, Dr. Indu Shahani, who is a formidable, forceful and friendly woman. She is very positive and embracing, and is indeed, I suspect, a strong role model for other women in the city. By profession, she is a teacher so we met her at a college. With 50 per cent. of the population under 25, education is vital for India’s future development. Dr. Indu Shahani told us about a scholarship scheme that was being set up with the university of Westminster to send four girls to London to study. A delegation of academics from the university were in Mumbai on 26 November to discuss the scheme. They were to meet the shortlist of eight girls from which the final four would be chosen. They were near the Taj hotel at about 10 o’clock at night and they heard shots being fired just as they were leaving their meetings. There was obviously a degree of confusion, but most of the delegation of academics were prevented from going back to the Taj hotel where they were booked in to stay. Instead, they were taken to the homes of members of the Indian staff to spend the night. Sadly, two of the academics had gone on ahead and went back into the hotel just at the wrong moment. One of them was shot, although fortunately they recovered and are now fine.
Obviously, for an Indian college trying to put together a scholarship scheme, it was hugely worrying that such an incident would have a negative impact. However—this speaks wonders about the university of Westminster and made me feel quite proud to be British—the university said that, as a gesture of solidarity, it would extend the scholarship scheme to all eight girls on the shortlist, rather than just offer it to four. Indeed, two of those girls came from the slums. That is an example of the type of work going on between India and the UK, and shows that it is perhaps in the most difficult moments that the friendship between the two countries is strongest.
We were obviously in India to visit various businesses. I was struck by the strong commitment to corporate social responsibility that others have mentioned. That concept seems to be much more ingrained in Indian business than it is in many British businesses. Tata was perhaps most impressive in that respect. Its business has a long history of being part of the community, although it has forthcoming challenges in terms of sustainability and climate change. The launch of the Nano will be followed by the Europa, which will be a similar model with lower emissions launched in Europe.
It was hugely helpful to have Baroness Coussins with us because she has a strong background in CSR. When we visited Hindustan Unilever Limited, it told us that its motto was, “Doing well by doing good.” HSBC talked to us about its financial inclusion education programmes, environmental sustainability and how it is training women to be entrepreneurs. It used the words “corporate sustainability”, which might find their way into the UK lexicon in relation to this matter. Corporate sustainability is a different approach. It is not an add-on, a public relations strategy or something that will simply look good in a glossy brochure; it is about the entire way that a business operates.
When on a trip, the most striking things are not always found on the programmed activities; they are often found when one gets away from the scheduled meetings. Some colleagues and I went for a wander around one of the slums in Chennai. Frankly, watching “Slumdog Millionaire” does not prepare one for seeing that level of poverty. Walking past the chop shop where they put different bits of cars together, I thought that if it were in Britain health and safety would have a field day with what was left lying around the road, and, of course, there was no running water or sanitation. However, when we walked down the street, children were excited and talked to us—their basic English was quite good. They have so little, but they are almost unaware that they have so little. It is difficult to go through that experience without feeling a huge sense of guilt. That experience was for me very profound.
Similarly, in Mumbai, we saw places that were basically shacks with no sanitation. However, we then walked down the street and saw that a street party was going on. At such parties, there is a tradition of getting paste and coloured dye and throwing it over everyone with hilarity and joyfulness. There is a challenge in seeing such intense poverty, but it is also inspiring to see the positive attitude that goes alongside that. That is one of the things that will stand India in good stead.
Obviously, the UK has a history of close ties with India. Indeed, that came through in a meeting with Cadbury, which is an historic brand in India. It has a 70 per cent. share—most businesses would be chuffed with that—of the chocolate market. I was intrigued to learn that chocolate has to be made to a different formulation in India. A different level of milk fat is required so that chocolate does not melt until it is at 35o, whereas apparently Cadbury chocolate in the UK melts at 28o. That is an interesting fact that stuck in my brain.
The relationship between the UK and India has been important and will be important in the future, but we need to guard against complacency and thinking that we will always be close because of our long history. There are increasingly close ties between the United States and India as more and more young Indians go to US universities to study. Indeed, it is often the older Indians who have a strong attachment to the UK.
History is not enough. We need to encourage more Indians to study here, which is why the activities in India of the British Council, which we met, are so important. Coming back to the purpose of our visit, that is also why the activities of British businesses working in India and Indian businesses working in the UK are a wonderful way to integrate the two countries for our mutual benefit in the future.
I, too, congratulate you, Mr. Sheridan, on becoming a member of the Chairmen’s Panel, and also on having your debut in a relatively quiet and civilised debate.
I also congratulate my hon. Friend the Member for Southend, West (Mr. Amess) on introducing this debate with such panache and on the fact that he obviously was a good leader of the delegation. It is important to emphasise that it was a successful delegation. There is a caricature, certainly among the media, of all parliamentarians as members of what I refer to as the all-party surf and sand group, but it obviously did not apply in this case.
We had a debate in this Chamber about three weeks ago on the Foreign Affairs Committee’s report on overseas territories. There is another classic example of the work of a group having a major impact. In fact, the Government of one of our overseas territories were, in effect, suspended as a direct consequence of it. I congratulate all the members of that Committee.
I shall not reprise the comments made by Members who spoke with such enthusiasm about the visit of the Industry and Parliament Trust to India, about what lessons could be learned, and about their hope that Indian friends would look at their work and what they had done. Instead, I shall make two or three general points and perhaps widen the debate.
It is apt that we are having this debate, because India is in the middle of its national elections. Before the first world war, it was common for elections in the United Kingdom to take place over several days, if not weeks, because of the problems with communications. It was possible for our predecessors to fight and lose a seat in, for example, Manchester, and then move on to fight another seat a week later. That is what happened to the British Conservative Prime Minister Arthur Balfour in 1906.
In India, where polling is staggered over five dates, the election is still going on. There are 828,804 polling centres—imagine the sheer size of the challenge. Returning officers have been murdered and voters have been intimidated, but, nevertheless this largest democracy is successfully carrying out a vast national election, and we should celebrate that. It puts into context some of the little local difficulties that we face in some of our elections.
I want to touch on and perhaps expand briefly the comments made by hon. Members and hon. Friends about British-Indian relations. I take the point that the hon. Member for East Dunbartonshire (Jo Swinson) made at the end of her contribution. My friend the right hon. Member for Makerfield (Mr. McCartney) rightly said that we are all children of the Commonwealth now, not children of the British empire, although that lies heavily on my generation. We should reflect on the fact that modern Indian society is global. It looks to the United States of America, to China and to the middle east.
We should not downplay our links with India but we need to take them forward. They are not something to be put in a museum or regarded as a jewel in the crown, if I may use that analogy. We should also recognise the fact that 349,193 visas to visit the UK were issued in 2008, which was more than for any other country. The number of contacts between people is enormous.
The UK and India also have a vital and effective partnership in countering terrorism. What happened in Mumbai had an enormous impact on British public opinion, and the Indians are some of the world’s leading fighters against terrorism. We should celebrate our compatibility in economic affairs. Both countries have strong service and knowledge sectors and traditions of democracy, and both uphold the rule of law, which, as all colleagues will recognise, is crucial to business and investment. I was speaking to members of a delegation of visitors from Hong Kong last week who emphasised how important the rule of law is in getting investment in Hong Kong.
I would like to emphasise the fact that India now operates as a global power. It is a member of the G20, the World Trade Organisation, the G-77, and the United Nations Human Rights Council and, of course, it plays a crucial role in the Commonwealth. I see one part of that, in that I am one of the two parliamentary representatives on the Commonwealth War Graves Commission. We must remember how important that side of India’s history still is to Indian Governments today. I commend the work of the Indian high commissioner and the Indian defence attaché.
Finally, India has a crucial role in helping to resolve major international crises on its borders—not only the ongoing problem with Burma but, of course, the conflict in Sri Lanka. We should recognise that India has provided more than 55,000 military and police personnel to United Nations missions in the past 60 years. In many respects, it has been the unsung hero of the United Nations in resolving some of those issues.
I congratulate my hon. Friend the Member for Southend, West on securing this debate, and all the hon. Members on that visit to India on their obvious enthusiasm for strengthening British-Indian relations.
It is a pleasure to be here for your first time as Chairman of a Westminster Hall debate, Mr. Sheridan. I assure you that I will refrain totally from any comments about Members of Parliament losing their virginity.
To proceed, I genuinely congratulate the hon. Member for Southend, West (Mr. Amess) on securing valuable parliamentary time for the debate, and I am pleased to have the opportunity to respond to the comments and contributions that have been made. What has come across clearly this morning is a real understanding of the commitment and hard work involved in fostering relations. I noted all the comments about the hon. Gentleman’s dignity and leadership skills. I would have expected nothing less from a fellow Essex Member of Parliament. I also take this opportunity to congratulate the IPT on the exceptionally valuable work that it does not only in this area, but in many others.
As many Members have commented, this is an historic moment for India. Tomorrow marks the fifth and final day of voting in its general election. The counting of votes in the world’s biggest democracy will begin on Saturday, and the new Government must be constituted by 2 June.
I question the implicit enthusiasm of the hon. Member for Mid-Norfolk (Mr. Simpson) for elections over five days. I know how exhausted I am knocking up for one day of elections. The thought of five days on the trot beggars belief.
Whatever the outcome of India’s elections, I am confident that its commitment to the liberalisation of its economy will continue, because it genuinely understands that opening up its economy will create a quantum leap in its ability to attract foreign investment, accelerate much-needed infrastructure development and drive forward inclusive sustainable growth, which is critical to its meeting its millennium development goals.
We also look at India in the context of the current economic climate. India is not immune to global downturn; it no longer remains on the sidelines of the crisis. Growth is likely to fall to 4.5 per cent. in 2009, from the 8.5 per cent. average of recent years. As a result, it is estimated that there will be an extra 9 million to 12 million Indians living in poverty in 2009. Although 4.5 per cent. might seem a high figure by our standards, for India to achieve its millennium development goals and lift the 456 million Indians who live on less than $1.25 a day out of poverty, it needs to deliver sustained growth of at least 9 per cent. a year. That is a challenging factor.
Unlike China, India’s population is getting younger, but India will be able to reap that demographic dividend only if it makes substantial investments in its physical and social infrastructure. In that regard, UK companies have a lot to offer and a lot to gain.
Since 1991, as many hon. Members have mentioned, India’s gradual opening up to international trade has fuelled consistently high economic growth that has made a real and substantial impact on people’s lives there. Now India is entering a new phase in moving up the value chain. Whereas the early years of its growth were fuelled by offshoring and low-cost, low-value service provision, the emphasis and focus now—this is the challenge to us that the hon. Member for Cotswold (Mr. Clifton-Brown) underlined—are on value-added, research and development-rich, manufacturing and services: from groundbreaking new oncology treatments in the pharmaceuticals sector to highly sophisticated knowledge process outsourcing and world-class, innovative production in sectors as diverse as nanotechnology, animation and renewable energy.
I would like to respond to some of the points that have been made. I welcome the comments on our high commission in India, which were made by the hon. Member for Southend, West, who led the delegation, and I will ensure that those congratulations are passed back to it. He commented on the fact that the emerging economies have to be a priority for the Government and for this country, and I agree.
In 2006, UK Trade & Investment launched a five-year plan that refocuses more of our resources on the 17 key emerging markets. In India, 86 UKTI staff are working in nine offices, which is an increase of 18 per cent. over the last couple of years. That is exactly the kind of improvement that we need to make.
The hon. Gentleman also talked about India being a young country and about the demographic dividend, but that represents part of the challenge for India, in that it has to upskill and educate that younger generation. He also mentioned the World Trade Organisation overview. The Doha development agenda is important. We need a successful EU-India free trade agreement and a development-friendly conclusion to the DDA, addressing India’s concerns on the special safeguard mechanisms in agriculture. That is at the forefront in respect of those issues.
The hon. Gentleman made an important comment on the role of the British Council. In my former role as Minister of State with responsibility for higher education, I was pleased to have the opportunity to lead the UK-India Education and Research Initiative, which, in a practical way, is bringing together UK universities and their counterparts in India for the benefit of both our countries. The British Council has been fundamental and critical in developing that initiative, and I have seen the impact it has had on the ground.
The hon. Member for Castle Point (Bob Spink) intervened on the hon. Member for Southend, West to make a point about so-called EU protectionism. The EU is not protectionist, but we are rightly resisting Indian demands for asymmetry when entering negotiations. That is a sticking point at the moment, but the seventh round of negotiations will resume on 13 July in Brussels and I hope that those issues can be overcome.
The hon. Member for Southend, West also mentioned the role of the British Council in twinning schools in this country and in India. I have seen the real advantages of that and I welcome the fact that he has promoted such an initiative in his constituency, because that broadens the minds of young people in this country at an early stage and builds a relationship and contact that is beneficial on both sides.
The hon. Gentleman also asked whether enough was being done to get Indian inward investment in this country. That is a priority for UKTI. Some 600 Indian companies have a base in the UK, of which approximately two thirds are in the information and communications technology and software sector, with the next significant knowledge sector being pharmaceuticals. Those companies’ investment is worth some £9 billion. The UK attracts around 50 per cent. of all Indian investment in Europe. We need to fight to maintain that figure and that position.
The success of Indian entrepreneurs in the UK is well known in India. India has entrepreneurial talent and is a priority market for UKTI’s global entrepreneurs programme, which supports links between exceptionally talented entrepreneurs and their counterparts in the UK.
The hon. Gentleman will also be aware that Tata is a much-valued investor in the UK. Its acquisitions of Tetley, Corus and Jaguar Land Rover have helped to secure many jobs in this country. In addition, Tata Consultancy Services is a major employer in Peterborough and elsewhere in the UK, providing more than 4,000 jobs for people locally. We want that kind of relationship to continue.
The hon. Gentleman also raised the question whether the UK Border Agency staff who deal with visa processing are sufficiently aware of business trends and concerns. I would say that that is so. Training is available for all staff on all aspects of our visa process. Business visitors from India amount to 27 per cent. of the total and the UK Border Agency in India is meeting all its targets at the moment.
As a number of hon. Members mentioned, globally, we are second only to the United States in terms of overseas students, a significant proportion of whom are Indian. That demonstrates the progress that we are making. However, I acknowledge that, as my hon. Friend the Member for Eccles (Ian Stewart) mentioned, there has to be a balance between welcoming genuine visitors to this country and continuing to fight and deter illegal immigration. We have to get that balance right.
My hon. Friend spoke eloquently, revealing his personal commitment to education and training and to the relevance of charitable support—or “giving back”, as he described it—to India. That point needs underlining. Even with the opportunities available and the progress that is being made in India, still a third of all the world’s poor people live there, which is why it is the biggest recipient of funds from the Department for International Development.
The hon. Member for Cotswold raised an important issue about a woman he spoke to at the airport before going out to India. He is right. We have to underline the fact that there is a crucial role for parliamentarians in having international awareness and international access. When I travel abroad as a Foreign Office Minister, I am struck by how such activity is built into the mainstream for parliamentarians in other countries. It is about pursuing the national interest and contacts. We ignore such activity at our peril. I also take on board the hon. Gentleman’s comments about the support that he received from DFID.
The hon. Gentleman made some important points, including about the fact that as India moves up the quality and value-added chain, we need to recognise the fact that, to be able to continue to compete, we need to be smarter and need increased focus on education, training, innovation and research. He also criticised the expertise of UKTI staff, but that was unjust. We have appointed specialists in financial services and aerospace in India, and all senior staff there attend a rolling programme of business development visits to the UK to develop their expertise in commerce.
My right hon. Friend the Member for Makerfield (Mr. McCartney) made a brief contribution, but demonstrated his real knowledge and experience as a former trade Minister, and his commitment to our relationship with India.
I conclude by echoing the comments made by the hon. Member for East Dunbartonshire (Jo Swinson), who leads for the Liberal Democrats. Our relationship with India is historic and well founded, but within any good relationship we have to keep working at it and prioritising it. The Government are absolutely committed to doing that.
I am grateful, Mr. Sheridan, for this opportunity to discuss consumer rights. I shall highlight three constituency cases, in each of which an individual or group has been treated badly as a consumer, and then suggest how each problem might be dealt with. They are very different, and there is no common theme, but this is too good an opportunity for me not to raise issues that have caused me and those constituents great concern. Although there is no common theme, I shall conclude by making some general comments about and suggestions for improving consumer protection.
The first issue that I want to cover is the problems frequently faced by people who buy newly built houses from a developer. I raised the issue first in a debate in April 2002, less than a year after I became an MP, and again just over a year ago in February 2008. The problems may be numerous and include lengthy failure, sometimes over years, in getting snagging work completed; dates of entry being delayed time and again; serious defects, such as flooding, not being dealt with; problems with property management companies, and so on. I will not go into all of them in full detail this morning as I have covered them before.
The particular problems that I want to raise this morning were highlighted for me in the case of the Corinthian Quay development at Granton harbour in my constituency, to which I referred at length during my debate in February 2008. There were water supply problems, sewage coming through floors, and external finishes and areas not completed. I will not go into all the problems, except to say that some of them were first reported by residents in early 2005 but have still not been dealt with.
After I highlighted the specific case of Corinthian Quay in my previous debate, there seemed to be some movement. Two senior directors of the development company came to my office and promised action. For a while, things seemed to improve, but that did not last long and residents told me that the situation deteriorated again. Earlier this year, on 20 February, there was a dramatic development. My constituents discovered that the company from which they thought they had bought their houses and would receive after-sales service was not Elphinstone, but its wholly-owned subsidiary, Holyrood Services Ltd, even though all communication with residents had been from a company going by the name of Elphinstone, and its name was on all the sales and marketing boards around the site. The original seller’s brochure made no reference to Holyrood Services Ltd, but referred only to Elphinstone, saying that over 10 years it had built up an enviable reputation for its ability consistently to initiate and manage high-quality residential projects. All correspondence seemed to come from Elphinstone, as did the packs given to would-be buyers. Indeed, my correspondence was with Elphinstone and not the mysterious Holyrood Services Ltd. However, it turned out that the eventual contract between the purchasers and the building company was with Holyrood Services Ltd, not Elphinstone, with which they thought they had been dealing.
On 20 February, matters moved on dramatically, and the residents discovered that Holyrood Services Ltd had gone into administration, while Elphinstone had escaped scot-free from any liability, reducing the chance of a satisfactory outcome for the residents. The National House-Building Council became involved and, to be fair, seems to be actively dealing with the problems, but the residents are not certain whether all the outstanding issues will be dealt with because, for example, they complained not to Holyrood Services Ltd, as they should have done formally under the terms of the NHBC guarantee, but to Elphinstone, the parent company, which seems to have walked away from the problems.
That experience highlights three issues. First, there are clear questions about the way in which Elphinstone seems to have been able to escape its responsibilities using a front company, Holyrood Services Ltd. That happens in areas other than building, but I would like a request to be conveyed to the Minister that his Department urgently investigate the circumstances in which builders—in this case, Elphinstone—are apparently able to evade their responsibilities by using a subsidiary. Will the Minister investigate whether that arrangement is legal, and whether his Department can take any action in this case?
I understand that Holyrood Services Ltd is a wholly-owned subsidiary of Elphinstone, the builders, and not a separate property management or factoring company. It seems to be Elphinstone in another guise, but the eventual contract and deed of conditions was with Holyrood Services Ltd, although the preceding material had come from, and many of the subsequent dealings had been with, Elphinstone.
The second issue is wider, and relates not just to the Corinthian Quay development, but to the long-running issue of how purchasers may assert effective rights against builders who do not fulfil their side of a bargain. Owners may in some circumstances have the right to cancel a purchase if defects have arisen, but that is often not an effective remedy if people have sold their existing house and moved job, and would have to get involved in lengthy litigation to try to cancel the contract.
There have been five such developments in my constituency. The one at Corinthian Quay is the worst, but there are others. One problem is that owners may be able to pursue good legal avenues, but may be fearful of entering what may be very expensive proceedings against a large and powerful opponent. My constituents have found that no independent body can provide even initial free advice, and there is clearly a gap in the representation available to consumers. I will return to that, but I hope that the Minster will address the matter today, or write to me in due course.
The third matter concerns NHBC cover. In the particular case in my constituency it now seems to be doing a good job in actively trying to sort out the problems that it has inherited. However, through no fault of its own, but because of arrangements under which it operates as a backstop for problems with developments, it could become actively involved only at a fairly late stage in the process because residents must first go through a number of other steps. Is there a way of encouraging the NHBC—I understand that it is an industry body—to have a more proactive role in such cases, perhaps with a mediation or ombudsman role at an early stage, to try to persuade developers to deal with problems such as those that my constituents have suffered for far too long?
The second issue is very different, but also involves consumers thinking that they have bought something from one company, only to discover that they have bought it from another, connected company, as a result of which they lose protection. The issue concerns a holiday in Mallorca booked by one of my constituents and his elderly parents. I do not have time to go into the details of what was wrong with the holiday. Basically, it was the holiday from hell, and it was made worse because the facilities were entirely unsuitable for a person with a disability, which one of the parents is, even though my constituents had made it clear when booking the holiday that they needed an appropriate hotel.
As I said, my constituents had many problems and the upshot was that they wanted to claim compensation from the company with which they had booked the holiday—First Choice. At least they thought that they had booked the holiday with First Choice; after all, they bought it from a shop calling itself a First Choice hypermarket. Their correspondence, when they complained, was with First Choice. However, when they started to complain, it turned out that the contract was apparently not with First Choice, but with a subsidiary company—First 4 Hotels. Although First Choice is bonded with the Association of British Travel Agents, apparently First 4 Hotels is not, so when my constituent complained to ABTA, it said that it could not do anything about the problem as First 4 Hotels was not an ABTA company.
That appears to me to be a complete abdication of responsibility by ABTA. It seems clear that the company arrangements in this case have the effect—whether by design or not, I cannot say—of allowing First Choice to wash its hands of complaints made by customers by saying that the arrangements are with a different company, even when the customers believed that they were booking with an ABTA-bonded company. I believe that ABTA should investigate this case and withdraw its endorsement from any travel company that appears to make use of subsidiaries in a misleading way, as certainly seems to have happened with First Choice in this case. If ABTA is not prepared to investigate or take action, I urge the Minister to do so.
When the Minister wrote to me on the issue a few weeks ago, when I first raised the problem, he invited my constituents to raise their complaints with ABTA, but as I have pointed out, they have already tried to do so, only to be met with the response that ABTA cannot get involved because they did not book their holiday with an ABTA company. The whole point is that the holiday was in effect with an ABTA company. In my view, ABTA should not be able to get out of its responsibilities as a trade body in that way.
I am sure that the hon. Gentleman has looked at the ABTA website. I would be interested in his comments on its credo, which is at the top of its website:
“For more than 50 years ABTA and its Members have been helping holidaymakers to get the most from their travel plans”.
It refers to “Great Service”, stating:
“Because ABTA Members follow our Code of Conduct, you’ll receive a high standard of service, fair terms of trading, and clear and accurate information.”
What does the hon. Gentleman have to say to that credo?
I am sure that it is true in many, many cases, but the problem is that in this case it was not what happened to my constituent and his family. My constituent did not have that pleasurable experience, and ABTA seems to have managed to wash its hands of any involvement, which to me is unacceptable.
As I said, when the Minister wrote to me, he suggested that my constituents raise the issue with ABTA, but they have done so without any joy. He also pointed out the possible legal avenues open to my constituents, and indeed there are some, but just as in the case of my unfortunate constituents at Corinthian Quay, it is not so easy for individuals to make use of those rights. Particularly when it comes to package holidays, legislation is often complex and the consumer may not be able to pay for the legal backing to assert their claim against a powerful company that will want to exploit the complexity of the regulations to its advantage.
There is a shortage of legal and other information resources to help consumers in their battles with those who have sold them faulty goods or offered poor services. A strong customer advocate needs to take up that role. From my experience with the bodies that do have that role to an extent—such as trading standards, which is excellent, if I may say so, at Edinburgh council, or Consumer Focus—it is not their role to be an advocate in respect of particular cases in the way that is needed to help consumers in the circumstances I have described. Somebody needs to be encouraged and empowered to do that. Perhaps the way to deal with the issue is to give support to some of the non-governmental organisations to take up the role. Perhaps the Minister can address the issue in the consumer White Paper, which is expected shortly. He may be able to say something about that paper also when he replies to the debate.
I cannot pretend that my final issue has any real connection with the previous two, but I would like to address it briefly as I have the Floor to do so. I am sure that hon. Members are familiar with what are called look-alike websites. Such a website appears to be from a governmental or other public agency, but in fact is not. It may be designed to mislead the consumer, the member of the public, into parting with money in some way or otherwise getting involved in something that the consumer did not wish to be involved in.
Last year, I raised in questions with one of the Minister’s colleagues an official-looking website to which a constituent had logged on and paid money to get a birth certificate. She paid more than twice as much as she would have if she had gone to the official website. She got her money back eventually, after a number of complaints. That company was not bogus: apparently, people would get their document if they paid the money. However, it was charging two or three times more for documents that were easily available from public websites or other public sources.
There has been some publicity recently about credit advice websites—an issue on which I know the Office of Fair Trading has been active. Those websites give the impression of being linked to bodies such as Citizens Advice, other credit advice agencies or, indeed, Government Departments. I am pleased that the OFT has taken some action to try to deal with the websites in recent months.
A website to which I want to draw attention today because it has recently been raised with me by one of my constituents represents itself as providing an opportunity for members of the public to obtain the European health insurance card—the EHIC. A website whose address, I believe, is www.ehic.org is one that people who do a search are referred to. People can go to that site and pay a much higher price than by going to the official NHS website. I draw attention to that case because it is one of many. I understand that the Government cannot totally control bogus or scam websites that are set up not necessarily from this country, but from many other parts of the world. However, the issue should be monitored closely.
In relation to the website that was providing genuine Government certificates but at a higher price, the response that I received from Ministers here and from the Scottish Justice Minister, to whom the matter was also referred, was in effect that not much could be done about it. Although I accept that not much might be able to be done about it in many cases, the Government and Government agencies should be proactive in trying to monitor the growth of such websites. Where they can take action to shut them down, they should do so. Where proceedings can be taken against individuals who are misleading the public, they should do that. The Government should at least ensure that people cannot get documents through those websites, thereby driving the websites out of business.
That concludes my tour of consumer affairs problems. They are all different, as I said, but they highlight the ways in which consumers can be misled and prevented from obtaining adequate redress. They emphasise the need for the excellent legislation introduced by the Government in this area to be accompanied by effective means of allowing the consumer to make use of it. I hope that by raising the subject today, I have not only highlighted cases affecting some of my constituents—I hope that the Minister will be able to investigate those in detail—but highlighted issues that need to be addressed, because we all know that when it comes to scams, shams, bogus websites and bogus activity, it is a moving target: we have to keep moving to try to catch up with what is going on. I hope that by drawing these matters to the House’s attention today, I have contributed to the debate about how we can tackle these important issues.
I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on introducing this important debate. He has three bees in his bonnet, but lots of other bees are buzzing around on all sorts of consumer protection issues, and I want to address some of those issues in addition to the hon. Gentleman’s points.
The Office of Fair Trading reports that 3 million people a year fall victim to scams using post, text and e-mail. With the credit crunch, the scammers’ target has become some of the most vulnerable people in our society. Although we do not want to take a nanny-state attitude to protection and regulation, it is clear that such unfair practices must be sorted out.
I wish that I could have made a speech, but I have to attend a meeting. Is my hon. Friend aware, however, that the protection available to consumers who make purchases from salespeople who come to their property—the salesman might have come to see them after they answered an advert—is far weaker than that available to those who make purchases over the internet or by post? If the salesman comes to their property, consumers no longer have the right to cancel their order if the goods are not what they expected, although they would have that right if they purchased the goods over the internet or by mail. The problem often impacts on vulnerable people.
A salesman from Willowbrook, which provides recliner chairs, visited an invalid in my constituency, who ordered some chairs. When the chairs arrived, they were not of the right dimensions and did not provide the therapeutic effect that the customer thought they would. However, she could not cancel the order and get her deposit back, because she had ordered from a salesman who came to her house. I wonder whether my hon. Friend can work with the Minister to see whether this egregious loophole can be remedied.
I am grateful to my hon. Friend for that example. The answer to her question is that I was not aware that there was less protection for someone who orders from a salesperson at the door. I hope that the Minister will specifically address the issue, because that loophole clearly should not exist, particularly given that door-to-door salespeople often target more vulnerable people with their sales patter.
We have all been told that we have won a prize draw and that we have to send a fee to get the money. When we read the small print, however, we see that we are only being entered into the draw. We have all had e-mails saying that we have won a foreign lottery prize, but anyone who takes up the matter—I have not—discovers that the prize does not exist. We have all heard of the entreating e-mails from Nigerian business people who cannot spell and who need our help to get a large sum out of the country. We have also heard of boiler room scams, with cold callers offering shares and property investments, which might exist, but which are usually wildly overvalued if they do.
Another trend is the increase in pyramid selling. The practice is illegal, but it is thriving, especially on the internet, and the credit crunch makes it particularly tempting. Bernie Madoff is one example. Ponzi schemes are widespread, and one in my area of Birmingham targets women, telling them that they can make £21,000 in weeks. Pyramid selling is already illegal, but we need a lot more consumer awareness, particularly among vulnerable groups who do not realise what is involved.
The hon. Member for Edinburgh, North and Leith mentioned builders, and everyone probably knows somebody who has fallen victim to cowboy builders who have done a job that is incomplete or of insufficient quality. If the consumer pays the bill, there is, as the hon. Gentleman said, no redress and no incentive for the company to come back and make good the work, which should have been done properly in the first place. One lesson that I recently learned at the hands of a builder is that people should never pay the final sum until they are completely satisfied.
A constituent ended up with a bill of £30,000 for a new drive. The builder kept finding more little jobs to do, saying, “I’ll just do this for you,” and my constituent ended with a huge bill. I intervened. Trading standards said that everything was perfectly legal, but the threat of being exposed by an MP had some effect, and my constituent did not end up paying the whole amount.
The hon. Lady is giving very good advice, which applies to many builders, but will she deal with the situation that I highlighted of people who move into new properties? They do not have the option of retaining the money, because they have to pay to get into the property. They then have the problem of dealing with any difficulty, but they have no easy way of forcing the builder to do so quickly.
I listened carefully to what the hon. Gentleman said about new build. As he said, the national house builders body is supposed to deal with the issue, but the time and energy involved in getting redress on behalf of properties’ new owners is totally inappropriate. Will the Minister tell us how the situation could be more appropriately and speedily dealt with?
A constituent of my hon. Friend the Member for Montgomeryshire (Lembit Öpik) was a victim of an internet scam after he ordered a mini digger from eBay. When all the paperwork was done, it was agreed that there would be a five-day trial. He thought that he was giving the money to the eBay solicitor, and everything was documented. He paid £5,900 and was told that the digger was being shipped, but it never arrived. According to eBay, the problem was nothing to do with it, because the payment did not go through its approved system.
The European Commissioner for Consumer Affairs, Meglena Kuneva—apologies to her if I have pronounced her name incorrectly—said that the privacy rights of internet surfers are abused by companies that amass personal information and supply it to advertisers that target consumers without their knowledge. I loved the quote from her in which she said that
“the World Wide Web is turning out to be the ‘world wild west’”.
Again, this is a serious problem, and we need to address it in what are changing times in the area of communication.
The hon. Member for Edinburgh, North and Leith mentioned holidaymakers and a company acting as a front for a more well-known company, which then takes no responsibility when things go wrong. I am sure that the Minister will have some comments to make about how that can happen.
My concern is about holidaymakers who book their holidays themselves. When things go wrong, they are not covered by ABTA. The hon. Gentleman talked about First Choice and First 4 Hotels, and I agree that ABTA should take more responsibility—it cannot be a fair-weather friend. It is hugely important that the issue be addressed.
Another issue about which we have had a lot of complaints in Solihull is mobile phone contracts. The contract details look good—in fact, they look great, with cash back and all sorts of other offers—but the small print ties people into long contracts with the same phone. The cash back never materialises unless people meticulously pay the relevant amount on the exact day. In 2007-08, Consumer Direct received more than 100,000 complaints about mobile phone contracts. The terms of those contracts and all other credit contracts should be made clear and understandable. Perhaps an organisation should have the responsibility for scrutinising small-print contracts; if they are not up to scratch, they should not be legally valid.
Businesses are not exempt from scams, including free listings in business directories, which however mean that a company unwittingly signs up to pay for advertisements in bogus charitable publications, hard selling and grossly overpriced goods.
There is also, of course, the problem of companies going into liquidation, described by the hon. Member for Edinburgh, North and Leith. There is an answer that we could use simply and cheaply to expose serial liquidators of all kinds in business: a requirement for the director of a company that goes into administration to register in a centrally kept register of administrations. Someone thinking of supplying or being supplied by a company could go to the register to see how many times its directors appeared there. That would be a simple way to help companies that might lose their livelihood because of the cynical financial manipulation of bumping a business and going on to create another.
We can welcome two things this morning: first, the consultation on the European consumer credit directive, which has many good elements, including a general clause on defining unfair practices. Secondly, as the hon. Member for Edinburgh, North and Leith said, we can look forward to the White Paper on modernised consumer rights. We do not want to stifle innovation or bring about a nanny state, but somewhere in our consumer regulation, there should be a principle of basic fairness, which should not be contravened.
As my hon. Friend the Member for Richmond Park (Susan Kramer) mentioned, we need protection with respect to door-to-door salespeople and the time allowed for goods to be returned. We also need the register of administration for serial liquidators, and better consumer advice, especially about communications media such as the internet, particularly for young people who buy things on the internet and discover, if those things are faulty and do not reach the required standard, that they are not confident about getting redress.
As I said in the previous debate, it is a great pleasure, Mr. Sheridan, to serve under what is I believe your first chairmanship in this Chamber. It is also good to see the Minister; and I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on the very reasonable way in which he put across the problems in his constituency involving dealing with a property company at Corinthian Quay, the holiday company, First Choice, and look-alike websites. I want to deal with all three problems in the brief time available to me. I am also pleased to follow the hon. Member for Solihull (Lorely Burt).
Of course, consumer affairs is a tremendously broad term, covering all interactions between the entities that consume—principally, the general public and small businesses—and those that supply, which are often large firms. There is quite a lot going on, both by way of Government changes and, as the hon. Member for Solihull said, through the European consumer rights directive. We welcome the merging by the Government, on 1 October 2008, of Energywatch, Postwatch and the National Consumer Council, to form a new statutory consumer watchdog, called Consumer Focus. The new organisation fights to secure a fair deal for consumers throughout the United Kingdom. It has the right to investigate any consumer complaint, provided that it is of wider interest to the public, the power to conduct research and the ability to make an official super-complaint about failing services. It would be interesting to hear how the Minister feels the new, merged organisation is doing, particularly as there is now such a narrow focus in the ownership of the energy markets. Some accusations have been made of cartel activity in the energy markets and energy pricing, particularly in relation to fuel poverty.
The hon. Member for Solihull referred to the consumer rights directive, which the current European Commission is considering, although it will of course probably have to be put through by the new Commission when that is adopted, probably in November. For the record, the proposal represents the most far-reaching change for European consumer law to date. It brings together four existing pieces of community legislation—on unfair contract terms, sales and guarantees, distance selling and doorstep selling—into a single horizontal consumer rights directive. It would be interesting to hear whether the Minister feels that the legislation on doorstep selling indeed deals with the points raised in an intervention by the hon. Member for Richmond Park (Susan Kramer) about the differences between guarantees affecting doorstep selling and selling on the internet.
I should perhaps have intervened a little earlier in response to the query by the hon. Member for Richmond Park (Susan Kramer). My understanding of the legislation on doorstep selling is that it offers the same right as in any other case to reject goods if they are not as they were described. The doorstep selling law also gives people a seven-day cooling-off period after the making of the agreement, in which to cancel it. I hope that that will deal with the concern raised by the hon. Lady; but if she or any other hon. Member taking part in the debate has further information or concerns about the working of the provisions, I shall be happy to discuss them in more detail.
That clarification is helpful. The problem with the legislation is enforcement. We all know about fly-by-night doorstep sellers, and although I am wary and would not expect to be sucked in by such a salesman, many people are; if those people receive faulty goods, how do they know who the salesman was? How can they find him again and enforce any law against him? That is the difficulty for consumers. No doubt, the hon. Member for Richmond Park will contact the Minister if I am not correct.
The hon. Member for Edinburgh, North and Leith raised an important subject: the Corinthian Quay development in his constituency, the parent company, Elphinstone, and the fact that the subsidiary company providing the building contract, Holyrood Services Ltd, went into administration. That continues to be a problem in the building industry, because of the recession, among other things, and the fact that many building companies have difficulty in making ends meet. People make quite a number of complaints about the buying of new homes. I declare at this point that I am a fellow of the Royal Institution of Chartered Surveyors. I have a few general comments to make about the purchase of new properties.
The purchase of a property is not subject to the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982, which cover the majority of purchases, and consumers are left without adequate protection in a high-value risk field. At present, most regulatory protection is aimed at sellers rather than buyers. Since the Consumers, Estate Agents and Redress Act 2007 came into effect on 1 October 2008, which I welcome, every residential agent selling property in the UK must be registered with an approved redress scheme. As estate agents act principally for the seller, the buyer has relatively little redress under the scheme. Although estate agents are not obliged to tell buyers every last detail about the property—they are, after all, making a sales pitch—they must answer buyers’ questions accurately and to the best of their ability.
We have a list of typical complaints, to which the hon. Gentleman alluded, which broadly fall into the following categories: time taken to finish a building; misdescription or misrepresentation of the property or area; the contractual process after the exchange of contracts; inability to gain access to snag the property before completion; quality of finish on moving in and the time taken to come back and rectify the faults; absence of customer care; no legal right to damages or compensation, even if major problems with the property cause significant disruption or loss of amenity; and dissatisfaction with the actions of the National House-Building Council—however, when I had a complaint about one of my own properties, I found that the NHBC could not have been more helpful.
In July 2007, the Government announced an increased target of 3 million new homes to be built by 2020, so we will probably get even more of those types of complaint. It is incumbent on the Government to see whether consumer protection is adequate in that area, particularly in the light of the hon. Gentleman’s remarks.
The hon. Gentleman mentioned a company in his constituency, First Choice, and the role of ABTA, which is the industry regulator for the holiday sector. It publishes a code of conduct that requires, among other things, tour operators and travel agents to provide consumers with relevant and accurate information to help them make choices on their holiday and related products, including insurance. However, as the hon. Gentleman probably knows, in 2006, ABTA lost its Government seal of approval after it reduced the amount of financial protection that it offers holidaymakers: the organisation that represents the majority of UK travel agents and tour operators will no longer refund tourists who have been sold non-existent holidays by fraudulent agents. The Office of Fair Trading has stated that, given that change to ABTA’s code of conduct, it cannot back the revised scheme because it does not offer the same financial protection to consumers.
Current trends in the holiday market, as reported by ABTA members themselves, show that 68 per cent. of people are prepared to increase their holiday budget this year and that the average spend on holidays this year is expected to be £600 per person. However, despite the number of people willing to spend their money, even during the economic recession, there appears to be an issue—I would be grateful if the Minister addressed this point—and indeed a legal loophole whereby ABTA members can subcontract the provision of travel insurance, which is not unusual in itself, to non-ABTA members who do not subscribe to the code of conduct. Therefore, someone who thought they had bought insurance to cover the failure of their holiday could suddenly find they were insured with a company that would not provide for that. That allows for the provision of insurance that does not provide the same information or that supplies reduced cover.
I have already quoted from ABTA’s website, but it would be interesting to give hon. Members another quote from it:
“As you can see, it’s not always easy to know whether your money’s safe when booking a holiday or other travel arrangements. You should always ask when making your booking. If your arrangements aren’t automatically protected, ask if your travel company can offer you an insurance policy that will protect your money. ABTA has arranged a policy specifically for this—the ABTA Protection Plan—which is available to buy through most ABTA Members.”
As I have pointed out, there is probably a legal lacuna in that, which the Minister will need to look at carefully.
The third subject that the hon. Member for Edinburgh, North and Leith mentioned was the cloning of Government websites and lookalike websites. Many Members might have seen the horrific story reported by Matt Warman in The Daily Telegraph on 6 January 2009 about a fake Government website:
“The site looks identical to HMRC.gov.uk, using the same graphics, fonts and styling, and is being used to gather web users’ names, addresses and credit card details. Once the information has been obtained, the site then redirects people to the real HMRC website. Many victims have no idea that they’ve been conned until alerted by their banks. The fake site, set up from Denmark, has been recruiting users by sending a spam email, reminding people of the impending tax deadline on January 31, and then directing them to what appears to be a legitimate link. The page that comes up, however, is not the real HMRC.gov.uk.”
That seems to be a horrific scam, and the Government need to take it very seriously indeed. Having lost large amounts of data, the Government need to reassure the public and the consumer that data on Government websites are secure and that there is a clear way of knowing whether those sites are genuine. The penalties for that type of cloning should be severe when proved.
There is a related issue of counter-espionage cyber attacks on both Government and commercial computer systems in Britain, Germany, Australia, New Zealand, India and the USA, and they are thought to have probably originated in the far east. Such an attack caused a cyber riot that shut down banking and Government websites in Estonia for weeks after the deployment of new and sophisticated software, such as the so-called storm worm. Some threats to personnel and to commercial and national security are known to exist. Much of that cyber crime feeds on cyber carelessness and companies underestimating the risk.
The Government need to take aggressive, intelligent and persistent action against those threats, but some commentators have said the Government’s approach to the increased threat of cyber crime lacks co-ordination, focus and urgency. Perhaps the Minister ought to look to the United States, which has had its Internet Crime Complaints Centre, IC3, for seven years. It was established as a partnership between the FBI and the National White Collar Crime Centre. IC3’s mission is to serve as a vehicle to receive, develop and refer criminal complaints regarding the rapidly expanding area of cyber crime.
Those are just some of the large number of areas relating to consumer protection. The hon. Member for Solihull raised other areas—it is a big field. New scams are coming along all the time, and it is impossible for any Government regulatory authority always to be ahead of the game, but I have no doubt that clever people are looking at all those things. There used to be an insufficient number of technical people within the enforcement agencies to keep ahead of the game, so we now need to ensure that we have some of the best people in IT and in other skills to counteract those increasingly widespread scams. The problem is that they are now not only domestic in the UK, but tend to have a worldwide reach. Information gained, as the hon. Lady said, through credit card and banking scams means that large amounts of money can be shifted around the world merely at the touch of a button. I do not envy the Minister, because he has a huge job to do, but it would be interesting to hear his views on some of the issues raised today.
I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate and on how he campaigns on consumer issues more generally. I also welcome the interest shown by my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) and the hon. Member for Richmond Park (Susan Kramer), as well as the chance to follow the contributions made by the hon. Members for Solihull (Lorely Burt) and for Cotswold (Mr. Clifton-Brown).
Even in this relatively short debate, a series of issues has been raised, and I will try to do justice to at least some of them. My hon. Friend the Member for Edinburgh, North and Leith—I apologise for missing the start of his remarks—raised a series of specific constituency cases, not least some of the problems with new homes. Some of his constituents have found it hard to assert their rights because the firms that built their houses perhaps contracted out responsibility for completing the work to subsidiaries.
One of the issues that we are concerned about is the continuing high number of complaints about home improvements and the completion of work by those who operate in that sector. Year on year, Consumer Direct continues to report high levels of complaint in that area. That is one reason why I wish to bring together key players in that sector—for want of a better phrase—to hold a home improvement summit to consider the scale of the problems and what further collective action might be taken to improve the experience of consumers.
As my hon. Friend knows, whether specific action can be taken depends upon the particular circumstances of the case. However, I would be happy to have a further conversation with him if he wanted to explore whether anything else could be done to help his constituents.
My hon. Friend also mentioned First Choice holidays. I hope that he will understand when I say that I cannot comment on individual cases at this stage. His concerns about the ABTA code of practice were echoed by a number of other hon. Members. From what I have heard about that case, it seems that a package had been purchased. That is significant, because rights under package travel regulations may enable civil action to be taken to secure redress for those consumers who have lost out. Again, we are dealing with specific circumstances in that case, and I would be happy to discuss them in more detail.
I turn to the other matter raised by my hon. Friend—misleading websites. The Government recognise that there has been considerable concern of late about misleading websites, particularly those that appear to be similar in design to Government sites or debt advice agency sites. New protections in law protect consumers from unfair commercial practices, should misleading statements cause consumer loss. Those regulations have strengthened protections—for example, introducing a general duty on traders in all sectors not to treat consumers unfairly. They came into force in May 2008, and they prohibit unfair marketing practices, both online and in the high street. If the attention of the Office of Fair Trading or trading standards officers is drawn to specific cases, action can be taken.
I shall give an example of such action being taken on the question of misleading websites and debt advice. The OFT has recently taken action against firms posing as Government-endorsed or other sorts of official debt advice service. The OFT has initiated action against 27 websites, closed a number down and forced improvements in how others present themselves. The OFT is working closely with Citizens Advice and other consumer organisations to monitor what is going on in the sector and will continue to take action to shut down rogue websites.
The Minister mentioned one enforcement agency and one advice agency—trading standards officers and Citizens Advice. In my constituency, although I suspect that it is a national problem, council budgets are being squeezed. The budgets of trading standards officers and consumer advice centres are therefore being squeezed. As a result, they are becoming less effective, particularly in the enforcement work of trading standards and the debt advice of citizens advice bureaux. Will he consider that question carefully, because I believe that consumer protection is being weakened?
I have similar concerns, but responsibility has to be taken by local authorities. They have to make a judgment on the service required in the area. As the House would expect, I always hope that local authorities will prioritise support for trading standards and Citizens Advice. Action was taken in the pre-Budget report to make further funding available for debt advice, and agencies can bid for additional money. There is a series of extra advice surgeries, and surgeries are being opened for longer or at more convenient times. Further debt advice is being provided through citizens advice bureaux as a result of Government action.
[Mr. Martyn Jones in the Chair]
A number of hon. Members raised the issue of scams, either on the internet or simply through the activities of rogue businesses and more generally. Some hon. Members will know that, following the introduction of a series of pilot scambuster teams, we have rolled out the model of regional trading standards officers working with other enforcers to all parts of the United Kingdom.
So far, that approach has led to 19 successful prosecutions, with an estimated saving to consumers of more than £3 million, and £2.5 million-worth of criminal assets have been seized. Clearly more needs to be done, but although many of the scambuster teams are relatively new, they are already bedding down and making a difference.
The hon. Member for Solihull raised the question of mobile phone contracts. I am aware of the considerable concerns that arose last year, some of which continued into this year, about the complexity of mobile phone contracts, the difficulty of judging one service against another and whether cash-back and other contracts were being honoured. The hon. Lady may not be aware that Ofcom has taken action. Indeed, Consumer Focus, the new body to which a number of hon. Members referred, has also prioritised some of its work, putting pressure on the mobile phone industry to get its act together. We will continue to watch for progress. Given the huge concern expressed by the media and the House, we hope that the industry will realise that there is a spotlight on it and that it will continue to work to improve its performance.
We are taking a series of other measures to provide real help to consumers affected by the downturn—not only with the additional debt advice to which I alluded in response to the intervention from the hon. Member for Cotswold, but in dealing with some of the emerging practices that we have seen, such as in the credit card industry. We also realise that we need to help consumers not only by cracking down on rogue businesses, but by helping to deliver a level playing field for reputable businesses—the vast majority in the UK—that do not want their relationship with the consumer to be undermined by the rogues.
New markets have developed in recent years, particularly on the internet, which may lead to a need for changes in how regulations are introduced and managed in the UK.
The Minister is being generous in giving way. Does he recognise the final point that I made in my speech, which is that it is incumbent on all Government organisations to have people of sufficient expertise to be able to counter the growing world threat of cybercloning and so on—people with IT skills and forensic accountancy skills? Such people need to be well paid, as they need the ability to counter such international scams.
I accept in principle the point that the hon. Gentleman makes. We want to take action to increase our capacity to crack down on rogues—be they loan sharks, those perpetuating scams or those operating on the internet.
I referred to our additional investment in scambuster teams, which are beginning to make a difference regionally. We have also established regional illegal moneylending teams to target those who are often vicious thugs who operate as loan sharks and target the most vulnerable members of our communities. Those teams have had considerable success in bringing loan sharks to justice. They not only take victims’ harassers to court and prosecute them, but direct victims to more affordable credit, be it in the form of credit unions, social fund grants or loans, or support from debt advice charities. We have been aiming at a holistic response to people’s needs.
The marketplace in which consumers operate has been changing steadily as a result of globalisation, and the hon. Member for Cotswold alluded to additional work done in the United States. We recognise the need to update and modernise our consumer law and enforcement regime to reflect the internet era. With that in mind, over the past 18 months, my officials, at my request, have been reviewing the relevant consumer law with a view to introducing a series of reforms.
In particular, we recognise the need to improve internet enforcement. Many of the issues discussed today will be reflected in the consumer White Paper, to which my hon. Friend the Member for Edinburgh, North and Leith alluded, and we are busy working on those, although hon. Members will forgive me if I do not reveal the full contents of the White Paper at this stage.
Will the Minister comment on my suggestion of a register of administrators to help businesses seeking to trade with other companies to assess the risk-worthiness of such trade and to establish whether there might be any serial liquidators? That suggestion was made to me by an industry body and I have mentioned it a number of times in Parliament. Will he take it into consideration?
I shall consider the hon. Lady’s suggestion when working on the White Paper, but, if she will forgive me, I make no promises.
With that, I again congratulate my hon. Friend the Member for Edinburgh, North and Leith on securing the debate, and I look forward to the opportunity presented by the consumer White Paper to continue today’s conversation.
Police Crowd Control
I am grateful for the opportunity to raise in this House the widespread concern over the policing of the recent G20 protests and demonstrations. Like many hon. Members, I have been on my fair share of demonstrations and am well aware that police tactics are not always ideal. Since the days when I went on demonstrations nearly every Saturday, we have seen the rise of the citizen journalist. Police tactics and activities are subject to scrutiny as never before. The video footage and photographs of police crowd control at the G20 protests were shocking to many of our fellow citizens up and down the country in what could be called middle England. Such people might never have been on a demonstration and might not have believed previously what was said about police excesses.
We have a right to protest, and I am well aware that policing demonstrations and protests can be challenging for the authorities. From this Chamber we can hear the drumming of the demonstrating Tamils outside. That demonstration has been going on for three weeks and has caused sensation, impact and inconvenience. None the less, however challenging the citizen’s right to protest may be, it is that right that separates free western democracies such as ours from totalitarian regimes such as Iran, North Korea and other despotic Governments of whom we are often critical.
The Independent Police Complaints Commission is investigating four charges against the police in relation to the G20 protests. A police officer hit Nicky Fisher and knocked the back of her legs with a baton when she complained. An unnamed man and a 22-year-old woman claim that they were assaulted. There is also the tragic death of Ian Tomlinson, which caught public attention the most. I remind hon. Members that as well as those four specific IPCC investigations, there have been 256 complaints to the investigatory body. Members of the press and the public have raised many concerns about the conditions that protesters were subjected to as a result of the kettling technique and the heavy-handedness with which the police broke up groups of peaceful protesters.
Before I speak about the events of that day, I draw the House’s attention to the way in which our right to protest has been curtailed through legislation over the decades. The Public Order Act 1986 gave senior police officers the power to impose conditions on a protest. Under section 44 of the Terrorism Act 2000, senior police officers can grant stop-and-search powers to other police officers to search anyone. Although ostensibly directed against terrorism, section 44 powers have been used against protesters. Famously, police officers used section 44 to prevent my Labour party colleague and the well-known activist, the elderly Walter Wolfgang, from re-entering the Labour party conference in 2005.
Section 50 of the Police Reform Act 2002 allows the police to demand the name and address of anyone whom they believe has acted in an antisocial manner. Failure to provide that information is a criminal offence. It is therefore a criminal offence to fail to give a name and address when stopped on mere suspicion of committing a non-criminal act, but it is not a criminal offence to fail to give that information when suspected of a criminal offence. In other words, the legislation imposes a more onerous regime on protesters than exists for people who are suspected of criminal acts.
Under the Anti-social Behaviour Act 2003, ASBOs can be issued against anyone who displays behaviour that is likely to cause harassment, alarm or distress. ASBOs have been given to peaceful protesters. The Serious Organised Crime and Police Act 2005 restricted protests in the vicinity of Parliament. Bit by bit over the decades, serious pieces of legislation have curtailed our right to protest. Overall, they have tended towards an atmosphere in which peaceful protest is criminalised. That is the context in which we must examine what happened during the G20 protests.
A number of hon. Members have raised concerns about the way in which the police hyped the threat of violence in the days leading up to the G20 protests. The Metropolitan Police Service seemed to focus on how violent the protests would be. My hon. Friend the Member for Hendon (Mr. Dismore), the Chairman of the Joint Committee on Human Rights, commented at the time that the hyped-up talk of violence from the police ran the risk of putting off peaceful protesters and of being confrontational to all protesters. Some of us feel that even before the day of the protests, the police had heightened the atmosphere and given the impression that they were in a combative mode. That was not the right way to prepare for a day of peaceful protests. Of course the police had to put the right mechanisms in place and needed the right number of officers to be available. However, the rhetoric of the police in the days leading up to the protests alarmed me and other hon. Members.
The use of the kettling technique, by which hundreds of people are hemmed in for hours in one place, has been raised with me. That technique was first used in the May day protests about nine years ago. The kettle is essentially a pen in which protesters and others are trapped by lines of riot police on all sides. Once the crowd is caught in the pen, the idea is that people should be let out slowly and dispersed. The police may take each person’s photograph and contact details before letting them out. That is presumably so that they can be identified later.
The police might argue that kettling is peaceful and appropriate if it minimises the danger of damage to property. I have been in contact with a number of people who went to protest peacefully at the G20 protests, including women and people who took their children. A number of things are troubling about the kettling technique. First, it is indiscriminate. The police might pen in a few people who are intent on violence—we do not know. We do know that during the G20 protests, hundreds of people were caught up, including women and children, who were genuinely there for a peaceful protest. The police will capture in that pen people who just happen to be walking past; people who are not protesting but who are looking at what is going on—men, women and children; people who work in the area; and, as we know from the case of Ian Tomlinson, innocent people who are trying to make their way home. So, to contain a minority of potentially violent or troublesome protesters—it is always a very small minority—the police end up containing hundreds of innocent people.
Kettling is coercive: people are not allowed to leave once they are cordoned off and contained in that way, whether they have children to collect from school or have parents waiting for them—no matter what. Another problem with kettling is that it goes on for hours. People are not only denied access to food and water and not allowed to move around, but they are denied access to toilet facilities. Former Met officer John O’Connor has been quoted as saying, about kettling:
“Instead of sending snatch squads in to remove those in the crowd who are committing criminal offences, they contain everyone for hours. It is a retrograde step…it is an infringement of civil liberties.”
I believe that kettling is wrong because it is indiscriminate, coercive and, ultimately, punitive. If we, as a society, defend the right to peaceful protest, why should we punish people by keeping them penned up for hours and hours, as at the G20 protests, when they have committed no crime? That punishment was doled out to a very large group of people on 1 April without any clear evidence that the majority of that group had any intention of turning violent or disorderly. The use of kettling and the punitive nature of that technique have caused a lot of concern not only among the people who were demonstrating on that day, but among the general public, observers and even some members of the police.
As I said, the IPCC is investigating four alleged incidents of assault following the G20 protests, but I want to focus on the tragic death of Ian Tomlinson. He was a newspaper vendor who was working on the newspaper stand on Fish Street hill on the day of the G20 protests. During his walk home, he encountered police officers on three occasions. First, he was reportedly manhandled out of the way of a police van by four riot police officers.
Order. I must warn the hon. Lady that we are straying into sub judice areas here, because there is a court case involving Ian Tomlinson that we are aware of. It is the consideration of the Speaker and the Procedure Committee that we should avoid discussing sub judice matters if possible. If the hon. Lady keeps her remarks general, that will be fine, but I warn her not to stray into the details of the case.
I am grateful to you for those comments, Mr. Jones, but you will appreciate that it will be impossible to talk about the policing of the G20 protests without mentioning Ian Tomlinson.
A number of general issues arise from the case of Ian Tomlinson. It is alleged—I can go no further than that—that he encountered the police on three occasions. It is alleged that he was manhandled on all occasions, and that, finally, police officers followed him along the street—he did not, allegedly, charge the police lines—and lunged at him from behind, striking him with a baton. It is alleged also that when a member of the public called 999 and spoke to the emergency operator, the operator asked to speak to the police officers, but they ignored the request. What is a matter of fact is that the first post-mortem took place on 3 April—two days after Mr. Tomlinson’s death—and recorded that he had died from a heart attack.
What it is worth saying about the Ian Tomlinson case, without venturing into the court case or other areas that are sub judice, which Officers of the House are anxious that I should not do, is that there is some concern about the discrepancy between the two post-mortems.
All right. A number of general concerns arise from the Ian Tomlinson case, some of which I cannot discuss in detail at this point, but one concern that I can properly raise is the allegation that the police who allegedly attacked Mr. Tomlinson covered up their identification numbers. That issue has been raised not only in relation to this case, but in relation to a number of police activities on that day. The Minister will be aware that the entire reason why police have ID numbers is to enable members of the public to know whom they are engaging with and, if necessary, to make complaints. It is at the very least sloppy, and at the very worst suspect, for the police deliberately to cover up their numbers when they go into operations that involve members of the public, particularly those that involve controlling demonstrations. That is one issue on which I should like a response from the Minister.
The other general issue that arises from the death of Ian Tomlinson is the impression that was abroad that initially both the IPCC and the Metropolitan police were trying to avoid an investigation into the incident. The initial reports that were given out made no connection between his death and any interaction he may have had with the police. The only reason the general public got to know about what had happened to Ian Tomlinson was the existence of video tape that had been taken by interested observers. It is clear to many of us that there would not have been a formal IPCC investigation had that video tape not been available and put online. What happened to Ian Tomlinson—and, whatever happened to him, only the coroner’s court can tell us—would have been completely swept under the carpet. Many of us find that very disturbing.
Journalists were fed information that was not wholly illuminating, and were told that they were not allowed contact with the family. In accordance with the information that journalists had been given, the initial news reports focused on the missiles that had been thrown at police officers, but eye-witnesses said that there were no missiles. The Guardian has reported that it was repeatedly warned off, by both the IPCC and the police, from following the story, and that it was told that the family were extremely upset at its coverage of the case. Other journalists have said that the IPCC told them that there was nothing in the story that Mr. Tomlinson had been assaulted. It is now clear that the family are very happy with the coverage, which has shone a light on the truth, and, of course, it is true that it is alleged that Mr. Tomlinson was assaulted by the police before his death—whatever the relationship between that and his death may be, which only the coroner’s court can reveal to us. It seems to me that both the Met and the IPCC went out of their way to dissuade journalists from investigating this issue properly. Mr. Tomlinson’s family are not alone in being grateful that journalists and interested observers were anxious to see the truth come to light and justice done in this case.
That leads me to a point about the IPCC. I remember campaigning, all through the ’90s and before, for a genuinely independent body to investigate the police. In case after case and campaign after campaign that I was involved in, in London in the ’80s and ’90s, the issue that always came up was how the police could investigate themselves. I, along with many others, welcomed the setting up of the IPCC. Sadly, it has proved to be something of a disappointment. It seems to offer process, but no outcomes.
The Minister might remember the 1999 case of Harry Stanley. He was a Hackney carpenter who had the misfortune to enter a pub and have a drink while carrying a bag with a chair leg in it. He happened to be Scottish, but someone in the pub believed that he was Irish and that the chair leg was a gun. Harry Stanley emerged from the pub and was gunned down in plain sight. The IPCC conducted an investigation into the matter, which I believe was wholly unsatisfactory. The fact remains that no policeman has been held responsible for what happened to Harry Stanley. He had nothing to do with any crime, criminality or terrorism; he was a carpenter having a drink in a pub in Hackney. His only fault was to be in the wrong place at the wrong time.
Ministers will remember the much delayed and much criticised IPCC report into the death of Jean Charles de Menezes. Again, he was a member of the public who was in the wrong place—
I was trying to make the point that something that emerges from the policing of the G20 protests is the role of the IPCC. I was trying to show that the inadequacies of the IPCC in relation to policing the G20 have been reflected in earlier incidents. That is why I mentioned Harry Stanley and the de Menezes case.
In the case of the G20 protests, the IPCC waited several days before announcing its own investigation. The IPCC denied that CCTV footage was available at the protests when it was, and it seems clear that the only reason why the IPCC moved to announce the investigation was that the truth was being revealed online, on the internet and in newspapers. It is very relevant, when illustrating the failings of the IPCC in relation to this subject, to mention its history hitherto.
In the aftermath of the protests, the Met police released their report of the event entitled “Policing of the G20 summit 2009”. The report claims that the Met police were unable to communicate with protest leaders, but protesters have said that they found the police unwilling to talk to them when they approached them prior to 1 April. The report claims that kettling was engaged only after protesters became violent. The protesters say that the main protest was peaceful until they had been contained for hours and hours.
I have received many letters from constituents who were involved in the protest and were concerned about police behaviour. One constituent tried to leave the protest once the cordons were put in place and asked a police officer if she could leave. She was told that she should have stayed at home in the first place. That seems to reflect the coercive and punitive nature of some of the policing of that protest on 1 April.
The director of Liberty, Shami Chakrabarti, says:
“Few would argue against proportionate interferences with that right to protect people and property. Yet the past 15 years have so blurred the lines between civil, public order and anti-terror powers that we risk turning constables (whose traditional role was to keep the peace) into bouncers charged with shutting down demonstrations.”
Although the majority of police at the G20 demonstrations did their best, I believe that the policing of those protests revealed the use of some very troubling tactics, notably kettling, and a very troubling attitude on the part of some members of the police—not all or even the majority. It also revealed something very troubling about how the IPCC sees its duties. When we have the final findings of the coroner’s court in relation to Ian Tomlinson, I do not believe that they will necessarily reflect favourably on the policing of the G20.
It is easy to demonise and stigmatise protesters and demonstrators. It is easy for middle-aged Members of Parliament to forget the days when they were demonstrators and protesters too, but, however inconvenient, troubling and challenging the right to protest may be, it is the fundamental role of this Parliament to defend the right of citizens to protest peacefully and to draw attention to policing tactics and attitudes that infringe on that fundamental civil liberty.
As ever, it is a pleasure to engage in debate under your stewardship, Mr. Jones. I congratulate my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) on securing an important and topical debate. This important issue has recently attracted considerable interest. I have certainly listened carefully to the points made and I shall try to deal with some of them.
These debates are never long enough. I have been a Member of Parliament for four years and my hon. Friend has been an MP for 22 years, and I think that the idea is that the Minister responds to the debate, but my hon. Friend has left me with five minutes out of the 30, so perhaps my understanding is incorrect.
I am always happy to give time to my hon. Friend and I would be happy to oblige her in relation to that.
Some of us have personal experience in this area, so we know that all in the garden is far from rosy. I was first arrested in 1988 on my 21st birthday, which I spent in Southwark police cells, during a “grants not loans” demonstration. Hon. Members will be pleased to hear that I was acquitted at Horseferry Road magistrates. That was my first experience of the police and it was a rude awakening—but just from those police officers involved, not the police as a whole.
My next engagement with the police was in 2001 when I was arrested and hospitalised courtesy of the police during the riots in Burnley. On that occasion, I was not charged and I later received an apology. I know that things can go wrong, but it is my belief, and I think the fundamental belief of most people, that the police often have a difficult job to do, which, in the case we are discussing, is balancing the right of people to demonstrate peacefully with the security and safety of others. That is why the Metropolitan Police Commissioner has asked for the Independent Police Complaints Commission to come in.
I agree with my hon. Friend that, frankly, the IPCC’s predecessor was a joke. I experienced its predecessor. I had an officer from the same constabulary investigating other officers because of a complaint that was made. The IPCC is light years ahead. It is truly independent and my hon. Friend is wrong to say that it is not listened to, because, following Stockwell, many of its recommendations were taken on board by the police and have led to fundamental changes.
Rather than focus on my prepared speech, in the few minutes remaining I shall respond to some of my hon. Friend’s points. She is right to talk about officers being identifiable. It is completely wrong and unacceptable for any officer to have their number covered so that they are not identifiable. The Met Commissioner, Sir Paul Stephenson, and I believe that to be the case.
My hon. Friend talked about how some of the legislation in respect of counter-terrorism powers is used. I stress that it is our view that those powers should be used only in relation to terrorism and not anything else. It is completely wrong for that to happen.
On the powers that exist in relation to protests around Parliament, for information, that is something that we are looking at, and will be reviewing and repealing. The police message on the G20 summit stressed the risk of violence—my hon. Friend is absolutely right—but it also stressed the right to lawful protest.
Unfortunately, only half that message seemed to get out there through the media. The police were clear about the fact that the coming together of a number of different groups heightened the risk of violence, but they also stressed the commitment to facilitate lawful protest. We should not lose sight of the fact that there was some violence on the day. It was minimal and we should not lose sight of the fact—
I am pleased that we are having this debate today, and I thank Mr. Speaker for affording me the opportunity to discuss Hezbollah, Lebanon and the middle east peace process at this important time.
The debate is timely, given the forthcoming Lebanese election, which will take place on 7 June. We need to be aware that a win for the Hezbollah-led March 8 Alliance could have a destabilising effect not only in Lebanon, but in the wider region, which is why I requested the debate.
Before I speak about the political situation in Lebanon, I would like to say a little about the nature of Hezbollah, its structure and its objectives. Hezbollah is a political organisation with a strong paramilitary force that operates independently of the Lebanese state. It emerged in the early 1980s to resist the Israeli occupation of southern Lebanon during the Lebanese civil war. Its fighters were organised and trained by a contingent of the Iranian Revolutionary Guard. Even today, Iran and Syria are its main sponsors, providing financial, political and military support to the organisation.
The deputy leader of Hezbollah, Sheikh Nairn Qassem, stated in April 2007 that
“all policies including firing missiles into Israeli territories could not have been done without the consent of the leader of the Islamic Republic of Iran. He has to agree to all Hezbollah’s activities in advance.”
Hezbollah is a proxy of Iran and is used by Tehran to exert its influence over Lebanon and the eastern Mediterranean.
The Hezbollah manifesto document produced in 1985, entitled “An Open Letter: The Hizballah Program”, makes it clear that the organisation operates under one command structure and shares the same goals:
“No one can imagine the importance of our military potential as our military apparatus is not separate from our overall social fabric. Each of us is a fighting soldier.”
Hezbollah does not have separate leaderships for its military and non-military work. The Jihad Council, Political Council, Executive Council and Judicial Council all report to the Shura Council. In an interview with the Los Angeles Times published on 13 April, the deputy leader, Sheikh Nairn Qassem, said of Hezbollah’s structure:
“Hezbollah has a single leadership. All political, social and jihad work is tied to the decisions of this leadership. The same leadership that directs the parliamentary and government work also leads jihad actions in the struggle against Israel.”
The 1985 manifesto outlines the objectives of Hezbollah as
“putting an end to any colonialist entity”,
bringing the Phalangists to justice for
“the crimes they had perpetrated”
and establishing an Islamic regime in Lebanon.
In addition, Hezbollah leaders have made numerous calls for the destruction of Israel. The manifesto makes it clear that Hezbollah intends to use armed force to achieve its goals and frames its arguments in the language of jihad.
Hezbollah is committed to war against Israel. On 16 April, the leader of Hezbollah, Hassan Nasrallah, was quoted thus:
“I am against any reconciliation with Israel. I do not even recognise the presence of a state that is called Israel. I consider its presence both unjust and unlawful. That is why if Lebanon concludes a peace agreement with Israel and brings that accord to the Parliament our deputies will reject it; Hezbollah refuses any conciliation with Israel in principle.”
Hezbollah’s objectives and how it sets out to achieve them threaten stability in the middle east and challenge the sovereignty of the Lebanese state. The violent clashes that took place in Lebanon in May 2008 were triggered when the Lebanese Government sought to challenge Hezbollah’s independent military capacity. Government moves to sack the Hezbollah-appointed head of security at the airport and to close down Hezbollah’s internal communications network were branded by Hassan Nasrallah as a declaration of war against the organisation.
Hezbollah’s response was to engage in violence, which brought civilian life into grave danger. The clashes that took place resulted in the death of some 40 people and took the country to the verge of another civil war. Ultimately, Hezbollah seized west Beirut, which forced the Government into a humiliating climbdown and led to the Doha agreement of 21 May 2008, which resulted in the election of Michel Suleiman as the new Lebanese President after 18 months of political stalemate.
The Doha agreement was nothing short of a victory for Hezbollah. It secured the militant group a veto over Cabinet decisions and allowed it to maintain its weapons arsenal as long as it was not used to resolve internal political conflicts. That means that although the Lebanese Government may no longer be a target, Hezbollah can continue to build its weapons cache for use against Israel in direct contravention of UN Security Council resolution 1701, which calls for disarmament of the group.
The international community continues to voice concerns that Hezbollah is rearming and that weapons are being smuggled across the Syria-Lebanon border, thereby raising prospects of further conflict in the near future. I would like to ask my hon. Friend the Minister what discussions he held with the Syrian Government during his visit last month on their political, financial and military support for Hezbollah. I would also like to know what steps the British Government have taken to encourage the Syrian and Iranian Governments to do more to prevent the continued rearming of Hezbollah.
Today, Hezbollah continues to maintain its military capacity in direct contravention of UN Security Council resolutions 1559 and 1701, and in defiance of the UN military mission UNIFIL—United Nations Interim Force in Lebanon—which is mandated to oversee implementation of the resolutions.
Hezbollah leaders themselves continue to maintain not only that they are rearming, but that they are acquiring more sophisticated military technology. UN Secretary-General Ban Ki-moon’s latest report, published on 24 April, on UN Security Council resolution 1559 reiterates concern that Hezbollah continues to maintain a substantial paramilitary capacity and infrastructure, separate from the Lebanese Government, along with a distinct telecommunications network.
Those concerns were reiterated by Terje Roed-Larsen, UN special envoy for the implementation of UN Security Council resolution 1559, when he addressed the UN Security Council last Thursday:
“The most significant remaining Lebanese militia is the armed component of Hezbollah.”
He added that it was
“a direct challenge to the sovereignty of the Lebanese State and a threat to regional stability.”
The UN Secretary-General’s report is also critical of Hezbollah’s actions in Egypt, citing the announcement made by the Egyptian authorities on 8 April that 49 people had been arrested for allegedly being part of a Hezbollah cell planning terrorist attacks in Egypt. According to Mr. Roed-Larsen:
“Equally alarming was the fact that Hezbollah has publicly admitted to providing support to Gaza-based militants from Egyptian territory.”
On 10 April, Hassan Nasrallah publicly acknowledged that the Egyptian authorities had detained a Hezbollah operative for attempting to provide logistical and military assistance to Palestinian militant groups in the Gaza strip. It is thought that the operative was the ringleader of the cell.
The US State Department’s annual report on terrorism, published on 30 April, highlights Iran and its proxy Hezbollah as lead sponsors of terrorism in the region. The report notes:
“Hamas and Hezbollah continued to finance their terrorist activities against Israel mostly through state sponsors of terrorism Iran and Syria, and through various fund-raising networks in Europe, the US, the Middle East, and to a lesser extent, elsewhere.”
The US State Department also notes that Hezbollah has completely replenished its ranks, that it possesses more short and medium-range rockets than it had before the 2006 war and that it has moved arms back into southern Lebanon. Perhaps most distressing is the fact that the report notes that London is one of the major financial capitals through which funds to Hezbollah are channelled. I would like to hear from my hon. Friend what steps the British Government are taking to ensure that such funding is monitored and stopped, and that UK banks are prevented from doing business with proscribed sections of Hezbollah.
Focusing on the internal Lebanese situation, the UN Secretary-General criticised Hezbollah for stoking up an atmosphere of intimidation in the run-up to the June election. We should not downplay the consequences and significance of a strong showing for Hezbollah in the forthcoming election. The decision by the UN-backed Special Tribunal for Lebanon on 29 April to release four Lebanese generals who were held in connection with the murder of the former Lebanese Prime Minister represents a major boost for Hezbollah.
More significantly, a new electoral law has redrawn various districts in ways that may bolster Hezbollah at the expense of the current coalition. An electoral gain for Hezbollah would represent a victory for Iran and its long-term strategy of seeking to gain regional hegemony through the promotion of a radical ideology and the application of political violence. It would also strengthen Iran’s power in Lebanon and further blur the distinction between the Lebanese Government and the Hezbollah parallel state.
I would like to focus now on UK policy on Hezbollah. On 4 March, my right hon. Friend the Foreign Secretary wrote to the Foreign Affairs Committee to inform it of a “significant change” in Government policy on Hezbollah. That same day, my hon. Friend, who has ministerial responsibility for the middle east, gave evidence to that Select Committee in which he made it clear that the Government were now exploring contacts with the political wing of Hezbollah. The Government have confirmed that that adjustment to policy was designed
“to press Hezbollah to play a more constructive role politically and move away from violence.”
The Foreign Office issued a statement on 5 March verifying that, prior to that official announcement, our ambassador in Beirut accompanied a group of Conservative parliamentarians to a meeting with the Lebanese Foreign Affairs Committee on 9 January that was also attended by Hezbollah Member of Parliament Ali Amar.
In response to a written question asking what criteria the Government use to distinguish between Hezbollah’s political and military wings, my hon. Friend stated:
“The Government distinguish between those parts of Hezbollah which are legitimately involved in Lebanese politics and those who are actively concerned in terrorism.”—[Official Report, 31 March 2009; Vol. 490, c. 1118W.]
However, in an article that appeared on Hezbollah’s website, Hezbollah senior activist Omar al-Moussawi says that although the UK’s policy has changed, Hezbollah’s has not. Hezbollah, he insists, remains an unchanged, singular and indivisible entity with no distinction between its military and political wings. He continues by saying that
“today there is a tremendous openness toward Hezbollah, and after a boycott that lasted for many years, Britain has announced a new openness toward Hezbollah and a dialogue with it… despite the fact that Hezbollah has not changed and still resists and refuses to recognise Israel. It is the other side—
—that is, Britain—
“that has changed, and retreated from its previous position”.
As previously outlined, Hezbollah has not made any positive moves towards disbanding its militia, in accordance with UN Security Council resolutions 1559 and 1701. On 13 March, Hassan Nasrallah made it unequivocally clear in a speech that, despite the British move, Hezbollah would not abandon its strategy of violence and terrorism and would never recognise Israel. It seems most peculiar that the Government have pursued this policy change at a time when Hezbollah continues to arm itself, in breach of UN Security Council resolutions. How do the Government reconcile their decision?
My worry is that the only benefit so far of the UK Government’s policy shift has been for Hezbollah, which has used it for its own electoral propaganda in the run-up to the Lebanese election. Hezbollah’s electoral campaign has been boosted by the British decision, which was made despite the fact that, as outlined, Hezbollah does not distinguish between its political and military wings. I therefore ask my hon. Friend whether he would please list the benefits so far for the UK and the international community of the decision to engage with Hezbollah and what benefits he believes there will be, going forward.
What contacts have been made with Hezbollah’s political wing since the beginning of March? Will my hon. Friend commit to reassessing the Government’s approach to Hezbollah, should the organisation take any further steps in the wrong direction?
An opportunity to re-evaluate the UK Government’s position will present itself after the Lebanese election, when Hezbollah will have the choice either to continue down the path of violence or to disarm and engage peacefully through non-violent means. Should it choose the former, the Government should actively reconsider their policy of exploring contacts with any element of the organisation. Not re-evaluating that policy will allow Hezbollah to continue to use UK recognition as a means to legitimise its actions. Further, the danger is that British policy could undermine Arab moderates in the region who strive for peace through non-violent means.
Hezbollah’s actions adversely impact on the internal politics of Lebanon. The organisation is intimidating the electorate and marginalising the Government’s sovereignty while flouting UN Security Council resolutions 1701 and 1559, which call on Hezbollah to disarm.
Hezbollah also affects the stability of the wider region and the middle east peace process. As admitted by Hezbollah itself, and spelt out in the UN Secretary-General’s report, Hezbollah provides support to Palestinian militant groups to strengthen their capacity to launch attacks against Israel. Such actions undermine the Palestinian moderates, led by President Mahmoud Abbas, who are committed to a two-state solution.
The international community should focus all its efforts on empowering and strengthening the moderates in the middle east—specifically in Palestine, Lebanon and Egypt—who are committed to peace in the region. It should not engage with those organisations that have entrenched, non-negotiable positions and which seek political change through violence. I therefore urge my Government to do all they can to engage with the new US and Israeli Administrations and the wider Arab world in a process to build a comprehensive peace and constantly to re-evaluate their position vis-à-vis exploring contact with Hezbollah.
I look forward to the Minister’s response.
I am pleased to have this opportunity to respond to my hon. Friend the Member for Denton and Reddish (Andrew Gwynne). I congratulate him on securing this debate. On these issues his passion, commitment, integrity and understanding are apparent to all who know him and came through clearly in his contribution.
Lebanon and the middle east peace process continue to be an extraordinarily high priority for this Government, as well being as a subject of great interest to hon. Members in all parties in the House, particularly in the run-up to the Lebanese parliamentary elections in June. The UK is strongly committed to stability in Lebanon and the wider region. We signalled this commitment to the President of Lebanon during his visit to the UK last month, when we emphasised that his role in providing constitutional continuity and promoting reconciliation in Lebanon sets a positive example for the whole region.
Before I come to the specific policy on Hezbollah, it is important that it be set in its proper context. Since the political vacuum of May 2008, there have been welcome improvements in Lebanon: the Doha accord, the election of President Suleiman, the formation of a national unity Government and ongoing national dialogue and reconciliation. We wanted those things to happen and it would be wrong if we did not acknowledge that that has taken place. These promising developments are supported by a greater movement towards stability in the region. Diplomatic relations between Lebanon and Syria, reconciliation between Syria and Saudi Arabia and the recent reports of movement on the Israeli-occupied Ghajar farms will help to provide a supportive atmosphere for the upcoming parliamentary elections. That is certainly our hope and our intention.
The UK is committed to fair, democratic parliamentary elections and has been supporting that process through projects costing almost £200,000. However, despite these developments there remain outstanding issues of deep concern, which my hon. Friend has mentioned: the proliferation of weapons and armed groups and failure to make concrete progress on issues, including the Israeli-occupied Sheba’a farms and the situation in Palestinian refugee camps. Hezbollah, in particular, continues to maintain a substantial independent military capacity—my hon. Friend mentioned that—and claims of more sophisticated technology and news of developments in Egypt add to the urgency of resolving these issues.
Our policy towards Hezbollah sits in the context of these improvements on one hand, and ongoing concerns on the other. But before I address that question, let me state clearly we have no illusions about Hezbollah. The aim of our policy is for that organisation to change and for it to reject violence, disarm and engage constructively, democratically and peacefully in Lebanese politics, in line with UN Security Council resolutions. In order to achieve this, our policy therefore has two strands. First, and most importantly, we take a strong position against any support for terrorism. In July 2008, we extended our proscription of Hezbollah from the external security organisation to its entire military wing. That was absolutely the right thing to do. It is fair to say that that puts us at the tough end of the spectrum within the European Union.
We continue to urge disarmament and to highlight the destabilising effect of an independent militia in the region. Most recently, we highlighted our strong concern at the UN consultations on UN Security Council resolution 1559 when we argued that it was essential to tackle the proliferation of weapons and armed groups, with particular reference to Hezbollah, to ensure long-term stability in the region. We also discussed the issue with the President of Lebanon during his recent visit to this country.
My hon. Friend asked about funding for Hezbollah and allegations that funding comes through London. I am sure that he and other hon. Members understand that because of the sensitive nature of the question, I am not in a position to confirm or deny funding of Hezbollah in the UK, but I can assure my hon. Friend that the UK is at the forefront of global action to combat the financing of terrorism. Terrorist financing is fully criminalised under the Terrorism Act 2000, and following a recent evaluation by the Financial Action Task Force, the international body which sets the standards for tackling money laundering and terrorist finance, the UK gained more “fully compliant” ratings of its work in this area than any other country assessed to date. That emphasises our real commitment to that crucial issue.
Secondly, alongside that tough stance, we are exploring the possibility of limited and considered contacts with Hezbollah’s politicians, and my hon. Friend referred to that. That means contacts only—I emphasise “only”—with those members of Hezbollah who are legitimately involved in Lebanese politics, and not with those who are involved in violence and terrorism. We are open to serious discussion with Hezbollah’s MPs on the same basis as MPs from other factions in Lebanon. Hezbollah’s MPs have condemned violence and assassinations, and called for calm and restraint in the run-up to the Lebanese parliamentary elections. On 25 February 2009, the weekly meeting of Hezbollah’s MPs concluded that the
“circulation of a calm climate...and the contribution in controlling and easing of tensions, is a responsibility to be shared by all officials, forces and reference authorities in all regions and by all confessions and sides”.
We strongly welcome that, and have been pressing for such statements, but it must now be carried through into reality. Such contacts provide the opportunity to speak frankly and directly with Hezbollah politicians about the party’s wider actions that threaten regional stability and the peace process. In doing so, we will gain greater insight into their objectives and can pass on clear, firm messages seeking to influence Hezbollah’s actions. That is an example of our strong, principled diplomacy and engagement.
It is also important to put that change of policy into context. To date, there has been only one meeting. On 9 January, our ambassador in Beirut attended a meeting of British parliamentarians with the Lebanese Foreign Affairs Committee. Representatives of all members of the national unity Government were present, including one MP from Hezbollah’s political wing, Ali Amar. During that meeting, our ambassador took the opportunity to urge all sides to show restraint during the crisis in Gaza, and referred to the importance of their respecting the terms of UN Security Council resolution 1701. No further meetings have been arranged, but any future contacts will be carefully considered and decisions will be made on a case-by-case basis.
As my hon. Friend and I have discussed privately, we are apprising ourselves of the new political situation in Lebanon and tentatively exploring step-by-step contact with Hezbollah MPs who are not involved in and reject violence. We are interested only in serious dialogue with Hezbollah about issues of national importance to Lebanon and the region. We will avoid any engagement with Hezbollah that causes publicity that might interfere with the upcoming Lebanese election. I assure my hon. Friend that, as he has urged us to do, we will continue to keep that policy under review and to take developments into account.
My hon. Friend asked specifically about the distinction between which Hezbollah representatives we will and will not speak to. Our distinction is between those who are legitimately involved in Lebanese politics and those who are involved in violence and support for terrorism. We will rightly take a pragmatic approach by speaking to known moderate political figures who, to the best of our knowledge, have no links to acts of violence.
In addition, we are trying to improve stability in Lebanon and to prevent arms smuggling more generally in the region. First, we are working with our regional partners, and calling on the Governments of both Syria and Iran to cease their support for Hezbollah. During my recent visit to Syria—my hon. Friend asked me about it—I discussed the matter with Syrian Foreign Minister Muallem, and my right hon. Friend the Foreign Secretary raised it with President Assad during his visit to Syria in November 2008. We have serious concerns about Iranian support for Hezbollah. Such support is unacceptable, in contravention of the arms embargo established by UN Security Council resolution 1701, and serves only to undermine regional security. We are strongly communicating that message to the Syrian Government, as well as the Iranian Government, although the degree to which they have influence is still open to question.
Secondly, we have provided some £800,000 over two years to the internationally supported northern border pilot project, which aims to secure the border between Lebanon and Syria. On Lebanon’s southern border we are supporting the Lebanese Centre for Policy Studies with a grant of £100,000 over two years to increase UNIFIL’s capacity to manage, mediate and resolve localised conflict with the communities of southern Lebanon. I saw some of that work during my visit to Lebanon last year, and it is contributing to the way forward. Through those policies, we aim to improve Lebanon’s security, to increase its sovereignty and to work to achieve long-term durable stability in the region and beyond.
It is important to emphasise—my hon. Friend did not raise this today, but he and other hon. Members have raised it with me privately—that there is no read-across from that policy to Hamas. Our policies must reflect the specific circumstances of the Lebanese and Palestinian political contexts. We have no contact with Hamas, and we do not believe that it is productive to talk to it directly at the moment. The Arab League has mandated Egypt to communicate with Hamas. As long as Hamas fails to subscribe to a two-state solution and fundamentally to reject violence, it is difficult to see how it can be part of the solution. If and when the Palestinians form a Government of national consensus, we will look carefully at their exact composition and programme before making any decisions on engagement.
My hon. Friend asked for this debate on Hezbollah in Lebanon and the middle east peace process, and was right to highlight the regional context and the importance of the process in the middle east. The Government are fundamentally committed to pursuing a comprehensive peace based on a two-state solution. A comprehensive approach to the middle east peace process will bring stability to the wider region, and political stability throughout the world. That means developing a solution on the Israel-Syria track, addressing concerns about Iranian intentions, and ensuring stability in Lebanon. Within that, the international community has a hugely important role to play. We must redouble our efforts to make a two-state solution a reality. My right hon. Friend the Foreign Secretary made those points at the UN Security Council yesterday, and we will continue to work with our international partners towards that goal.
We are at a timely juncture in the affairs of the middle east. Some people are pessimistic, but there are hopes and opportunities. President Obama and the new US Government are more committed to pursuing peace in the middle east than any US Administration in recent times. We must engage with the new Israeli Government and support the Arab peace initiative, and we need to see some response from the Israeli Government, particularly on settlements. I hope that with support from the international community, we can drive the process forward and move from a debate about a middle east peace process to a plan for implementation that can bring prosperity, peace and security for all.
I again congratulate my hon. Friend on securing this debate, and on his commitment to the issue, which is clear for all to see.
Private Rented Housing
I am grateful to Paragon Mortgages, whose head office is in my constituency, and to the Association of Residential Letting Agents for the help that they have given me in preparing for the debate.
Private lettings have not always enjoyed the best of reputations, but the days of Mr. Rigsby are, if not gone altogether, not a feature that we recognise as part of the general landscape today. Indeed, as an owner of two multi-occupancy properties in the dim-and-distant past, I know how many constraints and rules apply to the modern landlord. The private rented sector plays a very important social and economic role in the UK, helping to meet housing demand throughout the country. It provides housing for 3.2 million households, representing 12 per cent. of housing tenures, according to figures from the Department for Communities and Local Government. It meets the needs of both those wanting long-term accommodation and those requiring more flexibility.
The Government’s national housing and planning advice unit reported last year that buy-to-let has significantly increased the size of the private rented sector and helped to keep rents low. Those landlords are still comparatively small and lie at the heart of private rented sector provision. Three quarters of landlords are private individuals and couples, according to figures from ARLA. Only 10 per cent. are private companies.
Julie Rugg’s review of the private rented sector for the DCLG recommended that Government policy should help good landlords of all sizes to expand their portfolios. She stressed that that should include smaller landlords as well as larger ones. I look forward to the Government response to the Rugg review, which is expected later this week.
Driven by social and demographic change, the private rented sector now plays an important role in the UK housing market. Landlords have been able to respond to local patterns of demand effectively and efficiently. They offer locally managed responses to local needs.
Institutional investment has been mooted by Government in the form of the private rented sector initiative, which offers institutions interested in the sector an opportunity to invest on a large scale and for the long term. We expect more details of that scheme to come forth as part of the Government response to the Rugg review. However, it may not be the best or at least the only way to increase supply in the sector. The economics may not stack up. Suitable returns may not be made, given the illiquid nature of housing assets and the additional costs with institutional structures. Julie Rugg notes that small-scale landlords inject a great deal of uncosted sweat equity and do not factor in the time they spend managing their properties, in contrast with larger institutional landlords with higher management costs.
Social housing has not kept pace with the UK’s demographic changes. There has been a consistent decline in the provision of local authority social housing since the 1980s. The private rented sector has helped to fill that gap. Social housing accounted for 25 per cent. of stock in 1991 compared with 18 per cent. in 2007, according to DCLG figures.
The majority of the growth in the private rented sector has been funded by buy-to-let mortgages. The number of units in the private rented sector grew from 2.45 million in 2000, to 3.2 million in 2007, coinciding with a significant growth in buy-to-let lending. I want to talk about where the funding comes from for this sector. The sector was the mainstay of specialist lending, especially for landlords operating in the private rented sector.
Specialist non-bank lenders have played an important role in the growth of, and improving standards in, the private rented sector for more than a decade. The number of new loans for buy-to-let house purchase grew from 85,000 in 2002 to 183,000 in 2007, but funding constraints meant that that fell to 103,000 in 2008. Specialist lenders, excluding bank and building society subsidiaries, accounted for more than 20 per cent. of the buy-to-let mortgage market in 2007. By the final quarter of 2008, that had fallen to 0.3 per cent. Those figures are from the Council of Mortgage Lenders.
Non-bank buy-to-let specialist lenders have originated high-quality assets and experience low arrears. In addition, most non-bank buy-to-let lenders have extremely sound balance sheets. Colleagues have drawn attention to the number of recent repossessions in the rented sector, but it is important to note that the majority of those involve owner-occupied mortgages where borrowers have not informed lenders that they are renting, not buy-to-let mortgages.
Let me describe the current context. The credit crunch has resulted in increasing demand for rental property. People are more reluctant or are unable to buy and many are seeking refuge in renting. Figures from the Intermediary Mortgage Lenders Association show that 58 per cent. of first-time buyers were unable to get a mortgage through their broker in the final three months of 2008. Of those, 80 per cent. are opting to rent instead.
The private rented sector will play an increasingly important role as the recession continues. There was a 47 per cent. increase in rental demand in 2008, according to the property website Your Move. Demand from residential property investors is strong at a time when other sectors are showing little appetite for house purchases. Landlord purchasing activity has benefits for the wider housing market, as it could put a floor under falling house prices, and it creates an active market.
However, as more people turn to the private rented sector to meet their housing needs, the availability of buy-to-let lending to finance an expansion of the sector has fallen sharply. That shortage has been caused by the closure of the wholesale funding markets, thus non-bank lenders are not able to resume lending. Many non-bank lenders relied on securitisation to fund new lending; but since markets closed in 2007, no new funds have become available through that route, despite the fact that most non-bank lenders have no exposure to toxic assets.
Figures from the Council of Mortgage Lenders show that new lending for buy-to-let properties has fallen significantly. Of the top 10 buy-to-let lenders in 2007, only two are now writing new business: Lloyds TSB and Nationwide, and Lloyds TSB has signalled a change of buy-to-let strategy, reducing its focus on that sector. Non-bank lenders, which have provided vital competition and driven the market forward, are unable to operate in the market at all. Buy-to-let lending by specialist lenders fell to 0.3 per cent. in the fourth quarter of 2008. Figures released last week by Moneysupermarket show that the number of buy-to-let mortgages available has fallen in two years by 95 per cent.
What are the consequences? The absence of buy-to-let finance for investment in residential property has serious social consequences. At a time when people are looking to the private rented sector to meet their housing needs, the absence of funding has meant that the sector cannot expand to meet that demand. Landlords’ appetite to borrow remains. Considerable funding for the private rented sector has come from the non-bank sector, but that sector is now severely constrained and little new finance is coming in. Specialist non-bank lenders have been excluded from the Government’s lending support initiatives to date. Those lending initiatives have not resulted in any funds being passed through to specialist lenders from banks that have access to the schemes. There is no evidence that the lending commitments agreed by the nationalised and partly nationalised banks will result in the provision of necessary finance to allow the private rented sector to grow.
Existing lending by high street lenders will certainly not be sufficient to fill the gap created by the loss of non-bank capacity. Increased pressure on the private rented sector runs the risk of leading to rental inflation, putting further pressure on tenants. Indeed, the banks that are still lending in the private rented sector are increasing the minimum rent that they require landlords to charge. There is currently a complete lack of competition in that market. Moneysupermarket has referred to the market as a “ticking time bomb”, with the products on offer not reflecting need in the market.
What needs to change? What can we do to ensure that the private rented sector plays a full role in the future? The Government have attempted to stimulate institutional investment, but that is not likely to be the answer. Unsuitable properties are likely to be provided, which will not reflect local demand in the way that can be achieved by more adaptable individual landlords, with the knowledge and experience that come from being embedded in the local community.
We need to find ways to encourage such landlords to increase the supply of private rented sector properties. The answer lies in mortgage funding. Private landlords using buy-to-let finance have responded to demand in the private rented sector in the past, and lenders stand ready to provide the funds needed to meet that demand, but the Government need to help specialist non-banks to access finance.
In the Budget, the Chancellor announced further details of the lending support measures initially announced at the start of the year. Among those measures is the guarantee scheme for asset-backed securities, which is aimed at reviving the UK securitisation market to make more funds available for mortgage lending.
On 19 January, the Prime Minister said that the package of measures that have been proposed
“must be accompanied by action to address all the obstacles that are discouraging and preventing the remaining UK banks from supporting the expansion of lending.”
The package announced by the Chancellor last month will patently fail to achieve that. Buy-to-let is included in the scheme, but the majority of mainstream banks have withdrawn from the sector altogether.
Non-banks are excluded from the scheme, which is exclusively limited to banks and building societies, so specialist lenders, which have used securitisation to lend in key parts of the housing market, such as the private rented sector, are prevented from doing so again. The Government have commented on risk profiles, but the overwhelming majority of non-bank institutions have taken a prudent approach to lending.
There will be no secondary lending effect. Even mainstream banks are proving unwilling to utilise the scheme. The lack of lending in the buy-to-let sector is compounded further by the fact that high street banks are not passing on any new funding to specialist financial institutions.
The private rented sector is not getting the inflow of funds that it badly needs to allow landlords to meet demand. The answer is to include non-bank specialist lenders in the residential mortgage-backed security scheme and to amend scheme eligibility criteria accordingly. Given the protracted nature of the European Commission state aid approval process and the impacts that ordinary people are feeling across the country, it is urgent that the Government seek approval from the Commission as soon as practically possible.
Does the Minister accept that the private rented sector, driven by small landlords, must continue to play a vital role in the housing sector in the coming years? Will he raise three specific questions with his Treasury colleagues? First, why have non-banks, which have provided much of the finance that has driven the growth of the private rented sector, been excluded from the Government scheme? Secondly, will the Government seek approval from Brussels for the inclusion of non-banks in the residential mortgage-backed security guarantee scheme? Finally, will they amend the scheme’s eligibility criteria?
I congratulate the hon. Member for Solihull (Lorely Burt) on securing this important debate. She started by mentioning “Rising Damp” and Rigsby, and I would like to talk about the relationship between Miss Jones and your good self, Mr. Jones, but I am sure that you would rule me out of order, so perhaps I should get on with my contribution.
Aspirations and expectations about home ownership and, importantly, the rights of tenants have risen dramatically in the past half century, and rightly so. Whether people rent or buy, their right to a decent home in a thriving neighbourhood and to fair treatment, regardless of their ownership or tenure status, should be the same. That right underpins the priority that the Government attach to delivering housing across all sectors.
I can answer one of the hon. Lady’s questions about the private rented sector straight away. The Government’s vision for the sector, and our approach in shaping policy, is that the sector should be encouraged to grow and thrive, while ensuring that it is fair to responsible tenants and good, professional landlords, regardless of the size of their properties. Our aim is to harness what the private rented sector has to offer and to address the ways in which it currently fails to meet its potential. In particular, we want to ensure that all groups have a proper choice as to where they live.
That is especially important for the most vulnerable in society. Although social housing will always have a strong role to play in providing for those most in need, we want to know that a family or individual who is looking for housing will also be offered opportunities linked to employment and training. We want to ensure that the advice they receive looks thoroughly at the options they can be offered to meet their housing needs and that, wherever appropriate, such options include housing in the private rented sector.
We also want to be clear about what the private rented sector looks like. We often talk about the sector as some homogenous block—as if it were a single beast—but it is very complex, with interrelated sub-markets. That was one of the issues that we wanted to address when we commissioned an independent review of the private rented sector by Julie Rugg and David Rhodes at the Centre for Housing Policy at York university. They produced their findings in October 2008.
The Rugg review had a wide remit to look at how the sector meets current needs and expectations and at whether and how the experiences of landlords and tenants might be improved. It identified several overarching themes, including the need to improve the sector’s professionalism and increase knowledge and understanding of its various disparate sub-markets. After Julie Rugg produced her report, I went to York university to respond on behalf of the Government. I was struck by her suggestion that landlords should see their properties less as an investment and more as a business. That is a subtle, but profound description of the way in which we should approach the private rented sector.
Within the framework that it provided, the Rugg review also set out a range of what Julie termed “policy directions of travel”. Those included a revised and improved regulatory framework, including a national register for all private landlords and full independently led regulation for letting and managing agents; measures to improve the professionalism of the sector and to encourage the sector to grow, including a package of fiscal proposals and a culture change in local authority engagement with landlords; and better co-ordination of initiatives to procure and sustain private sector tenancies for those in housing need.
The review’s findings were thoughtful and well evidenced, and it has been really positive to see the endorsement that the report has received from all interested groups in the sector. I have since met a wide range of key stakeholders on a one-to-one basis and reflected on what they told us.
The Rugg review is proving robust in the face of the seismic economic changes that have occurred since its publication. Despite the challenges, we have not yet seen evidence that significantly undermines or invalidates its arguments. The review specifically set out a long-term vision for the sector, as well as the ambition of making the sector work more effectively for tenants, landlords and agents.
As the hon. Lady said, the housing market has been hit hard by global financial turbulence, but we have not yet seen the full implications of what that may mean for the rental sector. There is likely to be increased demand, not only from those who cannot currently obtain a mortgage, but, potentially, from more vulnerable groups who can no longer sustain home ownership. With more people, and potentially more vulnerable people, looking for housing in the sector, it is essential to ensure that they get a fair deal—particularly those who do not have the financial ability to walk away from bad landlords.
No one could argue that current conditions are absolutely perfect. Unfortunately, the worst housing is still found in the private rented sector, and that has a disproportionate effect on low-income and vulnerable families. As the Rugg review notes, however, the rental sector is in reasonably good shape overall, and there are many strengths to build on. More than three quarters of people who rent privately are satisfied, and levels of dissatisfaction are actually lower than they are in social housing. Our recent reforms, from the Housing Act 2004 onwards, such as the tenancy deposit protection scheme, have helped to give greater confidence to tenants and landlords alike. Although, unfortunately, unsatisfactory landlords and undesirable tenants exist, they are far from the norm.
We intend to issue in the near future the Government’s response to the Rugg review for consultation and wider debate, and, without pre-empting that response, I think I can share with the House a few of the principles that have informed our thinking. First, as I think I said at the beginning of my remarks, we strongly believe that a strong private rented sector has an important role to play in meeting the country’s future housing needs, so I am anxious that it should no longer be overlooked or marginalised in policy, or seen as somehow “second best” in the popular imagination. It is not in anyone’s interest to think that someone who rents privately has failed as a citizen. That is a wrong and incomplete picture.
Secondly, we believe that creating that stronger, healthier sector depends on supporting good landlords and letting agents so that they can thrive and expand. It is essential in tackling bad landlords that we get a proportionate, measured response. Thirdly, we want to make sure that any reform does not strangle the very strengths that attract people to renting in the first place: the flexibility, choice and diversity of what is on offer. My concern is that the proposals that we put forward might lead people to say, “I will not allow my property to be rented out,” and that the private rented sector would contract. Any policy considerations, as the hon. Lady will be aware, will need to take that aspect of the matter into account. The publication of the Government response will launch a three-month period of consultation, with the widest possible range of organisations and individuals, about the way forward on our package of proposals.
I am very conscious that the debate has focused in particular on the funding of the private rented sector. The sector will, of course, continue to be funded primarily by the rent paid by nearly 3 million tenants to about 1 million landlords in England alone, at a level freely agreed by both parties, as part of the tenancy contract. In some cases that rent will be funded, of course, from housing benefit, which is now local housing allowance. However, the primary contractual relationship remains that between the individual landlord and tenant. The private rented sector is not primarily dependent on the public purse and is proving relatively robust in the face of the shocks that have recently affected owner-occupation. As I have already mentioned, that is one of the strengths of the sector.
Of course—and the hon. Lady dramatically gesticulates about how she might disagree with me on that last point—private renting cannot be insulated from some of the impact of the global downturn, and we have all heard and read of instances of tenants of private landlords becoming subject to repossession proceedings. That is an important part of the remit of my Department. We must keep a careful eye on repossession statistics to make sure that we establish a range of policy responses to minimise the number of repossessions. I think that the hon. Lady alluded to the fact that currently data suggest that buy-to-let landlords are no more likely to be affected than other mortgage holders, and that just 0.1 per cent. of landlords are affected. However, because of the need to protect tenants as well as property owners in those cases, that needs to be monitored very closely, and that is what we are doing. In a few instances, tenants have faced eviction at very short notice—sometimes just a few days—through no fault of their own, when their landlord’s property has been repossessed. That is unacceptable. I am very much aware of the anxiety, hardship and distress that that situation can create, and we are actively looking at what can be done to tackle it.
As I have said, we would like the private rented sector to thrive, expand and offer a housing solution for a growing number of those who are unwilling or unable to buy in the current market. The main theme of the hon. Lady’s speech was the important role that buy-to-let can play in the financing of the private rented sector. Buy-to-let has accompanied an improvement in the quality of homes in the private rented sector—particularly flats. The English house condition survey shows that the proportion of “decent” homes in the sector rose to 55 per cent. in 2007. It is still low, and we still want to do something about it, but that rate of improvement exceeds the rate in the owner-occupied sector. Mortgage lending to fund buy-to-let has, as the hon. Lady said, fallen dramatically in the changed market of recent months but, as rental yields gently rise, in response to the supply-and-demand dynamics, the sector will, I think, prove attractive to professional investors and landlords.
I agree with everything that the Minister has said so far. The problem is that there is huge demand for buy-to-let mortgages, huge demand from tenants, and huge demand from people who want to make the business of buy-to-let their business, but there is no money. The funding has virtually dried up. I hope that in the closing minutes of the debate the Minister will deal with that problem and some of the suggestions that we have made for freeing up a little funding so that the sector can carry out its important function.
The hon. Lady was right on cue there with what I want to suggest. She will be aware of the creation in December 2008 of the Homes and Communities Agency, a powerful national agency working locally with different providers in a flexible way to try to address the needs—the housing and regeneration—of communities. I have said that a key role in housing provision belongs to the private rented sector, so the Homes and Communities Agency has a legitimate interest in it. On that basis, and in that context, I hope that the hon. Lady will join me in welcoming the agency’s launch on 1 May of its private rented sector initiative. That will also form a key part of the package of proposals in our forthcoming response to the Rugg review. I shall make sure that the hon. Lady is aware of that when we publish our response.
The “expressions of interest” process that the HCA has launched could address the points identified by the hon. Lady. Potentially, it will attract significant investment into the housing market by encouraging institutions to fund new homes specifically for private rent. That is important, because, as I have mentioned several times, I want the private rented sector to grow, expand and thrive. I do not necessarily mean that it should increase as a proportion of the existing housing stock. The hon. Lady knows as well as I do that we need more homes. I want to know how to encourage build-to-let and what the mechanisms are by which we can do that, and thus increase the number of homes rented out in the private sector.
The objective of the private rented sector initiative is to create an opportunity for investors such as pension funds to enter the private rented sector on a large scale. That has not happened in this country before, but it is a great opportunity. The reason why I think so is that this point in the economic cycle, where there is strong investor appetite for low-risk investment with a focus on income distribution and a longer-term investment horizon, is the right time to expand the private rented sector and consider its possibilities. The HCA seeks to work with financial institutions and other investors to develop a long-term funding model for new private rental housing in England. It anticipates that the potential investment could come from sources such as pension funds or overseas investors, which have not traditionally been involved in UK residential letting.
The private rented sector initiative could have the potential to help kick-start stalled development schemes and lead to a significant increase in high-quality new homes for rent. The hon. Lady will be aware of the £400 million announced by the Chancellor in the Budget to help kick-start stalled developments and make sure we have the housing delivery that the country needs. The private rented sector could play a part in that.
Is the Minister saying that the new initiative will provide funding for buy-to-let for those individuals whom I have referred to, who are already the backbone of the buy-to-let industry in this country, and who are being starved of funds? Alternatively, is he referring to a hands-off management company funded by pension funds and other investors in large-scale long-term developments?
As to the prospect of the HCA providing mortgages for buy-to-let investors, it is early days, but I should have to say that that is not probable. One thing that we are trying to do is encourage, as much as possible, large-scale institutional investment. However, smaller landlords have a role to play as well. As I mentioned, it is important in the funding model that we should take into account the scale, and the variety of scale, in the private rented sector.
I welcome the debate, which is an important one. At a time of major change the private rented sector has the opportunity to grow in importance as part of our overall housing supply and housing offer, and to increase in professionalism, scale and quality. I look forward to working with the hon. Lady and others to make sure that we can realise that vision.
Sitting adjourned without Question put (Standing Order No. 10(11)).