Tuesday 22 March 2011
[Martin Caton in the Chair]
Promotion of Women in Business
Motion made, and Question proposed, That the sitting be now adjourned.—(Angela Watkinson.)
Balance is the centrepiece of science; it is the fulcrum of philosophy; and it is stability in society—light and dark, hot and cold, yin and yang. We need to balance the resources at our disposal in order to exist and grow. Good business managers embrace balance in so many ways—risk and return, investment and innovation, supply and demand. However, an imbalance that is common in business, the professions and politics is the one between men and women in senior positions.
That imbalance is often labelled a gender equality issue, but actually it is a business performance issue. Men and women bring different things to the business table, which are not mutually exclusive. Women can be great at multi-tasking; men can be cool under pressure and very spontaneous. Both have different attitudes towards risk and confrontation. However, if we put the two together, it is no surprise that gender-balanced businesses are more stable, more sustainable and more profitable. Those involved with such businesses tend to make better decisions about people, risk and customers. Let us not forget that women make 80% of consumer purchase decisions in many countries.
If we can share the best of what we have as men and women, our diversity will enrich us all. There are many barriers to progress. Business is a man’s world built by men and, because people tend to recruit in their own image, male imbalance prevails. In the home, women are still the primary carers, and the struggle to juggle domestic duties and a demanding job can be a major hurdle. Silly stereotypes have been created in relation to both domains. Men are characterised as being confident, aggressive and direct, while women are characterised as being kind, warm and gentle, and therefore as perhaps not having quite what it takes to tackle tough business decisions. The truth could not be further from the myth. However, even today, some people still argue that gender difference in attainment is simply because of personal choice, aspiration and preference.
Some Governments have already taken action. Eight years ago, Norway passed legislation requiring all public and state-owned company boards to be 40% female. Spain and France are now following suit. Norway has achieved its quota, but succession is now a problem. Board members typically come from senior management in private companies. However, in Norway, only 6% of those posts are held by women. Clearly, a root-and-branch approach is still required.
I congratulate my hon. Friend on securing the debate. I know that the issue is very important to her. I hope that she agrees that we are striving for a quality of fairness. Does she also agree that we need to ensure that such fairness is not patronising to women and does not replace one form of apparent discrimination with another?
My hon. Friend makes a very good point—I could not agree more. I shall cover that issue later. I am grateful for his intervention.
In Britain, we have much to do. Only 5% of FTSE 100 companies have a female chief executive, and only 12% of board directors are women. Our Government have promised to promote gender equality, and I am encouraged by coalition policies on flexible working and parental leave. Lord Davies of Abersoch is leading a review on women on boards, and his report has just been published. He has got it just about right and is seeking to accelerate glacial rates of change without causing global warming. Recommendations include encouraging head-hunters to put more women on shortlists, requiring chairmen to explain why boards lack female representation, inviting investors to take more responsibility in holding their plcs to account on matters of gender balance and, importantly, introducing voluntary targets to raise the number of female directors in Britain’s biggest companies while not ruling out quotas.
Enforced quotas worry me. I am really, really sceptical about them, because such positive discrimination can demean a woman’s real value among her peers and alienate men. Some would also say that quotas treat symptoms, not causes, and there is some truth in that. Surely our aspiration must be the creation of fair, real and equal opportunities, where meritocracy wins the day. Change is coming, and whether it comes eventually through quotas or by more gentle pressure will be a matter for serious and ongoing debate. Even without legislation, some British companies are already committed to gender balance and a variety of methods are being used. Mentoring and sponsorship, setting targets and using best practice illuminated by the light of transparency can all work very well. Part-time working arrangements can improve female retention. In fact, any family-friendly strategy that allows women just a little more flexibility, especially when their children are young, can pay big dividends—and word gets around because women talk. On an individual level, women can help themselves, too. We may need to be more assertive in our approach and not be afraid to take credit for our achievements.
I congratulate the hon. Lady on obtaining the debate. I promised my wife that I would be here this morning, because she is a business woman—it is more than my life is worth not to be. Although we perhaps have an issue around Government policy, does she agree that dealing with the matter should start earlier in life and that our colleges and universities could help to encourage women in entrepreneurship, so that things are more equal across the boardroom table?
The hon. Gentleman makes a very important intervention—I am sure that his wife will be proud. I could not agree more. Part of dealing with the problem is considering how to ensure that our girls—our young ladies—have much brighter, bigger, bolder, ambitious career advice when they are at school and university. The sky should be the limit—I agree with him completely.
I come back to men. Men, too, need to become better listeners. They need to learn to hear a woman’s voice and embrace the enlightenment of a broader horizon, because when courageous women and enlightened men—we have a few of those here today—come together, there is little that cannot be achieved. The non-believers should consider the following comment made by an all-male board member:
“Our board is really effective. We all think the same way. We all have the same views. Discussions are very short and we always reach the same conclusions”.
That all sounds very happy, but is that board healthy? Balanced boards are a noble aspiration, but there is a bigger picture. Boards are central in corporate life, but senior executives and managers create the wealth. That is where gender balance can be so effective. If we can recruit more women to those senior executive positions and train, nurture, promote and encourage them, then the transition to CEO and the board should be a much more natural step. In many ways, dealing with that is more difficult than dealing with quotas.
Enlightened leaders, both male and female, cast a lengthy shadow. Our Prime Minister, David Cameron, has set himself a target of one third of Ministers to be female by 2015. Likewise, a group of powerful London businessmen are aiming at one third female boards by 2015. A few weeks ago, the Financial Times published its list of the top 50 women in world business. Those women run organisations such as PepsiCo, Kraft Foods, Yahoo! and Xerox. Their success is cause for much celebration and they stand as much-needed role models. The aspirations of those leaders encourage millions. I take great heart in their initiatives, because it says to me that there is room at the top and the door is open.
In conclusion, this is an exciting time for the promotion of women in business, the professions and politics. Government have an important role to play, but legislation alone will not fix the problem. We need chairmen, chief executives, investors and head-hunters to all take action. The Davies report is a step in the right direction. I urge the Government to accept its sensible recommendations and to reconsider the whole issue of child care. Inadequate and unaffordable child care prescribes many women to the home, or to not having children. If some improvements can be made, many capable women will be released back into the working economy as taxpayers, entrepreneurs and wealth creators, which is exactly what our country needs at this difficult time.
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate on an issue that, for me, is all about aspiration and allowing individuals—men and women—to achieve their potential. We know that many women are stopped from achieving that potential, from being the best they can be and from delivering real value at senior levels in business. We need to do something about that.
I welcome the report from Lord Davies. He has looked at the issue in detail, involved many people in the discussion and come out with a good series of suggestions. I am a strong believer—as might be imagined from me being here—in the importance of having more women in business at senior levels. I worked for more than 20 years in the City in different sectors and have seen the lack of women at senior levels. I fundamentally believe that that is not necessarily because women are doing something wrong—although I agree with my hon. Friend that they can promote themselves better—but because there are serious issues about how we select women and people on to the boards in the City.
Does my hon. Friend agree that part of the challenge is the structuring of the career path? We are all now living longer. If we could find ways of structuring career paths, whether in the corporate or professional worlds, so that men or women could go into it at different times, that might ease the problem. In the professional and corporate worlds, we see a hub at the age of 30 where it is either make or break—the same time that many women want to have their families. That puts on undue pressure and makes that decision much harder than it would be if we had a career span that was much longer, over the many years that we are going to be working.
I agree with my hon. Friend. There is not a one-size-fits-all way of doing things. Different women will have different career paths and will do things at different stages of their lives. We want the flexibility to adapt to those different career paths and still to allow people to get to the top levels in business. I have seen the lack of opportunity and meritocracy that currently exists in business. We are not drawing from the possible range of talent that exists. That means that organisations suffer, that business and the economy generally suffer, so the country suffers. We need to do something about that, because there is a huge untapped pool of talent.
Why is this issue important? As my hon. Friend the Member for Maidstone and The Weald has mentioned, some of the reports and studies are not only about aspiration, but performance. Studies such as one by McKinsey’s have looked at a range of statistics that show that companies with a higher proportion of women in senior management teams, in essence, outperform their rivals, with a 42% higher return on sales, a 66% higher return on invested capital and a 53% higher return on equity. There is improved decision making, as was mentioned. Such companies may also be more responsive to the market, make better decisions and have improved corporate governance.
The current position is an issue. Only 12.5% of directors of FTSE 100 companies are women and only 7.8% of directors of FTSE 250 companies are women. Some 52.4% of companies have no women on their boards at all. That is a disgrace. There are a few reasonably good examples. GlaxoSmithKline, in my constituency, has 38% of senior positions held by women. It is good that that has improved year-on-year in the past five years, and that it has improved at the different levels—whether manager, director, senior vice-president or vice-president. That is what we want to see: an ongoing improvement at all levels so that there is opportunity for all.
In so many organisations, the frustrating thing is that progress has plateaued. Contrary to the widely held myth, there is no evidence to suggest that there is a shortage of appropriately qualified women in the pipeline. There are plenty of women to take on board-level roles, but we need to start to change the thinking about what the requirements are. As Lord Davies said, we must promote on the basis of merit and skills. That is important if we want a true meritocracy, and to have true fairness and opportunity. Lord Davies’ report mentions getting companies to talk about and publish their figures. That is a great starting point and something that we absolutely should do.
Other measures that need to happen include the better mentoring and sponsoring of the next generation of executives. One programme that exists and works very well is the FTSE 100 cross-company mentoring programme. Many chairmen of FTSE 100 companies are trying that new mentoring approach that will help in the long term, because it aims to sponsor, nurture and mentor the next generation and help them with the skills and experience to get to the next level.
More also needs to be done with networking for senior women in business. A study by Higgs and Tyson found that almost half of the directors they surveyed had been recruited through personal friendships and contacts. That is probably something that we all recognise, so it is important to build up those networking opportunities.
We also need to fight media images and stereotypes. The more we can create, promote and highlight role models, the better it will be, because we want the younger generation of women to see that it is possible to get to the top of their business or sector, and that that will happen purely on the basis of fairness and merit.
Also, we should promote companies that have a good record on gender diversity and flexible working options, which, for some people, is important. We have to work with the chairmen of FTSE 100 and FTSE 250 companies so that, as Baroness Bottomley put it, they look through the window when recruiting boards and not in the mirror. That is something that needs to be adjusted so that, as my hon. Friend the Member for Maidstone and The Weald said, people do not recruit only those who are similar to them and who are already on boards but see the value of having new and different skills on boards.
My hon. Friend is doing a fantastic job of setting out many of the challenges that need to be overcome, and how we might do that. Does she agree, though, that perhaps there is another approach, which is to think about how we actually structure roles? It is inevitably the case that those of us with families end up being torn in our daily lives. I have always thought that job shares—potentially having a Cabinet position as a job share—would send a powerful signal, allow women to achieve their best and also recognise the complexity of many of our lives.
My hon. Friend makes an excellent point. If there were job sharing in politics—there is no reason why the role of MP or Cabinet Minister could not involve a job share—we would show that we have made a real difference and made ground, and that there is no reason why that cannot happen in business.
The time has come to address the issue and really do something about it. It has been talked about for so long but very little has been done. The opportunities for business right now are too significant, at a time when we really need enterprise and growth, flourishing businesses, and more people creating their own business. We must do something about the issue. Women must be recruited to senior levels in business based on their merit and skills. Perhaps the definition and assessment of the skills that are required need closer attention, but I have no doubt that plenty of women with the right skills to take companies forward are waiting for the opportunity to do so. If we could let everyone, both men and women, aspire to be their best and achieve everything that they want, businesses across the country would flourish.
I join this debate as a head-hunter—I declare that interest—who, until recently coming into the House, worked on senior-level executive search assignments for global organisations. I am the employer in an all-women company and the proud husband of a wife who has just set up a business as part of a job-share situation. I am also a colleague of some exceptional new MPs on both sides of the House, many of whom are women. It is unfortunate that more of my Opposition colleagues are not here today.
As a small business owner, I have spoken frequently about the avalanche of regulation and red tape that hit small businesses over the 13 years of the Labour Government, and the impact of such legislation globally on Britain’s competitive position in respect of inward investment compared with Hong Kong, Asia and other international locations. As a head-hunter, I saw that people were beginning to hire in those locations rather than the UK as a result of our employment law.
Therefore, I was pleased that Lord Davies chose not to advocate legislation in his report, “Women on boards”, which came out in February. I add that I could not find a copy of it in the House of Commons yesterday when I sought one—that was not a great indication of the importance of the topic.
When I first sat on the Government Benches last May, I realised that never in my life had I been involved in something so male. When I reflected on the companies for which I had recruited as a head-hunter, I thought again about the stark differences between those that had seriously taken an interest in diversity and put it at the top of the agenda of their organisations, and those that had not. When I listened to the debate on UN Women, which I thought was one of the most productive and positive debates in this House, I resolved to try to play my part on this issue. I compliment my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate, and on all her work in this country and internationally—recently in Malaysia, I believe—on the issue.
Things have been improving, but progress is so slow. Statistics in the Lord Davies report show that 12.2% of directors of FTSE 100 companies are women, and that 7.3% of people on the boards of FTSE 250 companies are women. That is appalling. Our economy, which is on its knees, and which needs to use all its talents to get out of the current crisis and to deal with a competitive world, needs to address that. There are moral reasons as well: in a society that aspires to be equal, such statistics are not acceptable.
The best companies I have worked with in recruiting at senior level have not focused solely on women. Their big focus has been on diversity. They have been hard-wiring into their organisations the approach that it is not acceptable to come up with a shortlist of white males but instead it is better to come up with a diverse list of people and then select on merit. However, the number of organisations and companies that think that way is not as large as it should be, and we need to increase it over the next few years.
Recently, the Monetary Policy Committee announced that it was recruiting another white man, and that it was absolutely delighted—as, indeed, we all are—with the extremely talented gentleman whom it had chosen. In small print at the end, as an afterthought, it said that only one of the 27 applicants was a woman, and that it wished that more women had applied. Does my hon. Friend agree that it would be a good idea proactively to encourage more women to apply for senior roles?
My hon. Friend makes an important point. There is a great deal of work to be done in the public sector as well as the private sector, but the Government now need to put significant pressure on the private sector, and not just on targets. One area I would advocate as well worth looking at is performance management generally in organisations. Can the Government do more to highlight those organisations that performance manage their staff and that look at things such as the approach that my hon. Friend the Member for Devizes (Claire Perry) suggested? Can we highlight, as well as company growth, those companies that manage their human resources positively?
Does my hon. Friend think that it is important to have real performance measures and that that should affect how people are remunerated? If they are not assessed on that, which might affect what they earn, people tend to forget about it. It is a nice-to-have, but there is no focus on it and nothing ever gets resolved. If people are actually measured on that and remunerated accordingly, something might change.
My hon. Friend is absolutely right. The client that I worked with that did best in this area had such considerations hard-wired into compensation and promotion at all levels in the organisation, not just at board level. To get a pipeline of candidates for board positions, one has to work right down the organisation, at every level of management. In that organisation, the key question at every performance review was, “What diversity hiring have you done in the past six months?”
A relentless focus is required in the House and at every level of government. I am not convinced that having a unit on women and equality is the right way to go. We need this to be driven from the highest level in the Department for Business, Innovation and Skills, and we need to showcase with awards and in every way possible those organisations that are doing the right thing.
The role of head-hunters is important. The reason for stressing companies is that head-hunters are driven by their fees, and if the underlying companies are pushing them, that is when there is a change in the approach of the head-hunters. I was pleased that Lord Davies advocated a voluntary code for head-hunters, and some are doing great work in this area, but we will probably end up having to look more closely at this unregulated part of the business world, and push hard if they do not move quickly on their voluntary code.
On parental leave, child care and other matters that have been discussed this morning, I hope that the Government, with their moratorium on regulations for small businesses, will advocate a frank conversation between employers and female employees. My best employee relationship was with someone I could talk to about her plans for child care and family development, and we interweaved her talent and desire to build her family with the business’s needs. That employee was paid more and performed better than any other person in my company.
As well as the Government’s role, there is a strong role for Parliament. There is a strong argument for setting up a new Select Committee for the lifetime of this Parliament to focus on women and diversity. It could be wrapped up at the end of this Parliament, but in the meantime it could be used as a vehicle to demonstrate that parliamentarians in the class of 2010 will ensure that we move the issue on, drag companies in and question them. We want to ensure that the matter is nailed once and for all.
My concern and my message to business, whether head-hunters, global businesses or small businesses, is that if we are still here in 2015 having these arguments about the paltry number of women in the senior echelons of our businesses, it will be very difficult for people such as me, as a great supporter of less regulation and red tape, to stand up and say that there should not be legislation and intervention. This Parliament has an opportunity, as does business, to go for it, and to make a substantial change along the lines of what Lord Davies said, but it must be done now. We must get on with it.
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I also echo the excellent suggestion of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to introduce a Select Committee on women and diversity. The Minister will be listening carefully, and I shall make representations through the Liberal Democrats’ Business, Innovation and Skills parliamentary committee, which I co-chair.
We have heard excellent contributions this morning, and I need not reiterate why we must bother with women on boards. The aspiration of equal opportunities clearly does not work. It is 40 years since the Equal Employment Opportunity Act 1972, but still only 12.5% of members of FTSE 100 boards are women, and only five are run by women. Evidence shows that companies that increase the number of women in leadership positions outperform those that do not. Clearly, it is good for business to have more women.
On stereotyping, Martin Vander Weyer said in The Spectator on 26 February:
“Women are more risk-averse, less driven by raw competitive urges, and more likely to stay focused on generating steady returns; and those are precisely the qualities needed in non-executive directors to counterbalance the machismo of thrusting executives.”
Such stereotyping is dangerous. Not all women are like that, any more than all men are testosterone-fuelled risk-takers. We all have a bit of yin and a bit of yang in us, and it is important not to accept stereotypical opportunities.
Who is calling for change? Last year, the CBI called for a comply-or-explain policy for all businesses, and Viviane Reding, European Commissioner for Justice, is considering calling for quotas. She has started a five-year strategy to achieve 30% of women on boards by 2015 and 40% by 2020.
What are the problems? Many have been discussed this morning, and they include lack of flexibility, and linear advance patterns. My hon. Friend the Member for Brentford and Isleworth (Mary Macleod) talked about whole-life careers. We now have many careers during our lives, and the idea that one must go from one step to another clearly does not work for women or for men.
The male culture of people of the same sex, who perhaps went to the same school or who even belong to the same club, is harmful in achieving diversity of view and opinion and opening up boards to new ideas in all sorts of ways. On nominations committees, we heard an expert speech on the position that head-hunters are in. They may be eager to please, but I welcome the voluntary code that is being promoted by Lord Davies.
There are many things we can do to help—for example, flexible working. I am delighted that the Government are committed to flexible working not just for women and not just for men with children, but for everyone, because quality of work and life makes people better contributors to the work force. We must recognise people for their contribution, not for the number of hours their coat is on the peg at work. I call that “presentism”.
Collaborative leadership styles would be much more positive and helpful in some circumstances, as would effective succession planning. Women respond really well to coaching and mentoring, and we are often our own worst enemies, because we do not recognise how good we are. I had to have a stiff talking to by a friend before I accepted that I would be good enough to become a Member of Parliament. Talent must be recognised in organisations. My hon. Friend the Member for Maidstone and The Weald referred to the leader of the Conservative party and said how well the Conservatives have done in bringing on women. One could argue about whether that constitutes positive discrimination, but the A list has certainly introduced a new generation of women MPs, and I assure you, Mr Caton, that there are no token women in this Chamber; they are all full-on, first-class Members of Parliament.
Does my hon. Friend agree that the Conservative party increased the number of its women MPs at the last general election partly because we had a leader overseeing the matter from the top? He promoted it and ensured that it was at the top of the agenda. The same must happen on boards. Does she agree that it is important for chairmen, chief executives and board members to say, “This is really important; we must do something about it.”? If that happens, something will be done?
I could not agree more.
I want to finish by referring again to Lord Davies. I have spoken about head-hunters and the requirement on listed companies to disclose annually the proportion of women on boards, how many are senior executives and how many are in the work force generally. That would shame a lot of companies into looking at the poor representation of women.
Lord Davies leaves formal quotas as a future possibility, but states that there is overwhelming opposition to them. Well, there would be. To require someone to comply would challenge the stereotypical grey men in grey suits. Will we need quotas? The Davies challenge is for the make-up of boards to include 25% of women within four years. I believe that we will probably need to move towards some form of quota system if boards do not comply with that. This is the last chance saloon for the grey men in grey suits.
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this important debate. I start by saying that I absolutely love men. I have two beautiful sons and a nigh-on perfect husband, and I assure the Chamber that this debate is not about bashing men; it is about trying to promote more good and fantastic women, and even—let us face it—more mediocre women. In any society not everybody can be fantastic but everyone can achieve a lot more than they currently do, and that particularly applies to women. Let us bring on more women of all shapes and sizes, whether mediocre or utterly brilliant.
I want to be a tiny bit selfish and talk about my story. I represent a classic tale of someone who has suffered from the determination of society to promote one type of structure. My parents divorced when I was very young, and for a long time it was just me, my two sisters and my mum. My mother taught us that, “The world does not owe you a living; you get on and you do it for yourself, my girl,” and that was very much the mantra with which I grew up. My sisters and I were all driven to do well in our careers, while still loving men and having a place for them in our hearts. You can rest assured, Mr Caton, that my two boys are clear that women are their equals and every bit as good as them.
I went on to jump out of my political science degree and into the City with huge enthusiasm. I worked 60 hours a week and did all the things that the men did—I worked shoulder to shoulder, neck and neck, competing with the best of them. At the age of 30, I discovered the wonderful thing that was being married and having a child. When I was eight months pregnant—nobody could accuse me of concealing the fact that I was about to have a baby—I was promoted to be the youngest senior executive that Barclays had ever had. That was a huge privilege and honour and I was thrilled. I was also, however, about to have a baby.
I went away and had about three minutes’ maternity leave. I worked until two weeks before the birth and came back after less than three months. I was desperate to get back into the job, but I was knocked for six by the whole experience. Within a year of trying to hold down such an enormously challenging job, I spoke to my boss about whether it would be possible to do it part time. I will not name names, but the answer was, “We’ve managed without many women directors until now, and we certainly don’t need part-time ones.” I struggled on for another year, but two miscarriages later I gave up, went away and thought, “Right, I’m just going to be a mum.” I had a second child and worked as the managing director of a hedge fund. It might seem rather ridiculous to go from working in a mainstream bank to becoming a senior person in a much smaller organisation, but somehow that worked better. It involved less process and more interpersonal relationships, and people talking to each other and understanding what was necessary to get the job done. Even though I had an important position, it was understood that I also had other priorities.
My story is indicative of what so many women go through. They start off neck and neck, fighting on equal terms, but then something happens—they start a family and their career is never the same again. The past 10 years of my career were happily spent in a funds management organisation at senior level, but with no prospects of promotion because I was working part time. I recognised that and was happy to pay the price because being a mum has always been the most important thing in my life. At the moment, however, that price must be paid, which I do not think is right. It holds women back, and many women give up altogether. A wealth of evidence suggests that women deliberately apply for more junior jobs that do not meet or challenge their skill sets, simply because they want the time and space to raise their family. That is a tragic waste of talent, and I believe that so much more could be done.
I do not plead for quotas. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) so eloquently said, employers should be encouraged to talk to their staff about what works for them. Such flexibility is not legislated for, but we need to get away from the situation where an employer can never ask someone if they are planning to have a baby, or whether they need to go to parents’ evening, because that is a taboo subject. Inadvertently, legislation and workers’ rights have made that an even more knotty topic, but if we could get away from that problem and arrive at a position where employers can talk to staff about their priorities and the things that they need to do, we would be in a much stronger position due to that mutual recognition.
In my office I employ a fantastic caseworker whose wife is about to have their second child. That is bearing down on us all, and we will accommodate his needs as a father. It is not just about women; it is about families. Accommodating the needs of families will go a long way towards improving the talent base in this country, and it will improve business across the board.
I, too, congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing this debate. Ever since I left university, I have worked in business, and over the past 10 years I have run a couple of businesses. I was not sure what I, as a man, could bring to the debate, but when I spoke to my hon. Friend yesterday, it suddenly occurred to me that for 10 years I have run a business with about 80 staff of whom more than 90% are women. That had not occurred to me in the context of this debate, because we did not go out looking to recruit women or in any specific area. I fully agree with the comments about discrimination made earlier by my hon. Friends. Discrimination is not acceptable, but equally, we do not want positive discrimination.
I agree with my hon. Friend the Member for Skipton and Ripon (Julian Smith) that we should not seek Government legislation that makes work more difficult for small and medium-sized enterprises. It is already difficult enough to employ more people under the existing regulations, which put companies off. The Government can set an ethos, however, and perhaps I can add my experiences to the debate, and say what it is we do that means we attract more women, and why that works so well.
The hon. Gentleman is right to say that there is a limited role for Government in terms of imposing rules. Does he agree that it is important to encourage mentoring? A lot of studies show that all people benefit from mentoring, and women do not get as much of that as possible. Organisations such as Enterprising Women do a lot to try to promote that aspect, and I hope that the hon. Gentleman will mention it.
The hon. Gentleman is right. People across the board benefit from mentoring, and men are sometimes afraid of saying, “Look, I need a bit of help.” Some women I have worked with do that better and have benefited from it. Women hold top positions across my business. As declared in the Register of Members’ Financial Interests, my business involves a couple of schools and a nursery in which the head teachers are women. My administration team that runs the business is also made up of women. I have to say that they do a far better job now that I am not there interfering than was the case when I was. As an employer, we have appealed to women partly because primary education, on which we focus, tends to attract women. The tougher part of our job has been recruiting men into primary education, which is important because of balance.
When I was a council leader, I was always proud that I had a council group with very good balance. My hon. Friend the Member for Maidstone and The Weald made the point that for any business or organisation, it is balance that makes it work. The balance of men and women in my council group was about 50:50. I was very proud of that and made a big point of it, because we achieved it before many authorities could get anywhere near it. We also had people from different walks of life and different business backgrounds. They ranged from a councillor of 18—the youngest councillor in the country—through to councillors in their 70s. It was the balance of members—members who agreed with one another and members who did not—that made it a more powerful team.
In my business, it is the balance that works, and flexible working also appeals. As we are an educational establishment, we have a slight advantage, in that we can advertise jobs for people who want to work only in term time to fit with their families. More men might consider that, too. This is a time when we are looking for more opportunities for men, and men are sometimes afraid of admitting that they want to spend more time with their families. I am sure that many of us in the Chamber would fall into that category, if we could. However, the ability to work in term time—the ability to work part-time hours—has meant that we have attracted women, which is benefiting our business. Our turnover of staff is extremely low. I think that in the 10 years that I ran the main administration team, we lost only one member of staff, who went on to a promotion elsewhere and has been very successful as a result. Business can consider those issues. This is about achieving a good balance across the board, with different types of input from people with different backgrounds, from men and women, from different age groups and from people with different professional backgrounds.
With regard to being flexible about work, the hon. Member for Solihull (Lorely Burt) made the point about “coat peg hours”—a phrase that has stuck with me for many years. When I first qualified in law, I spent some time in a law firm and it always struck me as bizarre that the lawyers, particularly in the corporate law departments, seemed to feel that they had to be in the office from 8 am until 10 pm or later just to prove that they could be there. They were sitting in a square box, staring at a wall, doing work that they could easily have been doing at home, probably more productively.
Therefore, I have always taken a different view with people in my company, whether they are men or women. What interests me as a boss is that the work gets done and is of high quality. Unless there is a particular time demand, I am not interested in whether it is done at 8 am in an office or at 8 am in someone’s home. With the way communications work these days, businesses should think outside the box and be more open-minded about allowing staff, of whatever background and sex, to do their work to the best of their ability and not be so focused on “coat peg hours” and sitting in an office for the sake of being seen to be there. That in itself would be a big step forward for business.
If we can do nothing else in the next few years but encourage businesses to be more open about their working practices to allow people to be more flexible in that respect, we will see more women in business and certainly more production for business, without the need for legislation. I agree wholeheartedly with what hon. Members have said about how business has an opportunity now to make progress on this issue and to have more diversity across the board. Otherwise, we will end up having to look at more legislation, something which all of us who have been in business agree that business can do without.
I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing the debate, which is incredibly valuable. We have heard some excellent contributions and some interesting ideas, particularly the idea about job shares in the Cabinet.
I endorse the comments made by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). Every mum faces huge dilemmas in her everyday working life. Productive women are those who feel that their family life is respected.
I wanted to take part in the debate to talk about the untapped potential of women as entrepreneurs. As a business owner myself, I have experienced at first hand the challenges that women face in starting their own companies. It is a world dominated by men. I have experienced for myself the days of walking into a trade show or a builders merchant and it being a bit like the saloon in the wild west where everyone stops what they are doing and turns round to look at the strange being that is among them. When four of the five dragons from “Dragons’ Den” are male and men such as Richard Branson and Alan Sugar fly the flag for UK entrepreneurship, it is not surprising that less than half of businesses are started by women. The stereotype of the ambitious, ruthless male entrepreneur needs to change.
Women can bring a huge amount to business and the economy. Worldwide, women have been shown to be successful and conscientious business leaders. In microfinance initiatives in Africa, 90% of female entrepreneurs plough the profit from their businesses back into the community, compared with only 50% of the men. In the UK, we have inspirational women such as Deborah Meaden and Tamara Mellon, who prove that it is possible for women to succeed in starting their own business. With women making more than 70% of household purchasing decisions, they surely know what the market wants. So why are those inspiring business women so few and far between?
Anyone starting a business will face daunting tasks. They must win over potential investors, persuade their family that it is worth it and, perhaps more importantly, persuade themselves that they are capable of succeeding. That is often the most insurmountable hurdle for women—summoning the self-confidence to take on that task and that risk.
I am involved in a fantastic project in my constituency of Gosport. It is called AWESOME—all women entrepreneurs supporting opportunity and motivating their expertise. It brings budding female entrepreneurs together to provide a network of support. Despite having brilliant ideas, they tend to hold themselves back, perhaps due to a fear of rejection. It is almost as though they regard their business idea being rejected by a potential customer as a rejection of themselves. They have difficulty separating themselves from their business idea.
My hon. Friend makes a very important point about confidence. I agree that there is a fundamental confidence issue for us, which has come from years of sexism. Does my hon. Friend agree that if there were more female role models, that might help to correct the situation?
Absolutely. That is exactly right and it is the point that I was going to make and probably will in a second. Even when a woman succeeds, the challenges posed by approaching a bank or taking on greater responsibility sometimes prevent her from taking those steps and expanding the business to its full potential. I have seen so many women who have got to a certain stage and thought, “I don’t know whether I can take that final step,” and have then just stopped where they are. It is tragic to see that amazing potential go to waste, especially when our economy desperately needs the passion, hard work and vision of all entrepreneurs, but particularly female entrepreneurs. We just need to find a way of unlocking that talent.
By bringing female entrepreneurs together, as we have in Gosport, a network of moral support is created that allows a woman’s true passion for her business to shine though. Women say that they cannot do the hard sell. They say that that is the one thing they cannot do. They say, “I can’t do the hard sell. I can’t go into business.” However, when they are asked to talk about their businesses, their passion and enthusiasm for their product sells it for them. I could tell hon. Members about the number of times that I have walked out of a meeting, having subscribed to things that I did not even believe I needed—including a cat sitter when I do not even have a cat. They are incredible saleswomen, but they do not know that they are doing it.
Successful business women get involved in the group to which I am referring. They inspire confidence in those starting out and help to overcome the little barriers and difficulties that hold people back. We need to develop a network of such groups throughout the UK. They are self-started; they are not funded; and they are just self-help groups. We need to develop a network of such groups throughout the UK to ensure that in every constituency women are getting the support that they need.
Most importantly, we need to foster a culture of female leadership. We need to inspire and build self-confidence in people from a young age, whether that is done through debating clubs or programmes such as Young Enterprise. I did Young Enterprise at school. The business that we had was called Big Time and designed clocks—given my reputation for timekeeping, people find that quite surprising.
We also need to tap into the potential of the media and popular culture in promoting entrepreneurship. I visit many schools in my constituency, and nearly every time I ask the kids what they want to do when they leave school. Very rarely does a girl say to me either that she wants to start a business or that she has an entrepreneurial idea, yet so many want to be actresses, models and performers, which always staggers me. We need some more positive business role models in the media. After all, why should only Alan Sugar have an apprentice?
There will be great benefits for women and for the economy in promoting female-led business. It will bring fresh ideas and different qualities to the business world, while allowing women to set their own hours and agendas, which is what we are talking about. Entrepreneurship is not the preserve of men. It is our responsibility to ensure that women have the support and confidence to be entrepreneurs.
Many of the points that I might have made have been made already, given that I am speaking towards the end of the debate, but perhaps I can dwell on a couple of them and give them a little more thought.
In an intervention earlier, I raised the idea of flexibility over career timing. The ability to start a career later—perhaps after having children—is often not open to those of us who work in the City or the professions. I agree with other speakers that that is perhaps not something that can be legislated for; rather, it is about creating the right environment. We need to look at the issue, however, because we will all live longer and need to work longer. This is not, therefore, just a women’s issue, but a cross-gender issue.
I am sorry to delay my hon. Friend, but having had two children, my wife has gone back into work and successfully set up her own business, in exactly the way my hon. Friend has described. Does my hon. Friend agree that part of the issue is the need for us all to highlight the fact that such things can be done? More women, and indeed men, would then realise that being a certain age does not mean that they cannot achieve something and do something new. Highlighting such things would raise the profile of this issue in the way that my hon. Friend has.
I absolutely agree. That is absolutely right. However, the real challenge is changing that culture.
My second point builds on the idea of confidence and experience. I welcome the idea of a Select Committee, which would be a first-class way of encouraging more thought on this issue. I was delighted to hear about the FTSE 100 mentoring programme, which sounds like a first-class initiative. The challenge is to have more role models and better mentoring programmes—I agree that they should be for men and women—and to help rebalance individuals, so that they have the broad suite of skills that we all need.
In that respect, perhaps I can dwell on men for a minute. If we look at what is happening in schools, we see the reverse of that. Boys’ results are not as good as girls’. Girls are tenacious and exam focused, and they are good at the process involved in passing exams. More and more women are going into the professions, and more women than men are going into the junior level—not the top level—of medicine and law. Leaving aside the leadership issue, we therefore also have a problem with the gender balance in those professions. We need to help men to go into those professions and to compete, just as we need to help women to go into the corporate world and compete there. The gender balance in the professions and corporate life is completely different.
One of the challenges facing us is that the skills that make people successful in the corporate world are not embedded at school, and I suspect that that may be an issue for the Secretary of State for Education. The issue is which skills we need people to gain at school to help us right the imbalance that I have described. Another challenge is to ensure that we have better integration between school and the workplace. One of my frustrations is that the children we talk to about the requirement to do work experience talk about it as if it were a tick-box exercise; there is no real sense of the role they will have in the workplace. Indeed, there is still a bit of a sense that the expected option is to stay at home.
That would be very helpful. In the same way that we have looked at the intellectual aspects of education, including issues such as the English baccalaureate, we are now looking at the skills aspects of education through the Wolf report. I agree that we need to develop a fundamental understanding of these issues among boys and girls at school. I do not have an answer as to how we can more effectively integrate business into education, but the issue absolutely needs to be resolved.
My third point relates to child support, which is a real issue. Partly, it is about money, but is also partly about culture, expectation and provision. A number of organisations are looking at crèches, part-time working and job sharing. However, it is one thing to look at introducing such provisions and to recognise that they are the right thing to do, but another thing to work out how to make them really effective. There is a bit of a tick-box approach, with people thinking that they have ticked the box because they have a crèche. In that respect, I was really struck by the comments of my hon. Friend the Member for Skipton and Ripon (Julian Smith). What is important is the ability to sit down and have a meaningful conversation about how we can work together and take on board the fact that, biologically speaking—certainly in our lifetimes—only women will have children. The question is how we make a different outlook more of a reality, and a Select Committee could probably sensibly spend some time looking at the issue.
When I was thinking about today’s debate, I remembered that we had a married man’s allowance in the old days, and I wonder whether a working mother’s allowance might be appropriate in the modern world. I put that out as a thought, and I appreciate that the piggy bank is a little empty at the minute, but such a proposal might be food for thought. We need a holistic approach to the fact that women have the babies. We need to integrate that and enable women to contribute in the workplace, which is crucial.
My final point relates to the corporate issue. I was impressed by what I read in the report to which a number of contributors have alluded. Diversity is certainly key. I agree that it would make a lot of sense to ensure that the numbers of women coming through an organisation are published in the accounts. Although I agree that we do not want more bureaucracy, such a process would not be a big issue for the top FTSE companies. We have information about the very senior women, because of the reports to Companies House, but we need to see the progression planning, and we will not get it without information about the women coming through the organisation. That is what I would describe as a nudge, rather than a push. I agree that legislation is not the answer, because we need to shape and encourage. Once organisations begin to see that there is a spotlight on the issue, it will begin to make a difference.
The real difference in corporate life will come, however, with the review of the governance code, which is important. How do we ensure that we are really talking about diversity, not trying to right the gender balance? We have to acknowledge that women want to be recognised for the different skills that we bring. I would almost like to see job descriptions that show that companies have thought through the different skills that they need and how roles might work slightly differently to encompass the broader range of skills that are available through employing women. When we look at the governance code, we could try to give some guidance on what might go into it. We are not talking just about men and women, but about the qualities of good management. If we can articulate that, it would be a good way forward. However, I am conscious of the time, so, on that note, I will conclude my contribution.
I warmly congratulate the hon. Member for Maidstone and The Weald (Mrs Grant) on her excellent opening speech and on securing the debate. I thank the many Members who have contributed in a positive way. There is much that we can agree on in terms of the need for encouragement, mentoring, sponsorship, role models and enterprise awareness, and those are very much the steps we need to take.
Ensuring that women can participate as fully as possible in business and enjoy full recognition of their abilities and potential is vital not only to promote a more equal and just society, but to make the best possible use of their skills to increase wealth creation and make a more prosperous society. Women are, of course, involved in many different types of business, from the self-employed woman who works just a few hours a week to the woman with the busy corner shop or the woman working in the very largest of companies. Many of the difficulties they face are not necessarily specific to women. Generalisations over the huge diversity of business can be misleading, and there are, of course, many excellent examples of good practice and success stories.
Over the past 30 years, women’s employment has significantly increased and women are making a greater financial contribution than ever to family incomes. Therefore, it is not surprising that more women’s jobs, particularly jobs in the service sector, have been affected in the current economic crisis than in previous recessions. With the expected job losses in the public sector likely to affect women disproportionately due to the high concentration of women in the public sector, it is important that the Government do more than simply hope that the private sector will grow. There needs to be a clear strategy for growth and encouragement for women to take up jobs in the private sector, particularly those who have not worked there previously.
During Labour’s time in office, we introduced measures that have supported women. We extended maternity leave and introduced paternity leave. We also introduced the right for parents and carers to request flexible working, and many speakers today have mentioned its importance. There is more to do to ensure that employees and employers are aware of the right to request flexible working. It can be daunting to be the first in a workplace to make the request. Many women are worried that such a request might harm their career prospects or make them look half-hearted about work. Properly managed, flexible working, such as changes in working hours to allow a parent to drop off children at school in the morning, can result in the mum or dad feeling much less stressed and better able to concentrate on their work. For some women, it can make the difference between continuing in work and having to leave a job.
I agree with all the points that the hon. Lady has made. Is it not good that the Government are introducing flexible working for everyone, because that deals with the stigma of asking? Anyone can ask for flexible working, whether they are picking up their children or going to the golf course, so it is seen as part of the norm and not a condescension for someone because they happen to be a parent.
Indeed, the opportunity to have flexible working is extremely important. That is why it is particularly perturbing that news is coming through of an exemption for microbusinesses. That effectively denies employees in businesses with fewer than 10 employees the right to request flexible working. I question the Government’s rationale for making that exemption. They seem to be saying that denying employees that right will somehow stimulate growth in the economy.
If we cast our minds back a few years, we will remember that the Prime Minister, in his speech to the 2007 Conservative party conference, spoke about flexible working:
“Companies that have adopted this have found that they are able to grant the request in the vast majority of cases, they have actually found that productivity has gone up, profits have gone up, staff morale has gone up and keeping staff is easier.”
So what exactly has changed? Will the Minister explain what sort of analysis his Government have done that suggests that flexible working hampers growth? What economic impact assessment did his Government do before deciding the exemption for microbusinesses? How will this move impact on women in business? How is it compatible with the Prime Minister’s promise when he was in opposition that a Government whom he led would be the “most family friendly ever”?
The loss of the right to request flexible working will affect both men and women, but at the moment, it is likely to affect women far more widely than men. It will be yet another obstacle to women being able to combine work and family responsibilities. It might mean some women giving up work altogether, or it might deter women from seeking promotion. Was an equalities impact assessment undertaken on the exemption decision, and if not, why not? We are getting used to the Government breaking promises, and that action is usually accompanied by some sort of lame explanation, so I am curious to learn how denying employees the right to request flexible working will stimulate growth in the economy. To most people, it just looks like a backwards step.
When in office, the Labour Government introduced the Equality Act 2010, which not only streamlined the law by replacing nine major pieces of legislation and around 100 statutory instruments with a single Act, but introduced measures to create a more level playing field and make life fairer for women. Those measures include requiring gender pay reports, using public procurement to improve equality, extending the use of positive action in the workplace, and protecting carers from discrimination—although that, of course, applies equally to men and women, the reality is that women are more likely to be carers. Can the Minister confirm that his Government will implement in full all the measures in the 2010 Act?
We, on the Opposition Benches, welcome the work undertaken by Lord Davies of Abersoch in producing the Department for Business, Innovation and Skills report, “Women on Boards”. In particular, we welcome his recommendations that UK-listed companies in the FTSE 100 aim for a minimum of 25% female board member representation by 2015, that FTSE 350 companies set their own challenging targets to ensure that more talented and gifted women can get into top jobs in companies across the UK, and that those targets be set in the next six months and chief executives review the percentage of women they aim to have on their executive committees in 2013 and 2015.
The question is how we ensure that companies really make progress. The lesson from Norway, which is often quoted as having 40% women on boards, is that it does not happen simply by exhortation. That was tried first, but it took quotas to achieve the 40%. It is not nice to be accused of being on a board solely to make up a quota or to be used as a symbol that a company is addressing gender equality, but companies need to ask themselves exactly how appointments to boards are made. Does the process stand up to scrutiny? Is the best person for the post appointed? It may be that the best person for the post may not even be encouraged to apply. I hope that the recommendations in the report will make companies look very carefully at the whole pattern of promotion within the organisation, as many hon. Members have suggested, and identify whether there are factors, such as particular types of socialising after work, which tend to exclude women. It may be that much more subtle forces are at work, which amount more or less to that well documented tendency to select people like oneself.
What exactly will the Government do to ensure that the recommendations in Lord Davies’s report are fully implemented? Will the Government require companies to disclose each year the proportion of women on boards and in senior executive positions, and the proportion of female employees in the whole organisation, as recommended by Lord Davies? Will the Government insist on the disclosure of meaningful information about the company’s appointment process, as recommend by Lord Davies? How will the Government take forward the recommendation that a
“combination of entrepreneurs, existing providers and individuals needs to come together to consolidate and improve the provision of training and development for potential board members”?
The situation of part-timers needs particular attention. Some women find that they need to go part-time to combine work and a family. Other women would like to work part time, but are afraid of the consequences of doing so, knowing that too often going part time will set them back a long way in the pecking order. I have employed women part-timers, and have always found that their attitude to work is anything but part time. They invariably give over and above what is required for the hours they work. We need companies to take a serious look at how they deal with employees, largely women, who are working fewer hours than the full working week. Are they included in decision-making meetings? Are they encouraged to further their careers and seek promotion while remaining part time? Are they given training opportunities? Are they allowed to work part time only if they can find a person with whom to job share to replicate the exact pattern of a full-time post? Is part-time working considered appropriate only in the lower ranks of the company?
What is happening in other countries? In Spain, gender equity laws passed in 2007 obliged IBEX 35 firms to get a minimum of 40% women on boards in eight years. France passed a Bill applying a 40% quota for female directors by 2016. In Germany, the Justice Minister has threatened legislation if boards do not achieve a better balance in the next 12 months. Can the UK also move forward and can that be done without introducing quotas? Will the Government give companies sufficient encouragement to make the necessary changes voluntarily or will we find ourselves back here in two, three or four years’ time ruing the lack of progress?
This has been an excellent debate, and I congratulate my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) on securing it. We heard some powerful speeches, in which Members showed their experience and knowledge of the matter.
One of the key things mentioned by my hon. Friend, which was picked up by others, is that it is not only about equality but about business performance. I shall stress that aspect because I believe that the issue is about growth. We have the Chancellor’s Budget tomorrow. I believe that the Budget and other such measures are aimed at improving corporate performance and thus the performance of the wider economy.
My hon. Friend spoke of the extra benefits and skills that women bring to the boards of our great companies—their attitude to risk, how they manage employees and how they think about customers. She was right to say that the studies cited in Lord Davies of Abersoch’s report and elsewhere are unequivocal on the subject. The evidence is unambiguous that having more women on boards improves corporate performance.
The debate focused on the leadership of women on boards, following Lord Davies’ report. It was good to see such widespread welcome for his report. We also heard about practical support for women and families in the workplace and about supporting women entrepreneurs. I shall try to cover all those aspects. Before doing so, however, I make two further comments on my hon. Friend’s speech.
First, my hon. Friend reminded us of the Prime Minister’s aspiration for a third of Ministers to be female by 2015. Her speech may be an early suggestion that she is heading for promotion. Secondly, she made the important point that men need to listen to women in this debate. One of my favourite books when reading on the subject at university was a book about men and women in conversation called “You just don’t understand me” by Deborah Tannen, a socio-linguist. Listening to each other, particularly across sectors, is most important. We need to understand each other.
It is not only about listening in this debate, as we try to improve business and Government performance on the matter, but about putting that message across in the workplace, with employers and employees listening to each other and having grown-up, adult conversations. Indeed, many of the concerns that lie behind what was said this morning can be addressed in a way that does not require legislation or regulation. My hon. Friend spoke well and to the point.
Many Members spoke of legislation and non-legislation, and it is important that we realise the power of the nudge—the power of the non-legislative approach. That is one reason why I was keen to publish what has been called the employers charter. It sets out what employers can do under current legislation, and gives examples of the sort of conversation that employers are allowed to have with their employees—for example, about maternity leave and workers’ plans. It is important that we change some people’s perceptions about employers. Actually, employers have rights if they behave reasonably, and they can therefore work productively with their employees.
Right-to-request legislation, which was mentioned today, is a sort of nudge. It is about enabling employers and employees to have a conversation about flexible working. I have some concerns about the way in which the previous Government implemented right-to-request legislation. They took a prescriptive approach, and some employers find it rather regulatory and over the top. However, the Government are committed to right-to-request legislation. We will consult on it in due course. As I made clear in a written statement—
In a moment, but first I want to reply to my hon. Friend. The hon. Lady may want to intervene if she does not like my answer.
When we consult on extending the right-to-request legislation to all employees, we will also consult on whether there should be an exemption for micro-businesses. That may be appropriate because conversations are more easily had in small businesses. As my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, by and large smaller firms are better at having such conversations than larger companies. We will listen to people when we consult; the hon. Lady may believe too much of what she reads in the papers.
The question is whether people have the right to request flexible working. As everyone who has spoken today has been very much in favour of the right to request it, and as no one is obliging anybody to grant it, what is the difficulty with insisting that micro-businesses do the same as every other business?
The hon. Lady anticipates our consultation document. I believe that we will get the balance right, and better than the previous Government did; their approach was over-prescriptive. Indeed, that points out one of the differences between the two parties. I regret to say that for the vast majority of this debate, the hon. Lady was the only Labour Member here, but the Labour Government seemed often to think that the only way to secure progress in this area was through regulation and legislation. Sometimes that is needed, but it is often not necessary. For example, the employee engagement taskforce led by David MacLeod and Nita Clarke, which is business-led and is trying to promote best practice in employee engagement, and the employers charter that I mentioned earlier both take a non-legislative approach, and that can have a big impact.
Other questions raised this morning relate to the wider debate, particularly on how to take forward Lord Davies’ report. That report focuses not only on Government but on companies, their chairmen and chief executives and on the head-hunting industry. However, it recommends how the Government should ask quoted companies to report on their performance on this matter. We will be publishing proposals on improving narrative reporting following our consultation—the document was published in July 2010—and that issue will be included. I assure hon. Members that the Government strongly welcome the report, which paves the way to massive improvements in this important matter, on which the previous Government did little.
The hon. Member for Llanelli (Nia Griffith) asked whether the Government were taking forward measures in the Equality Act 2010, but she may have missed the fact that most of its provisions were brought into force on 1 October 2010. We have concerns about one or two areas, particularly to do with section 78, which provides for mandatory reporting on gender equality, and we are working with business to see whether we can take a voluntary approach, which we think is right. While we engage with business on that matter and try for a voluntary approach, we will not commence, amend or repeal section 78.
Another matter raised by the hon. Lady was that child care is inadequate and often unaffordable. I am proud to say that, in the spending review, the Government did not merely maintain spending on that but increased the opportunity for child care, particularly for the young of deprived families. Our commitment in that area is strong.
That brings me to the debate about maternity leave, paternity leave and parental leave. We will be consulting on that later this year. We already have a lot of legislation on the matter, but it does not work terribly well. It is inflexible, gender-biased and it does not work with the grain of many companies. Our consultation paper will take forward the coalition agreement, and I believe that we can achieve a win-win by making things more flexible for employees and employers. We want them to work better together to ensure that we have more family-friendly workplaces, but that it does not come at a cost for employers.
It has been an excellent debate. I pay tribute to my hon. Friend the Member for Maidstone and The Weald. I believe that the House could play a critical role. I do not know whether we could go for the Select Committee option put forward by my hon. Friend the Member for Skipton and Ripon, but I am sure that he will want to raise the matter with the Leader of the House. It certainly received support this morning.
Regional Development (North-East)
At the risk of making this Adjournment debate appear like the alternative Budget for the north-east—or of the hon. Member for Middlesbrough South and East Cleveland—I warn the Minister that the breadth of coverage of this speech will be large. However, I am sure, as I know my hon. Friends are, that such a diverse speech can only partially cover the wide sectoral diversity that has been achieved in 13 years of patient investment in the region by the previous Labour Government.
Let me give the Minister a brief overview of some of the issues of concern that face my region. I hope I speak for all parliamentary representatives of the north-east region when I say that a north-south divide still exists in England; it is deep, long term, continuing and persistently separates a nation on the basis of where an individual is born and raised, without due regard to the exceptional talent at hand within the boundaries of the Tees and the Tweed. Indeed, the current economic gap—which is perpetuated by the current economic climate—between the north-east and the rest of England is likely to widen, with the serious economic and social consequences that that entails.
PricewaterhouseCoopers’ analysis of the comprehensive spending review indicates that the north-east will be disproportionately hit by spending cuts and job losses. Unfortunately, the coalition Government’s hope that private sector growth alone will fully compensate for such consequences ignores broad economics and, therefore, looks highly unlikely. Indeed, with the Government doing less—or rather, intervening less—in the north-east in particular, the economic position of the region will be made far worse, not better. The coalition Government are not supporting with adequate institutional arrangements or money their declared aim of rebalancing. Rebalancing without the support of adequate resources is a recipe for failure.
Ministers have consistently disputed the need for proactive regional policy or strong Government intervention. That stands in stark contrast to what happened this time last year, when the parties in the current coalition, unaware of the then Labour Government’s actions behind closed doors, called for direct state intervention in Teesside Cast Products. They disingenuously confuse and coalesce the logic of the “crowded-out private sector” with a laissez-faire, sideline observing position, away from the crucial brokering of integral business deals necessary for a burgeoning and diverse manufacturing sector.
For my sub-region within the north-east, “primers”, or large industrial foreign and domestic investments, still dictate the pace of a regional economy outside a city. They historically work in our region, and our region, more than most in England, wants them. The new orthodoxy, rooted to agglomeration, relies on the purely local—almost parochial—delivery of economic planning. I do not decry that in its entirety, but for local partnerships with very limited resources, manpower, expertise, clout, cash and perspective, to deliver will be difficult and will only get more difficult.
Localism and equity are not the same thing. If the objective is to ensure that northern authorities have the resources both to support their local economies and to provide local public services, the greater the extent to which the business rate is devolved, the more extensive the equalisation scheme that would be needed. Such a policy approach remains spatially blind, with absolute priority given to the destruction of existing regional economic structural drivers, such as the regional development agencies, which is simultaneously delivered cap-in-hand with grossly exaggerated local government budgetary cutbacks in the north-east. It is evident that, for this Government, deficit reduction takes primacy over economic rebalancing and any notion of localism.
RDAs were emasculated before any local enterprise partnership was fully set up, allowed to root itself or to be fully financed in and around the expectations of the present Government. That is not the fault of the LEPs—in my case the Tees Valley LEP—because the structures, finance and guidance were delivered to them by the Government. A plan to allow LEPs organically to transform themselves and direct themselves—or perhaps that is the lack of a plan—has been the Government’s prevailing philosophical hobby, rather than occupation. However, that is a smokescreen. It only proves again that deficit reduction takes primacy over any economic rebalancing, and trumps any new trumpeted localism for this Government.
If we are to make LEPs work, they must be properly funded and have access to funds. They should not have to bid with raffle tickets for funds from a regional growth fund—such a fund is less than the total budget for a still non-defined mutualisation model for post offices—that is suffering under the gross weight of demands. LEPs need a proper funding apparatus, whether localised or national in source.
The rush to condemn the RDA within the crucible of the coalition’s gaze has been pursued with a vigour that borders on an almost McCarthyite zealotry. On 12 October 2010, the Minister said:
“The economic divide between the Greater South East and the rest of England is as wide today as when the RDAs began their work. That by any measure is a failed policy.”
The case against One NorthEast totally and utterly reduced it to a list of failings, without due or proportionate regard to its obvious successes, which, unfortunately, did not come to light until after it had effectively been dismantled. Many of the coalition’s policies, including the new homes bonus and impending reforms to the business rate, are likely to favour the south over the north, and the north-east in particular. Recent spending decisions in key areas such as science and technology largely favour a strong southern bias.
The bias in research and development towards the south is cumulatively increased when areas that produce traditional industrial products, such as Teesside, require further state investment, such as grants for business investment schemes, job creation programmes, and public sector relocation. If that investment is not forthcoming, the north-east will remain behind the curve in comparison with its sister regions in England.
The hon. Gentleman speaks very passionately on the subject; none the less, I find it hard to agree with some of his comments. He says that the north-east is falling behind, but since mid-August there have been announced almost 26,000 new private sector jobs, investment worth some £9 billion and private sector contracts worth £1.5 billion. The north-east economy is booming in some areas, and that should be welcomed. Far from falling behind the rest of the country, we are showing all the signs of powering ahead, rebalancing our regional economy and getting the private sector up and running again.
The hon. Gentleman is a strong advocate for Stockton South and a worthy adversary indeed. He is right: Teesside has a fantastic industrial economy and many new projects have opened up across the region, in his own patch as well as my own. However, those jobs will be created over a certain time period. Many of those were to have been announced before the general election, but for a number of reasons the announcement was halted until after the election was called. It would be false to say that One NorthEast did not have a prime role in bringing those businesses to our region. As a former union official in the steel industry, I know how much One NorthEast has worked with both Governments in trying to get Sahaviriya Steel Industries into the region. What I am trying to say is that a list of failings was produced but there was never an equitable list of positives and negatives when we were assessing RDAs.
We strongly require support for the emergence of a range of different financial sources for infrastructure development, including the green bank, and a greater localised and decentralised source of capital explicitly held for manufacturing entrepreneurship. That will allow risk-takers to take those industrial strides around the existing capital and skills inherent in the cultural demographics of our region. I hope that, unlike the Secretary of State for Energy and Climate Change, the Minister will consider a manufacturing green bank that works with the agencies to deliver the technology and product design that will give us green technologies—working and operating out of Edinburgh, the Secretary of State’s preferred location—rather than holding debates on “green” ISAs or other financial products that simply have the term “green” before them. That green finance must be aimed at manufacturing and not solely at financial high-street products if the Government’s own agglomeration policy is to be pursued for manufacturing.
However, I understand where the Government are coming from on industry. Agglomeration is fine, but industrialised clustering works even better, as we have seen in Germany and the Netherlands, when industry has its own access to funding to implement its own decisions, or when financiers are educated in industry and are located nearby, as documented in yesterday’s Financial Times. However, that connection between finance and industry is still vague and I very much doubt that Ministers at DECC and the Treasury are concerned about it at present, as both Departments appear to have a more obvious preoccupation with carbon floor pricing than with industrial finance. Carbon floor pricing, which I will discuss later, is perhaps the most important issue for Teesside.
I also challenge the Government’s huge assumptions about another topic that I will discuss later: export-led growth. It is obvious to any man and woman in the street that all Governments at any point in time want export-led growth. A healthy balance of trade is integral to a modern industrialised economy. However, we have to be vigilant about the economic mood music emanating from Asia at present.
Enterprise zones—an issue particular to my area—are the Thatcherite reprise of this Government. The enterprise zones policy is not wholly bad, but previous examples have shown that they are best used in certain sectors such as retail and finance. Our financial capitals are established overwhelmingly in London, although Leeds has developed in that regard in recent years. A previous example of enterprise zone growth in the north-east is evident at Gateshead’s Metro centre. However, what we do best on Teesside is not best suited to enterprise zones, and they ignore the broader view of industrialists in the port and chemical sectors.
I also want to look at particular areas in my constituency, such as our local high streets in Middlesbrough, Guisborough and East Cleveland.
I promise not to intervene often, as many Members are here for this debate. My hon. Friend mentioned my home town of Gateshead, and the Metro centre, which was viewed as a tremendous success in the 1980s, when it was initiated. However, did not the Metro centre have a profoundly negative effect on Gateshead town centre? That is the real danger that exists with any introduction of enterprise zones. They might assist a very small geographical area, but they might also create what is almost a wasteland outside their boundaries.
I thank my hon. Friend for his intervention and I have to agree with him. Obviously, there are benefits from enterprise zones. They bring a certain percentage of business in, but they also displace existing business. I will go into that issue in more detail later.
What can we do for small and medium-sized businesses and the self-employed? I have already talked to the Minister about that, and I believe my comments were received very positively. Ultimately, however, the direction of the north-east must be viewed from the perspective of the north-east. Until our region has more command of its economic destiny, it will continually have to bid against other English regions and Scotland and Wales for attention and investment.
Economic development in the north-east is a subject of deep concern to my constituents and the people of the wider region. Indeed, it should also be of concern to all the people of the UK, because without shared growth our country can never travel the road to prosperity. In the coalition agreement last year, the Prime Minister and the Deputy Prime Minister said:
“We both want to build a new economy from the rubble of the old. We will support sustainable growth and enterprise, balanced across all regions and all industries”.
That was and is an admirable pursuit, but my constituents are not seeing words being translated into action. In contrast, despite the north-east having the highest proportion of workers in the public sector of any English region, the Conservative-led Government have vague plans for growth in the north-east’s private sector, while simultaneously attacking its public sector base and the businesses—small and medium-sized, as well as self-employed—that thrive as a result of that public spending. The Prime Minister and the Deputy Prime Minister may have likened the economy under the last Government to “rubble”, but the last Government understood the regions and gave real teeth to regional development.
For example, the north-east regional development agency—One NorthEast—was one of those rarest of things: a public body with almost unanimous support that attracted praise from public and private sectors alike. However, a subtle criticism I have of the agency is that the region should have capitalised on the opportunity that it provided to take strides on its own. With a regional assembly that is democratically legitimate, our region would certainly be in a stronger position to attract business as well as to retain it, rather than witnessing what we are seeing in some areas: a partial and gradual leakage of industry from our region.
Praise for One NorthEast is well deserved. An independent report by PricewaterhouseCoopers showed that regional development agencies return £4.50 to regional gross value added for every £1 spent, if allowance is made for the expected persistence of economic benefits. Furthermore, the National Audit Office’s independent performance assessment concluded that One NorthEast was performing strongly. So why has it been abolished, especially after the Business Secretary said that the regions could decide what best suits their area? The only answer can be that the Conservative-led Government’s business policy is dictated from an informed position, but one that looks from London. It is a policy that will work, but not for all, and is ultimately submerged in an ideological fervour. It is formed not by regional or local opinion but Whitehall dogma. However, I reiterate that I do not believe that Ministers are stupid or ignorant of economics; they are simply applying a view that does not have a kernel within my region, and which does not redistribute wealth.
One NorthEast is the body that helped to set up and support the North East of England Process Industry Cluster, which made £1 billion gross value added in six years with just £3 million of public support. However, in addition to the scrapping of One NorthEast, we have now seen the abrupt end to the emergency package devised for Teesside in the wake of steel job losses. That fund targeted jobs growth in the chemicals sector, particularly in the growth area of agri-chemicals, as an alternative to lost steel jobs. Obviously, we have had the excellent news of the investment by SSI at Teesside Cast Products. However, that emergency jobs scheme has been axed, even though it is still allocating work and has £18 million in uncommitted funds that could have been used to support and enhance the objectives of NEPIC members’ companies.
Now we hear that a long-standing and successful job creation fund, which in the past decade has helped to create many hundreds of thousands of jobs in areas such as the north-east, is to be axed by stealth. That fund—the grants for business investment scheme, under the name regional selective assistance—has been responsible in the north-east for pumping £112 million into poorer parts of the region, helping to create 25,000 jobs. In various forms and under successive Governments, the scheme has been in place since the late 1960s. It survived the Heath years, the 1970s Labour Governments and even the Thatcher and Major years, as well as the following Blair and Brown Governments. Despite differences of economic policy, all those Administrations recognised the value of regional selective assistance. Throughout that whole post-second world war period, that element of consensual “Butskellism” remained and only now has it been totally dismantled.
The Chancellor has announced the creation of at least 10 enterprise zones across Britain, in a scaled-down revival of Margaret Thatcher’s flagship urban renewal programme of the 1980s. The Chancellor hopes that those zones, which will offer simpler planning rules and corporate tax breaks, will accelerate development in areas that already have high growth potential. They will not simply be created in areas of physical decline. However, sceptics believe that they could be ineffective and that the appeal of the tax breaks will be limited by the fact that only £100 million of Government subsidy will be available, spread over four years.
The Chancellor’s announcement is part of a wave of initiatives to be unveiled by Ministers before the Budget tomorrow, all of which are intended to prove that the Government have a coherent strategy for growth. He will announce at least 10 zones, which are expected to be chosen by Ministers on the basis of submissions by councils and business leaders. To address fears that this is a top-down initiative that might sideline town halls and local enterprise partnerships, the Chancellor will say that local authorities will be able to keep all of the business rates that they raise in the new zones.
However, retention of the business rates will almost certainly benefit a number of London and south-east areas. In fact, the special interest group of municipal authorities, or SIGOMA, analysis of 2009-10 settlement-based grants showed that the top 10 councils to benefit are Westminster, City of London, Surrey, Hertfordshire, Hillingdon, Hampshire, Camden, West Sussex, Kent and Essex. The London boroughs of Westminster, Hammersmith and Fulham, Kensington and Chelsea, and the City of London will gain £1.6 billion in total in local spending, whereas the north-east, north-west and Yorkshire will lose out by £760 million in total.
The Chancellor insists that the coalition’s initiative will shift growth from London and the south-east to other regions, and he says that it contrasts with what he claims was Labour’s attempt to micro-manage the economy. He told his party’s spring conference in Cardiff:
“Our approach is different: tax breaks and less bureaucracy, not quangos and more regulation.”
As I sense that the hon. Gentleman might be moving on in his speech, it is important to put very clearly on the record that, although he and I disagree about enterprise zones, there is a great deal of support right across Teesside for the campaign to get an enterprise zone in our local area. That support comes from not only me and the hon. Member for Redcar (Ian Swales) as local MPs but Ray Mallon, the mayor of Middlesbrough, and business people such as Steve Gibson, who is the chairman of Middlesbrough football club, as the hon. Gentleman knows. Moreover, the local enterprise partnership is extremely keen to secure an enterprise zone. It is important that the Minister hears those comments, which should be on the record. We really want an economic zone, although I acknowledge that the hon. Gentleman, who represents a neighbouring constituency, has a different view of the success of such zones from me.
Yes, I know Steve Gibson—I am a season ticket holder at Middlesbrough FC. I partially agree with what the hon. Gentleman has said. Local authorities, business leaders and LEPs have to work within the frameworks and structures that they are given, and they have to make those frameworks and structures work. However, this is a broad debate about the policy, and if I did not talk about the economic implications of the policy, I would not be doing a proper service to my constituents.
Reviving enterprise zones will prove ineffective, even if that aim is achieved at less cost than that of the 1980s model and the zones are redesigned for today’s circumstances. The Work Foundation and the Centre for Cities think-tanks argue in recently published reports that zones created under the now Lady Thatcher and Sir John Major created too few jobs and were too expensive. The Work Foundation has said that such zones typically created only a three-year boost before areas lapsed into depression, and that up to four fifths of jobs were simply displaced from other areas, often within the same town.
London’s Isle of Dogs—now Canary Wharf—was among the most successful of 38 enterprise zones created between 1981 and 1996, but others in places such as Middlesbrough, Speke, Hartlepool and Swansea left a less impressive legacy. The EEF manufacturing association has said that the policy sounds like a return to the past. The rhetoric deployed by the Government indeed sounds attractive, but I signal real caution and suggest to them and to supporters of enterprise zones that they reacquaint themselves with Teesside’s history in the 1980s. Enterprise zones offer potential relief on local business rates, reductions in corporation tax or national insurance contributions, tax credits or capital gains allowances on investment in premises, and the relaxation or fast-tracking of planning processes and capital expenditure subsidies. Did that work in the ’80s throughout the north-east, and throughout all sectors and, more importantly, will it work now in 2011? I had a look at my old economics notes from Teesside university, and all the evidence from the past suggests that enterprise zones did not work, and possibly will not again.
Locally, Middlesbrough’s Riverside Park, which has since been very successful, was designated as an enterprise zone, but all that happened was a rush to get speculative office development off the ground with no tenants and no businesses to fill the new buildings. That, of course, did not worry the developers, who simply benefited from the tax perks from building in an enterprise zone and allowed the empty buildings to be used to make artificial losses, which reduced the total taxation on their developments elsewhere. Such experiences, bar perhaps the Metro centre and Black and Decker in Durham and the London Docklands, were admitted as a failure at the time by the Thatcher Government. In their official evaluation, the Government admitted that between 1981 and 1986 they poured £300 million into the scheme but created only 13,000 new jobs nationally, which equates to £45,000 of public cash per job at the mid-1980s value of sterling. The same study also stated that enterprise zones mainly encouraged job displacement rather than real new jobs, and it showed that 25% of new jobs in enterprise zones were displaced from within the same town.
Repeated today, that type of local displacement risks seriously destabilising our local economy, as it involves artificially enticing businesses into what could be seen as less competitive areas within the same town. On the face of it, it might seem obvious that lower taxes boost business, but that was not borne out by experience. It quickly became clear for the majority of small businesses that their biggest concern was about making a profit in the first place, and about the risks associated with achieving that, rather than about tax on revenue or profit. Questions of rent, skilled workers and access to markets were more significant than a temporary lifting of a tax burden in a specific area rather than across the board.
The only people who benefited in the 1980s were the developers, not wealth-creating manufacturing businesses. We should not dismiss out of hand any proposals to encourage job creation and, for the sake of my area, if the plan goes ahead I will wish it every success, but the evidence of actual gain is thin indeed. Some already established businesses and their owners might see it as a helpful tax avoidance scheme, but that only benefits the already rich by possibly multiplying their wealth and does not create any added value.
I congratulate the hon. Gentleman on securing the debate, because it is a very helpful process. I have listened for 23 minutes now, and there is a great deal of criticism of what is being tried by the Government but no alternative being put forward. I look forward with great interest to hearing what the alternative will be—
The hon. Gentleman says that, but someone has to pay back the £120 million-a-day debt. Speaking as the son of manufacturers who have been in the industry for many years, what the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) describes is not necessarily how my family have found it.
I will come on to discuss the alternatives. We have seen borrowing increase by £2 billion, and certain policies, which I will come on to later, have economic effects on the national economy, and more profoundly on that of the north-east. Those effects will be part and parcel of the package due to inflation, and the retail prices index is currently running at a 20-year high. Such national policies are being put in place to deal with the deficit, but they seem to do only that, rather than presenting a progressive or prospective economic plan.
Turning to industry, chemical firms with major operations on Teesside, as well as our local steel producers Tata, have grave and well-founded concerns about industrial growth policy. I am, of course, talking about carbon floor prices. A consortium of firms, including SABIC, Lucite International and GrowHow, has recently criticised the Government’s energy strategy, justly claiming that it hinders the competitiveness of UK manufacturers more than any employment regulation or tribunal. The implementation of a minimum price for carbon will add a minimum of 20% to energy-intensive users’ energy bills. If the policy is implemented, our nearby EU competitors will no doubt exploit the situation, as will competition further afield. The policy will hinder further inward investment, and might lead to the departure from our region of good companies that provide long-term, well-paid, skilled work. EU competitors have attempted and then pulled away from equivalent policies. Changes to the carbon reduction commitment scheme, which amount to a £1 billion tax, will also delay green investment and hurt small downstream industry that aids steel production in the UK. Ultimately, potential and existing investors will move abroad to less efficient and less green arrangements, which will not benefit our economy either nationally or regionally.
Yesterday evening, some other MPs and I met some of the major companies in the energy-intensive industries, many of which are in our constituencies in the north-east. The Government plan to have carbon capture programmes, but none of them takes into account the specific needs of those industries. Does my hon. Friend believe that the Government should think again, and instead of just concentrating on energy plans concentrate on the needs of industries as well?
My hon. Friend hits the nail right on the head. Whatever policy we have—an agglomeration policy, or a slightly different industrial policy—the energy factor, which I will go into in more detail later, will have a more and more profound impact on industry’s ability to retain and maintain its current position as well as to invest. Teesside is potentially one of the key areas in the country, never mind the region, for that investment, particularly in the chemical and steel sectors. My hon. Friend makes an excellent point.
Of anything that I say today, I beg the Minister to take that message about carbon floor pricing back to the Department for Business, Innovation and Skills, the Treasury and the Department of Energy and Climate Change, to block any moves that will hurt our north-east in general, and Teesside’s industrial core in particular. The announcement of a supposed regional growth strategy for the north-east as part of the comprehensive spending review is at best misleading and at worst a smokescreen to hide the deep cuts that will stunt economic growth in our region. The regional growth fund will also have to finance bids for housing and transport plans, so it is obvious that even a successful LEP bid to the fund will mean only a small slice of a very small cake. The fund was designed to redress the regional imbalance in the economy, so surely providing funds to companies in the affluent south-east will undermine its objectives.
I am also extremely concerned that the Government may well be turning away millions of pounds of EC funding for new economic initiatives and infrastructure projects, because their blunders over the winding-up of the regional development agencies means that they do not have the match funding for those job-creating schemes. On Teesside that is made worse, as the back-up service for a Tees valley LEP will rely on the existing Tees Valley Unlimited agency and its staff. However, that too has had £7 million of its £9 million budget slashed. There will also be a real terms cut of 9% to the science budget, which threatens to leave the UK behind international competitors such as the US and Germany, which are still increasing their science spending despite the economic climate. Even the Minister for Universities and Science said recently that scientific research contributes to long-term growth. If the Chancellor agrees with that, why are we not increasing the science budget like other countries?
The Government announced in the CSR that £1 billion would be provided to fund carbon capture and storage. According to Jeff Chapman, chief executive of the Carbon Capture and Storage Association, that will fund one project,
“but it’s not enough for four”.
I argue that the Wilton site, in the constituency of the hon. Member for Redcar (Ian Swales), is ideal for the project in many respects.
We must be able to capitalise on foreign export opportunities, yet we must not rely wholly on them. As I have said, this Government have given absolute economic primacy to deficit reduction. That has massive implications for a sector-led agglomeration anywhere in England, but it will particularly affect how potential foreign export purchasers view England, especially the north-east.
Chemicals are a major player nationally as well as locally on Teesside, and they make up more than 30% of UK economic exports. Teesside has massive potential, with projects such as Chain Reaction by PD Ports at Teesport and Hartlepool, agrichemicals as a new growth sector, petrochemical developments, SSI and Tata at Teesside Cast Products and many more.
US ambassador Louis Susman has questioned the wisdom of the Chancellor’s massive spending cuts, warning that they risk plunging Britain into a double-dip recession. His remarks echo those of leading economists at the International Monetary Fund, who said last week that the US and EU economies remain too fragile to absorb major deficit cuts, concluding that additional spending and tax breaks would be a much more sensible strategy. In an interview with The Daily Telegraph, Susman praised the Chancellor’s determination to eliminate the deficit within a single Parliament as “very admirable”, but warned:
“But the question is, is it too much, too fast? We worry about double-dip recession and the lack of growth.”
So do I.
China reported a trade deficit in February of £4.5 billion. Exports from China grew by 2.4%, which was less than expected, mainly due to the appreciation in value of China’s currency. However, growth in imports also decreased from an expected 30% to 19.4%. We must remember that under Labour, between January and August 2010, exports to China from the UK rose by 44%, which especially helped manufacturers. Between January and April 2010, manufacturers boosted UK exports by £21.3 billion. The demonstrable reduction in Chinese demand is having huge effects on other international economies that export or rely on exports.
The coalition Government must understand that an export-led growth strategy alone will not suffice. Besides the obvious structural unemployment issues—the skills of redundant public service workers in the north-east will not match the growing sectors, if any grow—manufacturing sector credit squeezes in China, the terrible floods in Australia that have limited coke exports, desperate earthquakes and tsunamis in Japan and ongoing events in Libya, Bahrain, Yemen, Saudi Arabia and the wider middle east and north Africa will affect an overly optimistic and wholly reliant British exports policy. Iron ore, steel, cotton and other commodities are peaking at extraordinarily high levels. More importantly, coal, gas and oil markets are peaking as Japan, China, and Germany re-evaluate their nuclear policies, which is already affecting our access to fossil fuels and their domestic and industrial usage and price. That will undoubtedly affect not just our north-eastern industry but our national export capability.
By betting the house solely on exports, we expose ourselves to a potential backfire. However, public sector investment and an export policy need not be mutually exclusive. Obviously, we can pursue an export policy while retaining our levels of public sector investment in the north-east. Again, however, an export policy with no real investment and no public sector expenditure belies the coalition’s policy of giving economic primacy to deficit reduction. We should not reduce the deficit at the price of our public sector and, in turn, of the small and medium-sized businesses in the north-east that rely on it.
The planned changes implemented so far include a rise in VAT to 20%, which will affect consumer spend. Businesses such as leisure, hotels, restaurants and retail will bear the brunt. Indeed, figures from the Office for Budget Responsibility stated today that the consumer prices index was at 4.4%, double the Tory-led Government’s estimates. I am a traditionalist, and as a former union officer I never dealt in CPI, but always in RPI. The OBR says that the retail prices index has risen from 5.1% to 5.5%, the highest in 20 years. Funnily enough, that was the last time there was a Tory Government. We have had the wrong kind of snow from this Chancellor, and now he claims, as he did on the front page of the Financial Times, that we have the wrong kind of inflation, causing him to have to borrow £11.8 billion, up from £9.5 billion last year. I thought that we were making cuts in order to reduce loans.
The effects of the Government’s policies resonate hugely, and nowhere more than in the north-east. R3, the association of business recovery professionals, regularly contacts me regarding time-to-pay arrangements for small and medium-sized businesses, especially given the impact of oncoming public sector cuts. Time to pay is crucial in the north-east to help the self-employed and small businesses currently in trouble to avoid insolvency and prevent the further private sector redundancies that will be inevitable after public sector cuts.
R3 surveyed 300 small businesses and found that one third relied wholly on public sector spending in one form or another. The survey was nationwide, and things will undoubtedly be more severe in the north-east. The situation will be more acute, of course, if interest rates increase on top of the inflationary figures estimated today by the OBR.
On behalf of small businesses, I welcome the Government’s potential simplification of tax, especially if national insurance and income tax are combined. However, the Government could go further for the north-east and its small businesses. High streets in ancient market towns such as Guisborough, Brotton, Loftus, Skelton, Saltburn and other East Cleveland villages need help. Some great small businesses are developing in my constituency. Coastal View, for example, is a new free monthly paper that advertises other local businesses. In south Middlesbrough, retail is also key at shopping areas such as the Parkway in Coulby Newham, Easterside, Marton, Marton Manor, Hemlington and Park End.
Self-employed women and men in my region need quick assistance. On behalf of small businesses, I ask the Minister this: rather than enterprise zones, could the north-east as a whole pilot a 5% VAT rate for construction? Evidence in France has shown it to have turnover benefits of 7%. The Government must act on VAT and fuel duty, and the consensus on that is cross-party, especially on fuel. The 5% VAT rate could be extended in turn to public houses, restaurants and food service in general, helping struggling small businesses while aiding our region’s burgeoning activity tourism economy. Similarly, VAT exemption rates could be lifted from £60,000 to £90,000 for small businesses and the self-employed, bringing in broadly the same revenues for the Treasury while giving small business a break. Again, that could be piloted in the north-east.
I give the Government credit for relaxing planning regulations to allow some commercial properties to be changed to housing accommodation. It might prove a more viable solution in rural areas of my constituency, particularly on certain high streets in East Cleveland. Even so, small businesses will become increasingly key in the fine economic blend of the north-east region.
I understand that I have raised many sectoral topics and a diverse array of issues, but I look forward to any response that the Minister can give.
It is a great pleasure to follow a fine, long and detailed speech that took us on a lovely journey through your constituency and touched on many local areas, but not on many others. I waited—I probably waited too long to intervene—for you to acknowledge that the £120 million-a-day debt with which the Chancellor must deal is something that you caused. It did not arise out of nowhere. I hope that it is accepted that whoever was in power—this applies just as much to your good selves as it does to us—would have had to deal with that debt. To ignore the huge debt that we must deal with when addressing the economics of the situation is unacceptable.
If I counted correctly, there were few things of which you were in favour: simplification of tax, a possible VAT cut to 5% and the relaxation of some planning regulations. In 35 minutes, almost no description of anything that we are doing did not chime with McCarthyite zealotry, which is the most eloquent and powerful description of what you were trying to do—
I apologise. That is entirely true, Mr Caton. I could not possibly comment on whether anybody had McCarthyite zealotry.
I have listened to the hon. Member for Middlesbrough South and East Cleveland and hope that he will advance the issue. It is wrong, however, to describe enterprise zones as a bad thing and to say that policies should be implemented in a way that ignores tremendous benefits. I am sure that my hon. Friend the Member for Redcar (Ian Swales) would describe the great benefits of Corus, and we should not ignore the fact that the North East of England Process Industry Cluster has come forward. All of those are good things.
Frankly, it is important, at this moment in time, to deal with deficit reduction. If there is a manifest difference between the proposals of the hon. Member for Middlesbrough South and East Cleveland and ours, it is about whether the deficit is the key or not. I suggest that, at a time in which we are in so much debt, the deficit is always the key, because if we do not address it, we will disappear into a situation akin to that of Greece or Portugal.
I do not deny that the Government’s plans are sensible, have a point and a logic, and that they might work. The point is about who they will benefit. Is this yet more trickle-down economics, or are we genuinely talking about redistributive economics? Redistributive economics favours the north-east, but I am afraid that trickle-down economics favours the south-east. The Chancellor’s plans may indeed work, but to whose benefit?
The dispute between us is fairly stark in terms of the extent to which we have the potential to repay. My view is that the Chancellor is trying—this is not something he wanted to inherit—to address the £120 million-a-day debt and to be in a position to do that. I believe that he will take the issue forward and that there are real opportunities in the way ahead. I speak as the representative of a fundamentally rural constituency, but jobs are up and the points made by my hon. Friend the Member for Stockton South (James Wharton) are fair. It will be difficult, but I am absolutely certain that the Chancellor has the right policy.
I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this timely and important debate, and on his excellent overview of the north-east economy. Given the particular challenges faced in a region such as ours, and the already felt and anticipated impact of this Conservative-led Government’s policies, I could touch on so many issues in this debate. However, given that Newcastle airport is based in my constituency, I think it appropriate to address the important role played by aviation in the development of the north-east economy.
With about 3,000 people on site, the airport is the largest employer in Newcastle upon Tyne North. It contributes about £400 million to the north-east economy annually, and it handles more than 5 million passengers a year. The excellent service provided by Newcastle airport to domestic and international passengers has been nationally recognised by its peers, having been voted the best UK airport by the British Air Transport Association for two years running.
Indeed, the service provided by Newcastle airport has become increasingly important to the region’s economy over the years, with the growth of the tourism industry in the past decade or so being one of the real success stories for the north-east. Tourism is now worth nearly £4 billion to the region’s economy and employs more than 65,000 people, while the increase in visitor numbers to north-east England has been outstripped only by London in recent years. To give just one example of the airport’s impact on the north-east economy, the new Emirates route that launched in 2007 saw the region’s first ever scheduled long-haul route. It flies daily from Newcastle to Dubai, and it has opened up onward connections to more than 50 destinations around the world. It has also opened up a whole new tourism market for north-east England, leading to One NorthEast’s award-winning “Passionate People, Passionate Places” campaign heading as far afield as Australia and New Zealand to target those people who were then within easier reach of our region.
The Conservative-led Government’s cuts, however, and their decision to abolish our regional development agency, mean that north-east England no longer has the capacity to promote itself as a tourism destination either nationally or internationally. This situation and the abrupt end to the “Passionate People, Passionate Places” campaign have been rightly and roundly criticised in the region.
As the Minister should be aware, north-east England is also one of the few regions in the UK with a positive balance of payments—recently published figures indicate that the total value of north-east exports was £11.91 billion in 2010. At the same time, inward investment has played an increasingly important role in the north-east economy, creating or safeguarding more than 6,500 jobs in our region in 2009-10 alone, and levering in £720 million in capital. About 82% of the inward investment came as a direct result of One NorthEast. I hope that the Minister will reflect on that serious point.
Newcastle airport plays an important role in supporting the strength of the north-east export market and our foreign trading links, providing the region’s businesses with easy access to key international markets. Direct flights from Newcastle to Stavanger in Norway, for example, have proved crucial in supporting the development of the north-east’s offshore and subsea industries. Moreover, the Emirates link to Dubai, which I have mentioned, now provides easier access to commercial opportunities in China, the far east and India, as well as the middle east.
Another key area vital to the growth of the region’s economy is ensuring that we have the skilled work force of the future. I am a passionate supporter of vocational education and apprenticeships, which is why I tabled my Apprenticeships and Skills (Public Procurement Contracts) Bill. Recently, it was a pleasure to go to the airport and meet one current and one former motor technician apprentice—one at the start of their career, the other at the end—who have both trained and worked at the airport. I also pay tribute to the £3.3million Newcastle Aviation Academy, which was officially launched in 2009 having received investment from Newcastle college, One NorthEast and the Learning and Skills Council. This top-of-the-range facility, based at Newcastle airport, provides a wide range of training in all aspects of the aviation industry, including aircraft engineering, aeronautical engineering, and airport and airline management. It is exactly the sort of thing that the previous Labour Government invested in to support young people, rather than write them off, which is what some of the Government’s policies are doing.
Newcastle airport has, therefore, played an integral part in the north-east’s economic past, and will continue to do so in the future. However, a key, ongoing issue for the airport and north-east businesses has been the impact of air passenger duty and the Government’s proposals to move to a per plane duty. Notwithstanding the importance of ensuring a greener, low-carbon economy and the important part that aviation must play in achieving that, this and any other taxation policy must concentrate not only on increasing revenue for the Treasury and greening our economy, but on rebalancing our economy in a way that will not impact disproportionately on our regions.
The Newcastle Journal’s long-standing campaign, “A Tax Too Far”, has called on Governments, past and present, to recognise the disproportionate impact of APD on regional airports. It urges that APD or PPD be restructured in line with the impact they have on regions, compared with London, and for consideration to be given to reduced rates of APD for new start-up routes in and out of the north-east. The Newcastle Journal’s campaign has clear support from the business community. In January, the Emirates vice president for the UK and Ireland, Laurie Berryman, made it clear that larger airlines would be forced to consider their position at UK regional airports if APD becomes too great and passenger numbers fall. Moreover, earlier this month, the North East chamber of commerce wrote to the Secretary of State for Transport to call for an overhaul of the APD system, stating that it has a disproportionate impact on our region’s businesses. The NECC is calling for differential rates for regional airports, to replace the current blanket duty, in order to ensure that the north-east economy does not suffer and that its export businesses can continue to grow. As the NECC chief executive, James Ramsbotham, has pointed out:
“North East businesses already face heavier costs than their counterparts in other regions in order to access common markets due to high fuel prices, so addressing the anomalies that APD gives rise to will ensure that our exporting businesses have a much better chance of realising their potential.”
Of course, if differential rates of APD or PPD were introduced for regional airports, it would also reduce pressure on Newcastle airport’s already overcrowded south-east counterparts. In the words of Graeme Mason, head of corporate affairs at Newcastle airport:
“By freezing or reducing the rate of APD out of regional airports, the Government could, at a stroke, rebalance the economy, reduce the North-South divide, and take the pressure off the South East.”
An announcement on the issue is expected in the Chancellor’s Budget tomorrow. Will he recognise the regional impact of tax and provide a real stimulus for regional economies like ours in the north-east in his so-called “Budget for growth”? Like Newcastle airport, the North East chamber of commerce and many other north-east businesses, I—and I am sure my colleagues—await the Chancellor’s announcement tomorrow with great anticipation.
I congratulate my hon. neighbour—as I suppose I should call him—the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing the debate and on his powerful and very well-researched speech. He has done excellent work.
As we know, the north-east economy is largely founded on the historic industries of coal mining, ship building and steel manufacture. For decades, we have had issues with both the run-down of those industries and the run-down of employment in those industries, even those that continue. Although the news of the revival of the steel industry is very welcome in my constituency, I do not think it will employ 10,000-plus people again, which it did not so long ago. There has been a long history of assistance being given to the north-east in relation to various coal and steel closure areas and regional development grants. In the 1980s, I remember filling in the forms for regional development grants in a former life. There has been a long history of needing to do something about the north-east, and various Governments have continued that.
I accept the points made about the RDA. RDAs around the country have had patchy success. However, I think that even the other RDAs would recognise that One NorthEast was probably the best and most successful. I pay tribute to the former Minister for the North East, the right hon. Member for Newcastle upon Tyne East (Mr Brown), for his passion and advocacy both of RDAs and the region. Something we should all recognise in this place is that what divides us politically is far less than what joins us when it comes to regional issues.
The RDA did good work but, as I said in the recent debate in the House led by the right hon. Member for Newcastle upon Tyne East, we need to consider the study done last year by Experian and the BBC. They looked at 324 areas in the country in terms of economic strength and rated Hartlepool as 314th, Redcar and Cleveland as 319th and Middlesbrough last at 324th. Whatever else has happened, we have not driven the Teesside area up the economic league. The only time we had any significant urban renewal in Teesside was from 1987 to 1998, when we had Hartlepool marina, Stockton riverside and university campus, Teesside barrage and waterpark, Teesside retail and leisure park, and Middlesbrough riverside. That was the period of the flawed but, nevertheless, energetic and focused Teesside development corporation, which was scrapped by the Labour Government when they came to power. Much less has happened since in that regard.
I shall turn to transport. The Tees valley is the birth place of passenger railways. If someone were to ask in a pub quiz where the first passenger railway was, most people would say that it was Stockton to Darlington, which runs along the Tees valley. So where are we today with our railways? We still have a railway that runs from Darlington, almost touches Stockton and goes all the way through to Saltburn. It passes very close to the Riverside stadium, but does not stop there; it passes very close to Teesside retail and leisure park, but does not stop there; and it passes within half a mile of Teesside airport, but does not stop there. Is there another airport in the country that has virtually no public transport? The failure to even allow a railway that already exists close to Teesside airport to be part of the transport structure in the area shows that there is an awful lot to do. Middlesbrough is the largest town in the country without a direct link to London, which is another example of what is left to do. We have some real issues to deal with and real work left to do.
In business, I always used to say that one could tell whether a committee was any use, first, by how it was formed—did it form itself?—and, secondly, whether people attended it. Teesside Valley Unlimited formed itself as a private-sector led, private-public partnership about five years ago, because of the perceived needs of the Tees valley and the difficulties there. It is no surprise that that organisation was very quick out of the traps when it saw the opportunity to have a local enterprise partnership for the area. I know that that enraged some people further north and that it was felt to be a fragmentation of effort that may lead to outcomes that are not as good.
I have always been a one region person. Although I congratulate the people of Tees valley on putting together the first LEP in the region, does the hon. Gentleman not agree that it is important that the north-east—the smallest region in the country—works closely together and has a tremendous partnership with our local authorities and other organisations in order to drive the region forward? We should not simply try to plough our own furrow, as some people would have us do.
I was about to come on to that matter. I thank the hon. Gentleman for his question. Absolutely, we need one regional voice on a number of issues. This Government perhaps differ from the previous Government in that we do not see the need for such an approach to be prescribed in detail for every region. I hope that the existing structures can make decisions, create what they think they need and make it work. If there are two LEPs in an area, the Government are not prescribing that they cannot talk to each other and say, “Okay, let’s jointly work on this.” A good example is European funding. The Government have already decided to retain a regional focus for European funding, because that is what is necessary.
The hon. Gentleman is an excellent advocate for the region, and it has been a pleasure working with him on getting steel back to Teesside. However, there are some fundamental problems with the LEP structure. Let us consider, for example, Hitachi. As he has rightly mentioned, that is a great success story for the region. How will small and medium-sized enterprises in the Tees Valley LEP that want to grow around Hitachi, which is not in the Tees Valley LEP, interact with the new LEP, the North East Economic Partnership and the other structures?
I thank the hon. Gentleman for mentioning that. Not everything happens through Government agencies. Business is business. If I were running a business, or if I wanted to run a business in the Tees valley, and I knew that a train manufacturing facility was being set up 10 miles away, I would not need a Government agency to lead me to talk to people and make things happen. We have suffered from the idea that people wait to be told what to do, and that is a good example.
That still does not answer my point. If an SME wants to get regional growth fund funding, which LEPs does it talk to? Does it talk to both? Does it also talk to the NEEP, or does it talk to the Department for Business, Innovation and Skills and the Treasury directly? It seems that the need for further meetings will increase, rather than decrease.
Okay. I will be more specific for the hon. Gentleman. Clearly, if a business wants to base itself in the Tees valley and has customers—wherever they are—it should talk to the Tees Valley LEP. If those customers happen to be in the region, that is fine. I do not see a problem with that. As I have said, there is no law that states people cannot talk to each other.
An almost religious adherence to the regions has had some benefits, but it has also created some problems. In 2004, the people of the north-east firmly rejected the idea of regional government. Some of us regretted that more than others, but the decision was absolutely overwhelming—not just from the fringes of the north-east but from the heartlands of Tyneside and Wearside.
Absolutely. One issue was whether central Government were prepared to release enough powers. I remember reading the document and being unimpressed by such statements as the “power to advise Ministers”, which did not strike me as a particularly powerful power, so I agree with that. Regionalisation, however, has had some impacts—I will come on to wider issues in a moment—on the Tees valley. For example, our area, which contains 750,000 people, has been deemed unable to run our own ambulance service, which has been moved out of the area. The fire service was about to be moved, and an attempt was made to try to get the police to merge with another organisation. We need to stand up strongly for what is a very natural, large area of population, and, sadly, regionalisation has not always helped.
[Mr Edward Leigh in the Chair]
I am not a “little Teessider”—my wife comes from Stanley, which is quite a bit further north. My right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) would not let me get through this debate without mentioning the dualling of the A1. Just in case hon. Members did not think that was going to happen, it has happened. [Interruption.] Sorry, the dualling has not happened. I have mentioned it on behalf of my right hon. Friend. It would be great if that dualling were to happen. I recognise that the north-east has a lot of coherence, though it seems a long way from the end of my constituency to the north of my right hon. Friend’s constituency.
The north-east has a lot of strengths. In many cases, we can work together. In other cases, it is not appropriate to work together. There are enormous strengths in terms of industrial background and the conversion of people and industries in those historic sectors to doing new things. We have people who are highly skilled, as the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) has said. We already show, particularly through process industries and other manufacturing, that we can make and export things, and I know that the Government are very keen to see that happen.
On rebalancing the economy—yes, the process is redistributive, but as the hon. Member for Hexham (Guy Opperman) has said, what is it redistributing?—we know that the country has a huge economic problem at the moment. I welcome mechanisms such as the regional growth fund, but we have a massive issue in terms of small and medium-sized enterprises. I hope that the Minister will respond specifically to this point: 97% of the grants given out by One NorthEast were less than £1 million. That £1 million threshold has to be very short-term. If the board of the regional growth fund cannot consider hundreds and hundreds of projects, then we need a programme mechanism beneath that board.
It has been estimated in some quarters that the potential growth in supply chain jobs from the Hitachi development is as much as 7,000 jobs. There is very little chance, however, of 7,000 supply chain jobs in the north-east of England coming from the SME sector, if there is not much more flexibility in the distribution of the regional growth fund and in grants that are fit for the SME sector. At the moment, such grants are out of reach for many businesses.
I welcome that intervention, which powerfully supports the point that I was just making. I hope that the Minister will respond to that point.
I would just like to mention two other issues that the Minister could perhaps touch on. One issue relates to energy prices.
I will do that, Mr Leigh.
Energy pricing has already been mentioned by the hon. Member for Middlesbrough South and East Cleveland. I also want to press the Government on the Infrastructure Planning Commission. We have a large project in my constituency at the moment that must divide itself, completely artificially, in two. Part of the project is supposedly covered by the Infrastructure Planning Commission and part of it will be approved by the local authority. It is costing the business a fortune to fight two planning processes.
I will draw my remarks to a close now. Again, I congratulate the hon. Member for Middlesbrough South and East Cleveland. As I have said, there is a lot more that joins us on these issues than that separates us.
I will cut parts of my speech to make your deadline, Mr Leigh.
In the past 10 years or more, there has been a radical change in the mix of industry, business and public service in the north-east. Much of that was led by One NorthEast, the regional development agency, and by forward-looking local authorities of all political colours working in partnership. The result was that the north-east was slightly less vulnerable when the world economic crisis hit us, but we still need major change and investment to ensure that the region does not slip way back to where we were in the 1980s and 1990s. The number of unemployed claimants in my constituency of Stockton North in February 2011 was 3,812. That is 9.2% of the economically active population aged 16 to 64, which is a good reason why we need growth not only for my constituency, but for the whole north-east, where 10.2% of people are unemployed.
I would like to make a final comment on the RDA—I am sure that many hon. Members will welcome my saying that. Other RDAs may not have been a resounding success, but One NorthEast was. It was an organisation that we could be proud of. It played a huge role in developing the region’s renewable industries and in helping local firms grow. More importantly for me was that it also put together strategic land and other assets—packages—to build on for the future. With the demise of One NorthEast comes the question of what will happen to its assets. I am very worried that the Government might be preparing a fire sale for billions of pounds of RDA assets, such as business parks and development land, or that they will just pool them into some central bureaucracy in London. We argue that local enterprise partnerships should have first say over the RDA assets, which would enable real local influence. LEPs currently have one hand tied behind their backs, with no dedicated funding stream to aid them with their start-up costs and initial research. That would give them a real boost and real clout. To deny them operating funds is like giving a child a toy and forgetting to put the batteries in it.
Tees Valley Unlimited, the new LEP in my area, has confirmed that it has submitted 20 bids to the Government’s regional growth fund, asking for almost £80m of support. If granted, I am told that those plans have the potential to create a significant number of jobs. However, as we know all too well, the total pot of money for the regional growth fund is not nearly enough at £1.4 billion over three years. In comparison, in 2010-11 alone, the RDA fund for one year was £1.4 billion. It is clear that the money will be spread thinly. In the first round, which closed in January, bids worth £2.78 billion were made to the regional growth fund. Clearly, many bidders will be disappointed tomorrow, when I understand that we will learn who has, and who has not, been successful.
On a more positive note, I was pleased to learn in October that the Government are committed to offshore wind and did not cut Labour’s £60 million investment in our ports to ensure that that part of the renewable industry is supported and encouraged to invest in the north-east. We have yet to see whether the Government will deliver on that. If we are to meet EU targets that require Britain to increase the proportion of electricity that comes from renewable sources, from 7% to 30% by 2020, the Government must do more on renewable industry. Despite rising unemployment and the sluggish economy, there are a few good stories in region. The Hitachi trains were mentioned earlier, and the campaign led by my hon. Friend the Member for Sedgefield (Phil Wilson) for investment from Sahaviriya Steel Industries in Teesside steel, will create or secure hundreds of jobs.
We wait to see whether there will be a Budget for real growth, backed by substantial resources when the Chancellor stands up tomorrow. Resources must be the key. A jobless recovery would be a disaster for our region, and without growth there will not be enough new jobs. So far, the Government have been much too focused on the Budget deficit, cutting too far and too fast. I hope that they have finally realised that without a genuine plan for growth and real resources, the economy will continue to be sluggish.
It is a pleasure to address colleagues under your chairmanship, Mr Leigh, for the first time, I believe. I congratulate my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on securing this debate, and hon. Members on their interesting contributions. I wish we had more time, because I am sure that more could be added to the debate. I shall not deal with each of the speeches now but will refer to them in my comments.
It is imperative that the north-east has a strong voice in Parliament. The new generation of MPs who came into Parliament in the last general election are a powerful group who have contributed hugely to the voice of that region being heard in Parliament, and I am sure that they will continue to do that. That is enormously important when we know that regional assemblies have gone away for a while and that the Government’s focus is on local government.
The north-east is a powerful region. I was born there, and I am proud of the fact that I come from there. It has a distinct identity within England, and Ministers have to understand that. The voices that we have heard included that of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), who spoke about Newcastle airport. She told us how important its development has been to the region and how it has introduced so many more tourists to the area. People are able to see what a beautiful region it is and what a superb place it is to invest in.
We heard from my hon. Friend the Member for Middlesbrough South and East Cleveland about the varied industries in the north-east, from the chemicals sector, which is long established on Teesside, through, of course, to coal, steel and shipbuilding, which, I am afraid is long gone. The demise of those industries under the previous Conservative Government largely forged my identity in politics. The concern of Opposition Members is that the policies that are being pursued by this Government are a rerun of policies in the 1980s. We profoundly disagreed with what happened and think that it is a mistake to repeat it.
The hon. Member for Wrexham—I am sorry, the hon. Member for Hexham (Guy Opperman)—made some succinct comments about the deficit. Labour Members accept that it needs to be reduced, but we remember that 3.5 million people were unemployed in the United Kingdom under the previous Conservative Government, as opposed to the 2.5 million who are unemployed now. All those people received benefits that were paid from taxpayers’ money, and largely funded by the benefits the Conservatives received from the North sea oil revenues that were available at the time. That waste and spending of public money will be repeated if this Government continue with their policies, which will create a lack of confidence in the economy and business community, and less demand in the economy, less consumption by people and a smaller market. All that will lead to increased unemployment, increased burdens on the state and the type of long-standing depression that we had in the ’80s and again in the ’90s, when unemployment reached 3.5 million again.
Fortunately, the north-east has developed its economy since the 1980s. There has been development in the constituency of my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) at the Clipper site, which is a magnificent site on the banks of the Tyne, and development of the low-carbon industry in the north-east with companies such as Romag, which brings so much benefit and forward thinking to industry.
I should mention at this juncture the appalling decision by the Government to bring forward the review on feed-in tariffs, which is hugely damaging for companies such as Romag. The Government purport to know something about business, but that review will result in a lack of long-term stability for decision making. Business complains so much about that. The Government are changing a successful scheme, bringing forward a review, creating instability and creating difficulties for successful businesses that are benefiting not from state support but from direct investment, often from outside the UK. The whole industry would welcome the Government’s looking at that again.
It is important that we accept that regional development agencies are no more. I have attended several debates, and know about the success of One NorthEast. The hon. Member for Redcar (Ian Swales) recognised it in an interesting speech. However, we are moving on. The Government, as they are entitled to, are talking about local enterprise partnerships now, and we need to ensure that they work for the benefit of the north-east region. We need to address what I consider to be some of the failings of LEPs.
The first failing is the lack of resources. LEPs cannot sensibly contribute to driving the region forward if they do not have the resources to set up and develop businesses in their area. It is important that the partnerships should have resources. Of course they need to work with other LEPs in the region, but it is interesting that the Government themselves are showing a lack of confidence in LEPs; for example, on the hugely important issue of broadband. The authority that will contract for the provision of broadband services in the north-east and other areas of England will not be the LEP but the local authorities in individual regions. Having so many contracting bodies trying to formulate an infrastructure for a communications industry will be complex and difficult, and relying on delivery by individual local authorities which may or may not decide to take forward applications to develop broadband services in their area is a big mistake. LEPs, which cover larger areas and which more closely involve business than some local authorities do, should have a role in formulating a policy to take that forward.
The instruments that need to be used by LEPs must be made available to them by the Government. That must include, to some extent, financing, and it must also include the ability at least to be involved in securing funding.
We have heard references to the regional growth fund. There is general agreement in this room that there should be a rebalancing of the economy. The irony of the regional growth fund is that it is not regional at all. Its approach is entirely centralising. It is based not on localities but on a small group of people in a centralised area making decisions for areas about which they know little. That is the tragedy of the operation of the regional growth fund.
We all know that the fund is too small. The number of bids that have been made to it do not correspond in any way to the money that was available through RDAs, and we all know, as the hon. Member for Redcar pointed out, that the limits on the application of money by the regional growth fund are such that many of the grants and support that were given to small businesses in the regions will no longer be available to them. That is an urgent issue that needs to be addressed by the Government.
The other urgent issue that needs to be addressed is the lack of investment by banks and regional bodies in business and industry. We heard a massive amount about that from the Government when they were in opposition—day in, day out—but it has largely disappeared from their public pronouncements. I regret that the only thing that this Government have done as far as investment in business is concerned is to extend Labour’s successful enterprise finance guarantee scheme, which was a strong support for business and industry at a time when it was difficult to secure investment and keep businesses going.
Will my hon. Friend give way?
I have only a minute left, so I cannot give way.
I remember being criticised by the Minister when I sat where he is sitting now, and I shall criticise him now, although he and I get along very well. I do not recall his criticising me for spending too much money at the time. I remember his criticising me for not getting money out more quickly in support of the car industry. I do not remember the Conservatives or the Liberal Democrats opposing the introduction of the car scrappage scheme, and I do not remember their opposing any of the support that brought fundamental investment to the UK and benefited regions such as the north-east. Only now do we hear their constant mantra. The Government’s problem is that they will not reduce the deficit. They are damaging the economy in the same way as they did in the north-east in the 1980s and again in the 1990s. I hope and pray that they do not make the same mistake again.
I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) not only on the debate, but on an interesting contribution. We may disagree about the outcomes and the analysis, but a debate on how to enable different parts of the United Kingdom to grow sustainably is important. This is the first time I have been described as a McCarthyite zealot, but I shall work my way through it, and the hon. Gentleman hinted that he was perhaps not fully serious. Nevertheless, I shall put that comment up on the wall and remember.
I thank other hon. Members for their contributions. We have had an excellent and balanced debate, and it has been helpful, not least because I shall be travelling to the north-east tomorrow night, and I am looking forward to meeting some of the businesses that have been referred to. On the tourism front, if I am allowed a couple of days off during the Easter holidays, I am hoping to start at the north-eastern end of Hadrian’s wall and to head westwards.
I am pleased that the hon. Gentleman will spend some of his money in our tourist industry in the north-east of England. Is he aware that money to promote tourism in the north-east was choked off through the regional development agency this year, and that we saw an increase in the number of visitors to Yorkshire and Cumbria to the detriment of the north-east?
The hon. Gentleman started well, before coming to a money issue. We are looking not only at the need to deal with public finances, which my hon. Friend the Member for Hexham (Guy Opperman) accurately described, but at how they are organised as we change the landscape for public bodies. We must revisit the regional approach to tourism, allied with the RDAs’ work, which is what VisitEngland will do with local enterprise partnerships and so on. I greatly value the role of tourism, but I want to move on.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) referred to airports, and she will understand that as it is just 24 hours before the Budget, I would be wise not to pre-empt the Chancellor, not least if I hope to continue to be Minister of State, Department for Business, Innovation and Skills.
We all share the wish of the hon. Member for Middlesbrough South and East Cleveland that the north-east enjoys sustainable and long-term economic growth, which is certainly our overriding priority. We are seeking not only to tackle the public finances, as any incoming responsible Government would need to do, but to ensure that we have a new model for growth. In practice, that means not just rebalancing the geography, challenging as that will be—I will come to RDAs and LEPs—but ensuring more sustainable roles in different sectors.
The hon. Member for Wrexham (Ian Lucas) was a Minister, and we jousted when he was, but he and his colleagues were right when they established, for example, the sector skills council, Automotive Skills, so that the Government could be a better partner. We have continued it, and that sectoral role is important. In the Budget tomorrow, we will seek not merely conventional tax and spend, but to set out the detailed work that has been undertaken throughout Whitehall on a growth review looking at manufacturing, construction, retail and other core parts of the economy, so that we have an agenda and a strategy that is the most comprehensive, pro-enterprise and pro-growth Budget for a generation.
The hon. Member for Middlesbrough South and East Cleveland mentioned both at the beginning of his comments and later the role of small and medium-sized enterprises. Before I go into the specifics of the north-east’s economy and LEPs, it might be worth reminding hon. Members of the key changes that will help, and have already been announced, irrespective of what may or may not be said tomorrow. As hon. Members know, we are reducing corporation tax to 20p. We are doubling the threshold for small business rate relief, which is very important for businesses outside the greater south-east, so that for more smaller businesses that fixed overhead will fall instead of remaining as it is. Six months ago, we introduced the national insurance contribution holiday for new firms.
As the hon. Gentleman rightly said, we must encourage more entrepreneurs in the north-east. I have spoken to many SMEs throughout the country, and the shift in relief for entrepreneurs—10% capital gains tax—has given a boost to people who start a business, build a business and create jobs. Taking the limit up to £5 million is an important improvement.
With respect to the hon. Lady, other hon. Members have spoken and I should first respond to their points in the five minutes remaining.
The tax changes are important, and I hope that hon. Members recognise that they have been matched with a clear commitment to the Federation of Small Businesses on Friday that, for three years, microbusinesses—those with up to 10 employees—will have a three-year moratorium on all domestic regulation. Many SMEs have told me that the problem is not just one measure, but the fact that the Government constantly provide things to do when they want to get on and grow their business. That moratorium will be important, and it has been warmly welcomed. More will be said about the regulatory issue later.
My opposite number, the hon. Member for Wrexham—for a moment, I thought there had been a geographical shift when he referred to my hon. Friend the Member for Hexham as the hon. Member for Wrexham—talked about finance. He was right to say that there are issues. We have extended the enterprise finance guarantee, which is a scheme that needed to be extended, and we are proud that we have ensured an additional capital opportunity of some £2 billion. That should help about 6,000 additional viable businesses. We have gone further and put another £200 million to one side for capital for equity investment programmes. Those are important plans to help high-growth businesses throughout the UK. In addition, we have managed to secure from the banks a £1.5 billion growth fund to inject into SMEs. I hope that the hon. Gentleman recognises that those are important changes.
With respect to the hon. Lady, I have three minutes left. She did not make a contribution to the debate, and I must respond to hon. Members who spoke.
On the balance, there are challenges in the north-east, and no one denies that, but we should recognise that manufacturing there is doing well. A survey by British Chambers of Commerce shows that for the most recent quarter manufacturing grew most quickly in the north-east out of all the regions. Hon. Members have rightly referred to the decision on Tata Steel and Sahaviriya Steel Industries, and we hope that it will progress in the next few days or weeks, so that the agreement that was tragically mothballed a while back will be developed. Some 800 jobs will be created at the site, which will sit alongside the existing 700 jobs, but that is not all. There is a £420 million investment by Nissan, and the Hitachi development in County Durham, which are very welcome and very important.
I turn to RDAs and LEPs, where there may be a difference. No one denies that the RDAs, including One NorthEast, made successful and worthwhile ventures during their time—I accept that—but in 11 years, that agency received £2.7 billion to spend, and the reality is that the gap between the north-east and elsewhere grew. The reality of the gross value added—the measure per person—is that when it started it was approximately 83% of the national average in the north-east. Eleven years later, having spent £2.7 billion, it fell to 78%. It has not only not improved, but gone backwards.
There is a challenge, and the two partnerships that have been created, which I greatly welcome and am looking forward to meeting tomorrow and Thursday, have an opportunity to address their local priorities rather than what we think is best for them, which is an important shift. They can work together, as my hon. Friend the Member for Redcar (Ian Swales) has rightly pointed out, because they do not need Government permission to do so. I have every confidence that the business and civic communities will make that alliance and work together. We will set out the specific actions that they will be able to undertake. I will respond to my hon. Friend the Member for Redcar in writing about the regional growth fund.
The enterprise zones, which my hon. Friend the Member for Stockton South (James Wharton) has campaigned on—
In January, a cross-party group of eight UK parliamentarians, including myself, visited Pakistan to look at the challenges facing that country. Given the close historical, economic and social ties between our two nations—over 1 million people living in the UK trace their roots to Pakistan, and that country is on the front line in the war on terror—getting the policy towards Pakistan right is crucial to the UK.
The aims of the visit were to give UK politicians a better understanding of the democratic challenges facing our parliamentary colleagues in the national and provincial assemblies, to understand the impact of amendment 18 on the constitution, to energise existing bilateral links, and to learn more about the work of the UK Foreign Office, the Department for International Development and the British Council in Pakistan.
All those in the delegation hope for a longer and broader debate on UK Government policy on Pakistan in the future, and I am sure that other hon. Members in the Chamber will wish to participate in that. Today, however, I will focus my remarks on one specific issue: the murder on 2 March of Shahbaz Bhatti in Islamabad, and the plight of Christians in Pakistan.
During our visit, our delegation met Shahbaz Bhatti in the Ministry for Minorities. We discussed a range of issues, including interfaith dialogue and the murder of the Governor of Punjab, Salmaan Taseer, a Muslim politician who was killed by one of his bodyguards after he criticised Pakistan’s blasphemy laws. Shahbaz Bhatti was the only Christian in the Pakistani Cabinet, but he stood up for all minorities in Pakistan and wanted to see the tolerant, liberal and secular country envisaged by the country’s founding father, Jinnah, who said
“let all people worship freely in churches, masjids and temples.”
I will explain a bit more about Shahbaz Bhatti and his work. From 2008 until his assassination at the age of 42, he was the first Federal Minister responsible for minorities. At the time of his appointment, he said that he had accepted that post for the sake of
“the oppressed, down-trodden and marginalised”
of Pakistan, and that he would dedicate his life to
“struggle for human equality, social justice, religious freedom, and to uplift and empower the religious minorities’ communities.”
He added that he wanted to send
“a message of hope to the people living a life of disappointment, disillusionment and despair.”
During his time as a Federal Minister, Shahbaz Bhatti took steps in support of religious minorities. Under his guidance, the Government introduced for minorities affirmative action regarding 5% of all federal employment, and designated 11 August as a holiday to celebrate minorities. The sale of properties belonging to minorities while law enforcement authorities took action against them was banned, and a national campaign was launched to promote interfaith harmony through seminars, awareness groups and workshops. Shahbaz Bhatti initiated comparative religious classes in schools and universities, introduced a prayer room for non-Muslims in the prison system, and started a 24-hour crisis hotline to report acts of violence against minorities. He began a campaign to protect religious artefacts and sites belonging to minorities.
Shahbaz Bhatti, a Catholic, was also a critic of Pakistan’s blasphemy laws, and that was what led to his recent and untimely murder. He had been the recipient of death threats since 2009 when he spoke in support of Pakistani Christians attacked in the 2009 Gojra riots in Punjab, and those threats increased following his support for Asia Bibi, a Pakistani Christian who was sentenced to death for blasphemy in 2010.
I thank the hon. Gentleman for securing this important debate and I have some brief comments. I accompanied him to Pakistan some weeks ago, and had the pleasure of meeting Shahbaz Bhatti. From that visit, we learned that the country is more progressive than one might have initially anticipated. Some laws are very progressive, such as the 18th amendment that concerns devolving power and money to provinces and regions. This Government, and the previous Government, could learn from that.
It is not for us to tell other countries what laws to have, but the issue with the blasphemy law is not so much the law itself but rather the interpretation of that law, both formally and informally. Formally, the penalties linked to the law are far too severe, and informally—this is the problem—
I agree with the hon. Gentleman. As he pointed out, we met Shahbaz Bhatti during our visit to Pakistan and we saw different sides to the country. Some things filled us with hope for the future, and some things led to real concern. That is why I hope that we can have a longer debate in which all hon. Members may participate fully and relate their experiences of the country.
Asia Bibi is a 45-year-old mother of five from Punjab province. She has become the first Christian woman to be convicted and sentenced to death, by hanging, under Pakistan’s blasphemy law. As of today, she remains in jail despite many people acknowledging that she was falsely accused of blasphemy, and repeated international calls for her release.
According to the BBC, on the day he was murdered, Shahbaz Bhatti was travelling to work through a residential district having just left his mother’s home, when his vehicle was sprayed with bullets. At the time of the attack he was alone and without any security. The group Tehrik-i-Taliban—the Pakistani Taliban—told the BBC that it carried out the attack, and it left pamphlets at the scene stating that it had done so because Shahbaz Bhatti was a “known blasphemer.”
The assassination was condemned by the Pakistani Government, whose spokesman stated:
“This is a concerted campaign to slaughter every liberal, progressive and humanist voice in Pakistan.”
President Zardari vowed to combat the forces of obscurantism and said,
“we will not be intimidated nor will we retreat.”
The Government declared three days of mourning and Prime Minister Gillani led a two-minute silence in Parliament.
The hon. Gentleman will be well aware of Release International and Open Doors, two organisations that work on behalf of Christians in Pakistan, highlighting and cataloguing brutality against them by radical groups. Does he feel it is important for our Government to convey to Pakistan in strong terms that something must be done on behalf of Christians in Pakistan, to ensure that they are not subjected to authoritarian and critical blasphemy laws?
I agree. There are growing calls across the country from people of all faiths saying that we must engage more effectively with the Pakistani Government, and that the rights of all citizens must be respected, whether they are Muslim, Sikh, Hindu, Christian or of no faith at all. The rights of all Pakistanis must be respected.
I thank my hon. Friend for securing this important debate. He will know that as vice-chairman of the all-party group on Pakistan, I was due to host an event with Shahbaz Bhatti in this House, just a few weeks before he was assassinated. Unfortunately, he had to return to Pakistan because of the instability of the Government. My hon. Friend will also know that I visited Islamabad recently. I am sure that, like me, he has received a huge number of e-mails and letters from the Pakistani diaspora in Britain, where people are equally outraged about the assassination of Shahbaz Bhatti. Does he agree that we have a responsibility to ensure that the voice of those people is heard, and that their condemnation is relayed to the Pakistani Government, urging them to take action?
I thank my hon. Friend for that point. I agree that we must work across faiths. I think that all people recognise that Shahbaz Bhatti was not just a Christian, but one of Pakistan’s most progressive politicians. His death is a blow not just to the Pakistani Christian community, but to all Pakistanis and to the nation of Pakistan.
Following Shahbaz Bhatti’s death, I tabled early-day motion 1518 not just to condemn his murder, but to recognise the work that he had done in Pakistan and to urge the Government of Pakistan to consider reviewing section 295 of the Pakistani penal code, commonly referred to as the blasphemy laws. I am pleased to see that as of this morning my early-day motion has gained the support of 82 other Members of Parliament.
The blasphemy laws were first introduced by the British in 1860 in a mild form that gave equal protection to all faiths and provided for a maximum sentence of two years in jail. Unfortunately, they were given their present form by General Zia ul-Haq in 1986. There is now a mandatory life sentence for desecrating the Koran and a death sentence for blaspheming Mohammed. Unlike the Racial and Religious Hatred Act 2006 in the UK, which prohibits people from stirring up hatred against religious groups or individuals on religious grounds, the Pakistani blasphemy laws protect the Islamic scriptures and the person of Mohammed from criticism or insult.
Although all of Pakistan’s population of 170 million people are subject to the blasphemy laws, it is worth remembering that religious minorities make up only about 4% of that number.
I congratulate my hon. Friend on initiating the debate and on his work as chairman of the all-party group on Pakistan. I also congratulate my hon. Friend the Minister on his moving words last Thursday at the memorial service for Shahbaz Bhatti. Like other colleagues, I had met him; in fact, I met him two weeks before his untimely death and was extremely impressed by him. The practical point that I want to make is that it needs to be pointed out continually—I think that the hon. Member for Rochdale (Simon Danczuk) was coming to this point—that the majority of people affected by the blasphemy laws are Muslims. People use the laws quite often in vexatious business disputes to get rid of the person with whom they are arguing on a trumped-up charge, while they carry through the business deal that they wanted. If we are to win the hearts and minds of the Pakistanis, who are the only ones who can alter those laws, we need continually to be pointing out that yes, the treatment of Christians is appalling, but equally many Muslims in Pakistan suffer from the abuse of the laws by their fellow co-religionists.
It is a pleasure to speak under your chairmanship, Mr Leigh. I congratulate my hon. Friend on securing this important debate, which is about Government policy on Pakistan. I have visited Islamabad myself. I visited the Nowshera region, the flood-hit region to the north of Islamabad, in November and I went on to Kashmir—to Mirpur and Dadyal. I would therefore like to take this opportunity to hear my hon. Friend the Minister reaffirm the Government’s position—their stated thoughts—on the situation in Kashmir, because if we are to have security and peace and an end to the violent murder in Pakistan that we are hearing about, it would be a great asset—a great positive move forward—if there were peace and stability in Kashmir as well. That is a real cause of instability in the region.
I thank my hon. Friends the Members for Lancaster and Fleetwood (Eric Ollerenshaw) and for Colne Valley (Jason McCartney) for their contributions to the debate. My hon. Friend the Member for Lancaster and Fleetwood is exactly right to say that the majority of people affected by the blasphemy laws are Muslims. However, we have seen a disproportionate effect on some of the minority communities. Also, even simple allegations made under the blasphemy laws have quite often led to mob violence that has killed many hundreds in Pakistan before cases have ever come to court.
There was an interesting article by the daughter of Salmaan Taseer in The Guardian recently. Shehrbano Taseer wrote that
“more than 500 Muslims, 340 Ahmadis, 119 Christians, 14 Hindus and 10 others have been charged under the laws.
Thirty-two of those accused—and two Muslim judges—have been mowed down by Islamist vigilantes.”
That was before the trials were heard. It is worrying that religious zealots in Pakistan have now deemed man-made laws non-negotiable, with a very real threat of death hanging over anyone who disagrees.
I would therefore welcome the Minister’s comments on the blasphemy laws in Pakistan and, more importantly, as other hon. Members have pointed out, their abuse and misuse in the settling of scores and other disputes against Christians and other minorities in the country. I hope that he will agree that we should stand shoulder to shoulder with those of all faiths who want to see a debate about reform of the laws, so that they can no longer be used as a tool of oppression against Christians and other minority groups.
I met a group of Pakistani Christians on Sunday 13 March at Woodlands Road Baptist chapel in Nelson in my constituency. In addition to many Pakistani Christians who live in Pendle, such as David Dean, who organised the event, we were joined by others, including Canon Yacub Masih and Wilson Chowdhry from the British Pakistani Christian Association. I know that the Minister is aware that a number of Pakistani Christians live in Pendle, as some time ago, before the election, he attended an event at which some of them were present. I know that he will remember talking to them.
At the meeting, I heard from many about their shock at the murder of Shahbaz Bhatti, but also about their desire that his death should be a wake-up call not just for the Pakistani Government, but for the international community. Those at the meeting felt that there was no better illustration of the rising problems of anti-Christian discrimination in Pakistan than the murders of Salmaan Taseer and Shahbaz Bhatti over reform of the blasphemy laws.
Concerns were also expressed about whether the UK could not do more, given the amount of money that we give Pakistan in foreign aid. As the Minister will be aware, that issue was picked up by Cardinal Keith O’Brien last week, when he criticised the Government for increasing overseas aid to Pakistan to more than £445 million without demanding religious freedom for Christians and other minorities, such as Shi’a Muslims. Cardinal O’Brien was quoted in the press as saying:
“I urge William Hague to obtain guarantees from foreign governments before they are given aid. To increase aid to the Pakistan government when religious freedom is not upheld and those who speak up for religious freedom are gunned down is tantamount to an anti-Christian foreign policy.”
Although I share the cardinal’s concern about the plight of Christians in Pakistan, I am not sure whether withdrawing or cutting aid in response to Shahbaz Bhatti’s death would be the most productive thing to do right now. I would, however, welcome the Minister’s comments on what the cardinal said, because many people would agree with them.
To date, no one has been arrested and brought to justice over Shahbaz Bhatti’s murder, which makes matters even more painful for the religious minorities that hold him in such high regard. It is of course possible that the security services in Pakistan and the Government do not know who the killers are or where they are. However, with no one being arrested and held accountable for so many other incidents of violence against minorities, such as in Sangla Hill in 2005—
Does the hon. Gentleman share my concern and the concern of many that it seems that the gentleman who was murdered had requested a bullet-proof car and bodyguards just a few days beforehand? None of those requests was agreed to, and shortly after that he was murdered. Is there not concern about that as well?
Many have raised those concerns. Having visited Pakistan and seen the security available not just to Ministers but to all politicians in the country, at provincial level as well as national level, it strikes me as somewhat unusual, shall I say, that on the day when Shahbaz Bhatti was murdered, he had no security and no armoured car to use on the way to work.
That no one has been brought to justice for Shahbaz Bhatti’s death is a real concern for many. As I was saying, there have been so many incidents in the country— not just against individuals but much larger incidents, such as in Sangla Hill in 2005 and in Gojra in 2009, and no arrests have been made for those incidents.
In the time allowed, I have tried my best to describe the situation in Pakistan. I could have added numerous other incidents of persecution. Many were detailed to me by Pakistani Christians now living in this country. I believe that the only way in which we will see Pakistan become a liberal and tolerant nation, which values and treats all its citizens fairly, is through increasing rates of education in the country. I was therefore pleased to see an increasing focus on education in DFID’s recent aid review. The Minister may like to touch on that in his reply. The Government of Pakistan also need to do more to reverse the gun culture, to promote tolerance and to ensure that no part of the Government, the military or the security services appeases or supports extremists.
I pay tribute to organisations such as Christian Solidarity Worldwide, the British Pakistani Christian Association and many others, which do so much good work in promoting interfaith harmony and raising the profile of issues such as those I have outlined, which would rarely make it into the British press without their help.
By focusing only on Christian and minority rights, I fear I have painted a fairly bleak picture of Pakistan and its future, but that was not my intention. With the right leaders, things can and will change for the better. The country has so much potential, and we need to work with it to ensure that issues such as those I have outlined are resolved. In doing so, we will ensure that Shahbaz Bhatti did not die in vain, but gave his life to make Pakistan a greater and more tolerant nation.
It is a pleasure to serve under your chairmanship, Mr Leigh. I thank my hon. Friend the Member for Pendle (Andrew Stephenson) for securing the debate. Many colleagues in the Chamber also went on the visit to Pakistan and share our communal passion for Pakistan, and I thank them, too, for their contributions.
Time is desperately short, and colleagues will understand if I am not able to answer all the questions that have been raised, but I do want to make some remarks. I also want to put on record my appreciation for my hon. Friend’s work as chair of the all-party group on Pakistan and for the fact that he raised this subject during the Commonwealth Parliamentary Association’s visit earlier this year.
Time is tight, so let me say just a couple of things about the relationship between our two countries before turning to the meat of my hon. Friend’s remarks. The United Kingdom and Pakistan are close and historic friends and partners, and that partnership is set to continue. Nearly 1 million British citizens claim Pakistani heritage. More than £1 billion of trade flows between our two countries each year. There are 1.4 million journeys between Pakistan and the UK each year. We are building on the many strong ties we share.
At the end of his remarks, my hon. Friend said that he had focused on one area of our relationship and that he feared he had given a negative impression of Pakistan, but I can assure him that those of us who are friends of Pakistan recognise that there are many parts to our relationship, and we will continue to build on our history, our extensive cultural and business links and all the deep family connections. My hon. Friend need have no fear that his remarks will be misinterpreted.
The Pakistani diaspora in the UK makes a huge contribution to our national life, including our Parliament, our schools, our legal system and our universities. Its members make a remarkable contribution in the media, business, sports, entertainment and many other areas. It is clear that the British Pakistani community has offered, and will continue to offer, much to this country.
Pakistan faces many challenges. Last year’s flooding prompted a huge outpouring of support from this country. That support came not only from the Government but from churches, mosques and every community in the UK. The Government provided £134 million, giving a very strong sense of support.
Our bilateral aid review indicates that UK aid to Pakistan is likely to more than double to an average of £350 million a year until 2015. That will help to tackle poverty and, with the Pakistani Government, build a stable, prosperous and democratic Pakistan. The country faces economic challenges, and we are working with its Government to tackle them. We support the difficult reforms that Pakistan seeks to introduce. We also have strong links in terms of combating terrorism, which afflicts us both and which has echoes in some of the issues that my hon. Friend raised.
My hon. Friend the Member for Colne Valley (Jason McCartney), in particular, discussed the situation in Kashmir. The Government’s long-standing position is that it is very much a matter for the Indian and Pakistani Governments to deal with, although we understand the wish for self-determination among the people of Kashmir. We continue to encourage the parties to do as much as they can to deal with the situation—it is clearly difficult, and that has been the case for a long time—so that Kashmiri people have the opportunities they seek. We will encourage that dialogue wherever we can, but it is not the UK’s position to mediate in that situation.
Let me turn now to freedom of religion, which was at the heart of the remarks by my hon. Friend the Member for Pendle. The many links between the UK and Pakistan mean that we engage with each other on many subjects, such as counter-terrorism, security policy, trade, development and the rule of law. A theme that underlies all that is human rights, which is critical to the conduct of UK foreign policy. It is as relevant to our relationship with Pakistan as it is to our relationship with many other countries. We do not shirk our responsibilities to highlight our concerns about human rights to our friends. We will raise our concerns about human rights wherever and whenever they occur, without compromise. We are improving and strengthening the work of the Foreign and Commonwealth Office on human rights. That will be underpinned by British values and by our support for democratic freedoms, universal human rights and the rule of law.
My hon. Friend has set out compelling reasons why freedom of religion and the rights of minority groups are issues on which we need to speak out. It is vital that the Government of Pakistan uphold the fundamental rights of all Pakistani citizens, regardless of their faiths or belief. Pakistan can benefit only if all its citizens can play a central role in society. All Pakistani citizens should be able to live their lives without fear of discrimination or persecution, regardless of their religious beliefs or their ethnic group. I can assure my hon. Friend and all hon. Members present that we regularly reinforce the importance of upholding those fundamental rights to colleagues at all levels in the Government of Pakistan.
The Government of Pakistan have taken some positive actions on the rights of minority groups. They have reserved quotas for minorities in the public sector and Parliament. They have set up a complaints procedure for those encountering discrimination or abuse. Through our lobbying and project work, we will continue to support those who wish to see reform in Pakistan. Worryingly, however, allegations continue that the blasphemy legislation is being misused against Muslims and non-Muslims. That abuse often results in prison sentences for those accused of blasphemy, and we continue to hear of cases in which those accused of blasphemy offences have died in custody.
As well as raising the wider issues of freedom of religion and minority rights, we continue to engage directly with the authorities in Pakistan in relation to Asia Bibi. She was found guilty under the blasphemy laws and is the first woman in Pakistan to be sentenced to death. We oppose the death penalty in all circumstances. In December 2010, I raised Asia Bibi’s case with the former Pakistani Minister for Minorities, Shahbaz Bhatti. I have also discussed the blasphemy laws with the Pakistan high commissioner in London. Baroness Warsi highlighted our position to the Speaker of the National Assembly in Pakistan when they met on 17 January.
Those who champion such values in Pakistan are now under threat. The assassination of Governor Salmaan Taseer in Islamabad on 4 January was shocking. He was a strong advocate of religious tolerance and of the importance of reforming the blasphemy legislation to prevent its misuse. The scenes of congratulation following his murder and the behaviour of the lawyers who strewed rose petals in the path of his killer outside the courts were sickening, and those involved are a lasting disgrace to their profession.
Shahbaz Bhatti spoke out courageously on the issue before us, and his assassination marked a new low point in Pakistan’s struggle against violent religious extremism. He was a powerful voice against extremism and a fearless voice for tolerance and respect for minorities. His death is a tragic loss for Pakistan and for us all. I met him on a number of occasions as a fellow Minister, and also as a believer in the rights of minorities and a Christian. I did all I could to support my friend in his difficult role and in his attempts to revise his country’s blasphemy laws. It is deeply saddening that his courage in urging peaceful, moderate change was met with such violence. This was an attack not only on a dedicated Government Minister but on the people of Pakistan and their future. I was proud to speak at his memorial service last week. Following his murder, the Prime Minister wrote to express his condolences to President Zardari. The Foreign Secretary, Baroness Warsi and I all made statements condemning his killing.
The Christian community in the UK is correctly very active in supporting the persecuted Church wherever it is under pressure. I commend the work of the Barnabas Fund, Open Doors and others in this field. As a member of the board of patrons of Christian Solidarity Worldwide, I understand these issues very well. The Government will take up cases and we will do more work, including, I hope, a Wilton Park conference.
I wish the solution was as simple as a declaration of freedom of religion that was instantly acceptable and enforceable in any society with which we have contact. However, the sad truth is that that is not the case, and nor will it be, no matter how loudly we shout about it. We are talking about conservative societies that are fearful of change. We are sensitive and patient in addressing their fears, and we recognise that our overt intervention may be harmful or dangerous. However, we wish to make sure that we continue to raise these issues and work with people in these countries in the way they think best, so that we can free people from religious persecution and fear. In that way, we can get to the position we all want. I commend my hon. Friend for raising this issue.
Cross-border Child Custody
I want to use this debate to highlight a case that shows that our legal system has badly failed one of my constituents, Mr Robert Bennett. I raised his case in an Adjournment debate on 4 December 2007, when there were ongoing legal proceedings in England and Scotland involving the custody of my constituent’s child. He has now exhausted all remedies in the courts, but there are legal issues that I want to discuss. I rely heavily on the advice given to my constituent by Mr Alan Inglis, a barrister and advocate, who has considerable experience of family law in the courts of Scotland and England.
The facts of the case are fairly straightforward. Mr Bennett married and had a child. The family lived in Aberdeen, and therefore were habitually resident in Scotland. Without Mr Bennett’s knowledge, his wife left the matrimonial home in September 2000 with the child and moved to London. He did not know her exact whereabouts and at no time did he consent to his daughter’s removal. A few months after Mrs Bennett left the family home, she commenced legal proceedings in Willesden county court, where she obtained an ex parte residence order and an order preventing Mr Bennett from removing the child from her care.
A key part of the law that determines such matters is the Family Law Act 1986. Section 41 is the key part here, and I can summarise its effect as follows: where a child under the age of 16 is moved from, for example, Scotland to England, as in this case, then in certain circumstances a court in England would have jurisdiction to deal with any issue relating to the child after one year has elapsed. One of those circumstances is set out in subsection (2)(a), which states that it is required to be shown that there is
“the agreement of the person or all the persons having, under the law of that part of the United Kingdom, the right to determine where he is to reside”.
In this case, that means both parents. Mrs Bennett had effectively abducted the child from Scotland to England, and Mr Bennett, as a legal guardian of the child, had not given his consent.
Mrs Bennett made her application to the court before the year set out in the legislation had expired, and Mr Bennett also entered appearance in the case within the time limit. Notwithstanding those facts, the judge in the Willesden court made an order in favour of Mrs Bennett. It is clear that none of the lawyers involved at that stage—the solicitors or the judge—properly understood the implications of the 1986 Act, or, for that matter, indicated that they were even aware of its existence.
Mrs Bennett’s solicitors had a duty to the court as well as to their client, and should not have raised the action, because any interpretation of the Act would make it clear that the Willesden court had no jurisdiction. The judge should not have granted the order, and Mr Bennett’s solicitors should not have neglected to raise the point of jurisdiction before the court, despite his explicit instructions. I should add that Mr Bennett took action subsequently against his solicitors for that neglect and received an award of compensation.
That was the first stage before the one-year period had expired. As the case moved through its various stages, it seems clear that none of the judges who later considered it looked very closely at Mr Bennett’s rights under the legislation as a parent and legal guardian of his daughter. The 1986 Act provides that
“Where a child…becomes habitually resident outside that part of the United Kingdom...he shall be treated for the purposes of this Part as continuing to be habitually resident in that part of the United Kingdom for a period of one year beginning with the date under which those circumstances arise.”
That section therefore applies only where the child has already become habitually resident in another part of the UK, and it postpones the legal effect of that habitual residence for a period of one year. Correctly construed, it does not operate as a time limit of one year on habitual residence as held later by the Court of Appeal in England.
There are lots of examples of couples splitting up and moving to different jurisdictions, but, as far as I am aware, this is the only case in which the 1986 Act has not been properly construed—at least, that is my allegation.
In Mr Bennett’s case, for the child to have become habitually resident in England and, therefore, to give the English courts jurisdiction, both parents would have been required to consent, and even then there would have been a delay in operation of one year. There is ample legal authority to show that habitual residence cannot be changed by the unilateral action of a parent who shares parental responsibility with another. That is also the law in Scotland, and it follows that the courts in England have never had jurisdiction in this case because both parents had not given their consent.
Despite those facts, at every stage in the court proceedings in England, from the judge at first instance through to the Court of Appeal, section 41 has been interpreted as giving the English courts jurisdiction as soon as the child’s stay in England had exceeded one year. In its judgment, the Court of Appeal, through Lord Justice Wall, said:
“on the facts of this case Section 41 ceased to have effect in September 2001”.
As additional cover, the court also argued that even though there was no jurisdiction, the original decision was not a nullity. Lord Justice Wall said:
“The normal rule about orders, which on their face are regular, but which are in fact made without jurisdiction, is that they remain in force until they are discharged”.
He quoted the case of Hadksinson v. Hadksinson in 1952, but I am advised that it is questionable whether that case supports the Court of Appeal’s position. The ratio decidendi of that case is that there is an
“unqualified obligation of every person against…whom an order has been made by a court of competent jurisdiction to obey it until it is discharged”.
The difference between that case and Mr Bennett’s case is that the Willesden court was not
“a court of competent jurisdiction”.
I have been directed to “Halsbury’s Laws of England”—as a Scottish lawyer by training, I am not very familiar with it—and page 314, chapter 10 of the fourth edition says:
“Where a court takes upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing”.
When it was clear to Mr Bennett how the English courts were dealing with his case, he raised the issue in the Scottish courts by raising an action of divorce. I will not go through all the processes, but the case eventually reached the inner house of the Court of Session, having started its processes in the Aberdeen sheriff court. The inner house decision is directly in conflict with that of the Court of Appeal. Among other points, it noted that the order that initiated the proceedings in England was made without jurisdiction—a very clear statement. It agreed that the habitual residence of the child of a marriage cannot be changed without the consent of both parents. It doubted that the effect of section 41 of the 1986 Act was automatically to change habitual residence one year after an abduction. It recorded the failure of the English courts to hold a welfare hearing during the whole period when the matter was before them, despite a recommendation from Children and Family Court Advisory and Support Service that it was necessary, which is quite a serious matter. However, the inner house of the Court of Session also accepted that
“the Court of Appeal considers that the English courts have jurisdiction to make orders respecting the child with which this divorce action is concerned”.
The word “considers” is very important. The inner house does not cede jurisdiction, but recognises that the English court thinks it has jurisdiction. It is clear that the inner house of the Court of Session did not wish to get into a direct conflict with the English courts, and it has been tactful and diplomatic in the way in which it has questioned the decisions of the English courts.
Over the years, I have written to the Ministry of Justice and the Scottish Government about the apparent conflict in the law. I understand that meetings were held between representatives of the Scottish Government and the Ministry of Justice. I have not been formally advised of the conclusions of those meetings, although I received a brief letter from Scotland’s deputy Justice Secretary, who said that the meetings had concluded that section 41 of the 1986 Act did not require changing. It was as blunt as that. That view is probably correct.
As I pointed out earlier, the problem seems to be one of interpretation and application rather than the legislation itself. However, I am deeply concerned about the way in which the courts have acted in this case and the impact that the decision of the Court of Appeal could have in other cases. I find it extraordinary that all the lawyers involved in the initial proceedings in the Willesden court could either be so ignorant of the legal position in such cross-border cases or so easily misinterpret the legal position.
As the case moved on through the system, all the arguments that I have presented today were presented by Mr Bennett, my constituent. Part of the tragedy is that once he had discharged the lawyers who so wrongly advised him and who refused to carry out his instructions, Mr Bennett found it virtually impossible to find another solicitor to represent him, and he was forced to represent himself. He is a very single-minded individual and has become extremely knowledgeable in this area of law.
Reading through the various judgments, it is quite clear that the judges viewed Mr Bennett as an obsessive who was more concerned about legal principles or niceties than his daughter. I get the impression that he was not taken seriously. He desperately wanted contact with his daughter and felt that he was the more suitable parent to look after the child. He also strongly believed that it should be for the Scottish courts to decide the matter. It is probably fair to say that he was not learned in the law and did not treat judges with the respect that they are used to. He also became frustrated at what he believed was their refusal to consider his arguments.
I have had the opportunity to meet Mr Bennett and his child, who is disabled. He visited my office several times with the child on a previous matter. When we spoke about the difficulties that he was having with this case, I was in no doubt that he had a strong relationship with his daughter and was able to care for her. He and his wife—they are not divorced—split care between them, and he made quite a contribution to the care of the child in the household. Unfortunately, he never had the opportunity to have his side of the argument on residency or access considered by the court.
In Scotland, the inner house of the Court of Session made it clear that the court could have been obliged to consider the interests of the welfare of the child by carrying out the usual investigations and having an appropriate hearing regardless of the other issues in the case. The courts in England took no action in this respect. In addition, Mr Bennett was told by a legal adviser that if he tabled a motion on residency or contact, it would prejudice his argument on jurisdiction. He would effectively cede jurisdiction to the English court. That matter needs to be considered seriously by the Minister.
Cases such as Mr Bennett’s are not that unusual. What is unusual is his tenacity in pursuing this point of law. It is wrong that, in all the years while the English courts were considering the matter, no consideration was given to the interest of the welfare of the child—apart, of course, from Mr Bennett’s continuing interest in maintaining contact with his daughter.
I practised in the Scottish courts for a number of years, and family and child care law were my special areas of interest. I have not held a practising certificate since 1988 and do not claim any special expertise, but I do know that the guiding principle in all child care cases is and should always be the paramountcy of the welfare and interests of the child. Those interests cannot be met if a court has a case before it for about four years and does not itself inquire into that child’s situation. I am not significantly well versed in English law to know whether that suggested failure is a failure of the various courts in this case or a failure of the system, but I believe that the Minister should look into the matter urgently.
As I said earlier, Mr Bennett was put in an invidious position, because he was told by legal advisers that if he tabled a motion on contact or care and control, he would prejudice his case on jurisdiction. He should not have faced that dilemma. If they do not already have the power to investigate a child’s situation of their own volition—I suspect that they do—the courts in England should have that power, without prejudice to any other issue before them.
When there is a clear conflict between the decisions of the courts in England and Scotland, public confidence in the system requires there to be a proper inquiry. I do not know what understanding was reached by the Scottish and English civil servants who met to discuss this case, but I do know that nothing has been published. It is not enough to say that everything is okay and that everything is working fine, when clearly it is not. I should like a report published on the discussions that took place and on the details of the conclusions that were reached and why they were reached.
Of course, there is another way to resolve this case: to take the matter to the Supreme Court. That might seem appropriate, given the conflict between the two jurisdictions. Unfortunately, when Mr Bennett and his advisers—he now has legal advice—attempted to take the case from the Court of Appeal to the Supreme Court, his application was refused.
Without fully understanding all the mechanics, the idea that courts in Scotland dealing with the same circumstances and the same legislation could be in complete conflict with the courts in England is difficult for the lay person to understand. It is extremely regrettable that this important issue has not been considered by the Supreme Court. I know how important it is that politicians do not interfere in any way whatever with the judicial process, but I believe that a number of serious matters need to be fully considered, and the best place for that is the final court of appeal of both civil jurisdictions—the Supreme Court.
The issues that I have raised primarily affect my constituent and his daughter, who is denied access to her father. However, breakdown of marriage and movement between jurisdictions is not uncommon in our society. I believe that the courts in England have got the interpretation of the law completely wrong as it is applicable to this case. Now that the case is concluded, I hope that the Minister will agree that a serious injustice has been done and that Mr Bennett is fully entitled to feel that the legal system has let him and his daughter down badly. It is incumbent on our legal system and the Government to do something to correct the situation. As I said, changes do not necessarily need to be made to the Family Law Act 1986—unless section 41 can be amended so that it is more clearly understood, particularly by lawyers.
I ask the Minister to give serious thought to the matters that I have raised today, and to consider how we can move forward, so that the case of B v. B does not stand as a precedent to be applied in similar cases of conflict.
I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing this debate. It has enabled him to raise the concerns of his constituent on the difficulties that can arise when a child is taken from the part of the United Kingdom where he or she is habitually resident. May I say how sensitively he put his constituent’s case? He did so in the personal context a concerned parent. That should not be forgotten.
At the outset, I should make it clear that in all cases involving a child’s upbringing—including where the child should reside and who should have contact with the child, as the hon. Gentleman rightly said—the court’s paramount consideration must always be the welfare of the child. The welfare of the child should be paramount in all cases involving decisions about his or her life. The welfare of the child is paramount in the law in all parts of the United Kingdom. English courts are required to consider the child’s situation and hear any application made by a parent; the courts can also make orders on their own initiative, as required under the Children Act 1989.
The Government appreciate that disputes about arrangements for children—for instance, where the child is to reside, contact and the continuing involvement of both parents in the child’s life—will be extremely upsetting for all concerned, and will frequently be damaging for the child. The Government firmly believe that it is in the best interests of the child for both parents to continue to be involved with his or her upbringing, and for both parents to have regular contact with the child, provided it is safe.
The Government are conducting a review of the family justice system in England and Wales, and one consideration is increasing contact between children and the non-resident parent following divorce or relationship breakdown. The serious problems that can arise for parents in maintaining a relationship with their children when a relationship has broken down will be increased if the child is moved from one part of the UK to another. There is then a cross-border element in the family situation. The hon. Gentleman made clear the distress caused to his constituent by the circumstances surrounding the removal of his child and subsequent events. When a child is taken without consent, it inevitably causes great distress for the parent who is left behind. The parent can also be left facing considerable difficulties in obtaining the return of their child. As the child has been moved from one part of the UK to another, the parent has to deal with the question of which court will have jurisdiction. The Family Law Act 1986 provides rules of jurisdiction in the different territorial parts of the UK. The primary rule is that the courts of the part of the UK where the child is habitually resident will have jurisdiction in any proceedings regarding the child. That much is clear.
Identifying habitual residence is a question of fact for the courts. However, the 1986 Act contains rules to prevent a person who removes a child from his or her habitual residence without consent from benefiting from that wrong. That benefit could occur if the person could take advantage of any change in the child’s habitual residence resulting from the unlawful move to claim that another part of the UK now had jurisdiction. Allowing jurisdiction to change immediately in those circumstances would encourage child abduction, which is clearly contrary to a child’s welfare. Lengthy disputes about which courts should hear a case delay resolution for the child and are also clearly not in the child’s best interests. It is important that clear rules exist to prevent abuse of jurisdiction through child abduction.
As the hon. Gentleman describes, section 41 of the Family Law Act 1986 deals explicitly with the situation in which a child under the age of 16 who is habitually resident in one part of the UK becomes resident in another part without the agreement of all the people who have the right to determine where the child should reside. In those circumstances, the 1986 Act provides that the child shall be treated as still habitually resident in the part of the United Kingdom from which he or she was removed for a period of one year from the date of removal. In practice, that usually means that the courts of the part of the UK in which the parent from whom the child was taken lives will have jurisdiction over any proceedings regarding the child during that year even if the child becomes habitually resident elsewhere. To ensure that children are always protected, a court in the jurisdiction in which a child is present can take urgent, provisional action to protect the child.
In that way, the 1986 Act promotes child protection; it discourages wrongful removal of children by removing any jurisdictional advantage that the person removing the child hopes to gain. The Act also provides an important protection for the parent who did not consent to the child being taken, as the person has a significant period of time in which to challenge the removal of the child and to make an application to the courts of the child’s original habitual residence for the child to be returned. Once jurisdiction is accepted by the correct court, it will consider the merits of the case in the light of the child’s welfare. That may or may not involve a return of the child to the original habitual residence. The court will consider with whom the child will live, and how contact with the non-resident parent should be supported.
The hon. Gentleman makes a fair point, and I was coming on to that. However, I will say now that it is accepted that the original English without-notice decision was made without jurisdiction. However, there were numerous ways in which the order could have been challenged, either on the point of the lack of jurisdiction or on the terms of the order made. It must also be accepted that courts can make orders, and sometimes have to make orders, for the welfare of the child without all parties being informed of the application, if that is felt to be appropriate in the circumstances of an individual case. Such orders would usually be drawn up so as to provide for a review at an early stage—perhaps after seven days—so that all parties can make representations.
If the courts of the part of the UK to which the child has been taken make an order in respect of the child, then the parent who did not consent to the child’s removal can challenge that order in the court which made it on the basis that the court did not have jurisdiction to make it. It is very regrettable if an impression has arisen that to challenge the jurisdiction of the court to make an order is, by implication, to accept the jurisdiction of that court. That is absolutely not the case in English law, and indeed nothing in the 1986 Act seems to suggest it. The law is clear that to challenge the order in the court in England and Wales, which made it in this way, is not to surrender to or accept the jurisdiction of that court. This is a rule which is clear both at national and international level. However, even orders made without jurisdiction must be obeyed until such time as they are successfully overturned, and proper action must be taken to overturn them.
However, balancing the requirements of a child’s welfare requires that the rule in section 41 does not last indefinitely. Habitual residence is a question of fact for the courts to determine, and it is generally accepted, including in international law, that the interests of a child are usually best determined by the courts of the territory in which the child is habitually resident, as that court is best able to judge the child’s needs and situation there—the court is “proximate” to the child.
A year is a long time in the life of a child, especially a young one, and circumstances can change very quickly. If nothing is done in the original jurisdiction to address the removal promptly, and within the year at most, that child’s life will have moved on and courts need to be able to address the child’s situation as it is at the time any application is made. There seems to be little point in making the child’s habitual residence the primary rule of jurisdiction in the Act to ensure a close connection between the court hearing the case and the child’s actual situation, only then to refuse to acknowledge the reality of the child’s situation in determining jurisdiction because a non-consensual removal occurred quite some time in the past—even more so when that removal could have been dealt with promptly by the courts of the child’s original habitual residence had they been seized of the case by the left-behind parent within a year.
The hon. Gentleman has asked for the Government to examine this matter and consider a review of the provisions of the Family Law Act 1986. The Government do not consider that a formal inquiry would be appropriate here as the provisions of the law are quite clear and generally provide reasonable protection for children who are wrongfully removed. The Government do not believe that it is necessary to amend the provisions of the Family Law Act 1986. However, it is important that the provisions of the Act should be operated properly in practice and that the courts should follow its provisions as they determine the question of jurisdiction for proceedings.
The Government have undertaken to consider whether the question of jurisdiction regularly causes difficulties. Following the hon. Gentleman’s previous debate on cross-border contact issues in December 2007, officials wrote to the Law Society in England asking for its assistance in identifying the extent to which jurisdictional issues arose in cross-border cases and the extent to which they prevented people making substantive applications and having their cases resolved and whether any procedural or other changes might be required. Similar inquiries were made by the Northern Ireland Court Service with the Law Society of Northern Ireland, and by the Scottish Government with the Law Society of Scotland. Following receipt of the replies, officials have discussed the question of what further should be done to address the jurisdictional issues. Concern was expressed about the courts’ ability to deal with jurisdictional issues, particularly by Scottish colleagues.
I am not convinced that jurisdictional issues are preventing people from having their cases resolved. However, I fully accept that the sort of unfortunate circumstances underlying this debate today must be avoided if at all possible. We will consider whether anything more needs to be done.
The underlying question in all proceedings relating to children must be the welfare of the child or children concerned. The provisions relating to jurisdiction in the Family Law Act 1986 are intended to support the child’s welfare by deterring wrongful removal of children, but also by ensuring that the court with the closest connection to a child makes the decision about that child. Underlying the Act is the premise that it is normally better for decisions about a child’s upbringing to be made by the courts of the part of the UK where the child is habitually resident. That continues to be the case, even if the child was moved without consent.
The hon. Gentleman mentioned that the Scottish courts have criticised the English High Court. It is not for the Government to comment on the observations of a judge in deciding individual cases.
Civil Recovery (England and Wales)
I am grateful for the opportunity given by Mr Speaker to have this debate and to the Minister for doing a back-to-back session by responding to two successive debates.
Colleagues who have looked at the Order Paper and seen that this debate is about civil recovery in England and Wales may not have realised immediately what the subject of the debate is. “Civil recovery” is not a phrase that people regularly use. I want to introduce the debate by giving two examples of incidents that came to my attention as an MP in Southwark and that precipitated my interest in the subject.
A constituent of mine came to me after her 15-year-old daughter was accused of stealing £6 worth of goods from a London store. The daughter was then sent a demand on behalf of the store from which she was alleged to have stolen those items asking for £137.50. The explanation given was that she was being asked to compensate the store for the £6 worth of items and to pay the rest of the costs of the administration, the store security and so on. Another constituent then approached me on behalf of one of her daughters, who had been with two friends at Primark. One of the three girls—not my constituent’s daughter—was accused of stealing, but demands for £87.50 were sent to all three girls on behalf of Primark. These two incidents alerted me to what I have since discovered is a very widespread practice.
My right hon. Friend is right that this is a widespread practice. I want to draw to his attention to a very similar case involving a constituent of mine. She was stopped and accused of shoplifting. Nothing was found, and she was released by the police, but subsequently she received a letter from a civil recovery company saying that she needed to pay £70.
Like my hon. Friend, all Members of this House who are MPs for any length of time will discover, if they go through their casework files, that this practice is being brought to their attention. At the beginning of this debate, I unambiguously want to pay credit to the citizens advice bureaux and in particular to Richard Dunstan, who had done some work on this issue long before I became aware of it. On behalf of the CAB, he has brought together all the examples of this practice in the best possible place. As a result of his work, two briefings have been published by the CAB, which I recommend to colleagues and others who have an interest in this subject. The first, “Unreasonable demands?”, was published in December 2009, and the second, “Uncivil recovery”, was published in December 2010. The subtitle of the second briefing tells us succinctly what we are talking about. It is:
“Major retailers’ use of threatened civil recovery against those accused of shoplifting or employee theft.”
Colleagues in both the last Parliament and this one have shared my interest in this subject. In the previous Parliament, I know that Ian McCartney was particularly concerned about the issue, and in this Parliament I know that Baroness Hayter has already registered her interest in the subject. I am grateful to her for her continuing interest, which I think that she will want to pursue in the other place.
None of us who are here for this debate are defending shoplifting or employees who shoplift or take property from their employer. However, there are proper procedures, proper criminal processes and proper civil processes. What should not happen is that people who often are young—that is, under the age of majority—vulnerable, mentally ill, distressed or disturbed are intimidated, charged extortionate fees or threatened with what are, bluntly, bogus actions, either by the shops themselves or more frequently nowadays by those who are employed by shops to act for them.
I have discovered that this problem is significant. In each of the past three years, some 100,000 people have received one or more letters demanding a substantial sum of money as “compensation” for their alleged shoplifting or employee theft, and threatening civil court action and associated extra costs if the sum demanded is not paid promptly. Since 2000, more than 600,000 people have received such civil recovery demands, issued by one of a handful of agents acting for well known high street retailers such as Asda, Boots, Debenhams, Tesco and TK Maxx. In the great majority of those cases, the value of the goods or cash allegedly stolen was relatively low. If the accusation is of shoplifting, the value was just a few pounds. In four out of five cases, the goods were recovered intact for resale. In many cases, somebody was apprehended when they were accused of leaving a store with an item—for example, an eyeliner worth £2 or a grocery item worth £1.60—without having paid for it. They then paid for it and were released, but they still received the civil recovery demand later. Among those cases reported to the CAB, one in four of the recipients of such demands are teenagers, most of them aged between 14 and 16, and other recipients are particularly vulnerable.
In many cases, the alleged theft is strongly denied, so it is not always the case—indeed, it is normally not the case—that these allegations are accepted by the person who is charged. In some cases, there was clearly an innocent mistake; in other cases, there was an error; and in other cases there was confusion. However, it matters not, because these stores have behind them a small but growing army of lawyers and other companies that are making a hefty profit from this business.
There is a common feature in these cases. If the sum demanded is not paid, the threat of county court action is often repeated. There is a second threat and then a third threat, giving ever closer dates of notice. However, at the end of all these threats county court action does not materialise, because it was invalid and unjustified in the first place.
The most prolific civil recovery agent, a firm called Retail Loss Prevention, is the biggest player among a small army of players in this sector. It has confirmed that it has never successfully litigated a fully contested county court claim in respect of an unpaid demand. The CAB has also received advice, which I have seen, suggesting that there is no obvious legal authority for most of these demands. Taken together, those two facts suggest that the practice of threatened civil recovery relies on fear and/or shame, as well as ignorance of the law, for its effectiveness.
When I began thinking about how I would raise this issue, I wondered which Government Department I would, as it were, “summon to answer” to me in the first place, because it is very clear that this matter is not only the responsibility of the Ministry of Justice. However, I thought that I would start there, because it is a justice issue, and I am very grateful for the Minister’s presence today and for his Department’s interest in this subject. Shortly, I want to put to him some specific issues that I hope his Department can pick up, because I believe that it has a responsibility to do so and that it can do things.
There is no way that that we should continue to permit this system of civil recovery, and I hope that today’s debate will precipitate a working-together across Departments. Obviously, there is a Home Office interest in this issue and there is also an interest for the Department for Business, Innovation and Skills, as well as an interest for the Ministry of Justice, in trying to ensure that we shut down this business and make those who are involved, which are otherwise reputable major retail outlets, behave in a much more reasonable way.
Nobody condones retail theft. It is a big issue, and we need to ensure that stores are not pilfered and that there is the best possible policing of them. However, even if one accepts that retail theft is a big problem, the percentage of the money stolen from shops that is recovered by these means is a very small proportion of the total. So it is not as if the retailers involved are able to cover all their costs by doing this type of thing. I will turn to some examples.
Has my right hon. Friend considered that we should take up this issue in a protection of freedoms Bill No. 2? It is probably too late for the Protection of Freedoms Bill that is about to start its Committee stage, but it could be considered in a future Bill.
I am grateful for my hon. Friend’s suggestion, and I hope that the Minister will address the areas that the Ministry of Justice can pick up. If over the next few weeks, with concentrated efforts in both Houses, we can get a coalition—as it were—of determination to do something, I, with my hon. Friend and others, will look for the earliest available opportunity to deal with the legislative changes that I think are part of the response that is needed.
On the protagonists, I have listed some of the major retail players, and I will now deal with the agents. In eight out of 10 of the cases reported to citizens advice bureaux the demand was issued by a Nottingham-based company called Retail Loss Prevention Ltd. Since 1999, that company has issued more than 550,000 demands on behalf of dozens of retailers, including Argos, E.H. Booth, Debenhams, Harrods, Iceland, Lidl, Matalan, Morrisons, Mothercare, Netto, Primark and Waitrose. The company retains some 40% of any money it recovers and the remainder goes to the retailer client. The owner and managing director of the company, who is being pursued by Citizens Advice and by others in the media, has said that the company is
“passionate in our belief that we are helping the community by going after the ‘soft’ criminals who are often seen as lower priority by the police”.
In seven out of 10 of the cases that have come to the notice of citizens advice bureaux, the demand was issued on behalf of one of just six retailers—Boots, TK Maxx, Tesco, Wilkinson, B&Q and Superdrug. The predetermined fixed sum demanded by RLP in most if not all shoplifting cases varies according to, and is determined by, the total value claimed of the goods or cash involved. If the value is between nothing and £10, the sum demanded is £87.50 and the 21-day settlement offer is £70; if the goods are worth between £10 and £100, invariably £137.50 is asked for, with a discounted 21-day-period amount; if the value is more than £100, £187.50 is asked for, with a quick-pay discounted amount of £150; and if it is more than £300, £250 is asked for, with a quick-pay amount of £200. It is clear that the company has never justified the legitimacy of its action. It has been asked persistently about the evidence for its actions, and it has repeatedly declined to produce any evidence that claims have regularly and successfully been pursued by means of county court proceedings.
The company has also clearly misrepresented the position. Until last November, RLP’s website stated that
“we have established operating procedures for Civil Recovery and agreed guidelines with the Association of Chief Police Officers (ACPO) and Association of Chief Police Officers Scotland (ACPOS)”.
However, in October last year, the assistant chief constable who leads on retail crime for ACPO wrote to Jackie Lambert at RLP stating:
“Whilst there may have been agreements in the past about exchanging data and operating civil recovery with ACPO…there are no such agreements in place now and indeed on several occasions over the last few years I and my colleagues have asked that such references be deleted. Please remove from your website any and all references which state or imply that RLP operates its civil recovery in agreement or cooperation with the Police Service. Clearly if you have an agreement with an individual force you could make reference to that, but I know of none.”
In November last year, ACPOS said:
“At no time have ACPOS entered into any formal agreement with RLP or assisted them in any civil recovery”.
The other players are Drydens, a law firm based in Bradford, Nottingham-based Civil Recovery Solutions and, more worryingly in a way, a Florida-based law firm, Palmer, Reifler and Associates, which is a major player on the United States civil recovery scene but is not regulated to practise in the UK and uses Wigan-based law firm Goddard Smith as its agent. Lastly, there is the London-based firm Civil Recovery Limited, which acted for only Tesco and was closely related to a security company called TSS, which supplies security guards to Tesco, Boots and other retailers. Civil Recovery Limited ceased trading last summer.
Penultimately, there is of course a civil wrong if someone steals something from someone else. There is a tort as well as a crime, and there is a breach of contract if an employee steals from their employer. I am not arguing that there might not be proper civil proceedings, but this is a contrivance. It is an intimidation, with the protagonists selling their services to the retail fraternity and then recovering a large amount of money under clearly false pretences. What please can we do about it?
I would like the following from the Ministry of Justice. I would like it to ask the Law Commission, which has a report in the pipeline, to ensure that it urgently reviews the entire law on civil recovery, with a view to eventually ensuring, by law if necessary, that civil recovery is limited to cases involving serious, determined and/or persistent criminal activity for which there has been a criminal trial and conviction. I would like the Ministry, as a matter of urgency, to prepare and disseminate public information and advice on threatened civil recovery, and in particular on the options available to people who might receive a civil recovery demand from Retail Loss Prevention, Drydens or other civil recovery agents. That could be done through the Government’s public information service—Directgov—citizens advice bureaux and other advice outlets.
I also want the Ministry of Justice to talk to the Solicitors Regulation Authority to see whether it needs to take further action to ensure that the civil recovery practice of solicitors, including employed solicitors, is consistent with the solicitors’ code of conduct. I would then like the Home Office, the Department for Business, Innovation and Skills, the retail industry and the police to identify and develop a range of alternative ways of dealing with those involved who, if they are young, mentally ill or vulnerable, are often better dealt with by cautions and the early stages of the pre-criminal procedure in my experience.
As the total amount recovered by the civil recovery agents for their retailer clients each year seems unlikely to be more than £16 million, the practice is clearly completely unacceptable, given that they say that they lose £4 billion every year as an industry. I hope that some major retailers will hear this debate and agree to review their practice. Most of all, it is clear to me that the practice has become an opportunity for great profit-making by a few at the risk of improperly influencing and intimidating people who ideally should not be in the criminal process, unless they are regular offenders, and certainly should not be the victims of communications that distort the facts, misrepresent the law and often put the fear of God into people who certainly do not have the money to pay large sums.
I hope that the Minister can be helpful, that he understands the importance of this issue to all our constituents, and that today will be the beginning of the end of this practice. I am very grateful to all those people who have brought the issue to the public’s attention, and I hope that there will be continued significant public reporting, until the practice is ended.
I am grateful to my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes)for providing me with this opportunity to outline the Government’s position and the action being taken in respect of civil recovery.
The Government are firmly committed to working alongside business and trade associations to find effective solutions and responses to business crime, including retail theft. My right hon. Friend identified that civil recovery is dealt with by a number of Departments in addition to the Ministry of Justice—for example, the Home Office, in preventing and tackling retail crime; the Department for Business, Innovation and Skills, in retail business, sponsorship of Citizens Advice and employment relations; and both DBIS and the Office of Fair Trading, in consumer protection legislation. As my right hon. Friend requested, and as I will come to later, the Law Commission is reviewing this area, and officials in the Departments that I have mentioned will respond in due course.
Civil recovery is the legal means by which anyone who has suffered a financial loss due to the wrongful actions of someone else can seek appropriate compensation under civil law. Civil recovery schemes are used by many high-street retailers to deter shoplifting and recover from shoplifters the management, administration, security and surveillance costs incurred in dealing with the case, including the costs of the civil recovery action itself. That ambition is both understandable and justifiable. Shoplifting is not a victimless crime. Businesses employ civil recovery agents to recover through the civil courts often relatively low-value losses arising from, for example, shoplifting or employee theft. The alternative would be criminal proceedings rather than a suit, with the likelihood of a criminal record for the person being prosecuted.
Retailers have a clear legal right to recover the costs of goods that they lose as a result of crime. The Government recognise the appropriate and proportionate use of civil recovery as one option available to retailers for dealing with low-level criminal activity that also amounts to a civil wrong. We believe that civil recovery, when used proportionately, provides an effective response to low-value and often opportunistic crime that often involves teenagers and other vulnerable people.
The national retail crime steering group set up by the Home Office with the British Retail Consortium provides a forum for the Government, law enforcement agencies and retailers to discuss and devise strategies for tackling crimes of concern to retailers. At that national level, the Government are working with industry and business to broker solutions that cannot be solved by local action alone and to promote the sharing of effective practice. The group focuses on the significant crime issues affecting businesses, including tackling shop theft, violence against staff and the growing threat of e-crime, to adopt a task-focused, action-orientated approach.
We are encouraging businesses to do more to protect themselves from crime. Effective crime prevention advice is available for businesses to use, and we are making it a priority to share effective practice examples of businesses working together and in partnership with the police and other law enforcement agencies to tackle retail crime across their local areas.
As the right hon. Gentleman said, most retailers who adopt the civil recovery procedure normally employ specialist civil recovery companies to seek damages on their behalf, to meet the losses caused by individuals who steal from them. I understand that in addition to the actual cost of any goods stolen or damaged, retailers seek to recover the overall costs that they have incurred in dealing with the matter. The additional costs are usually claimed to cover the costs of general store security measures such as CCTV, security tagging and security staff, as well as any administrative costs incurred by the retailer.
In the great majority of cases, the value of the goods or cash allegedly stolen is relatively low, sometimes just a few pounds. However, the sum sought in damages can be substantially higher once additional costs are included. Such costs are often charged as a fixed sum of between £100 and £150, depending on the value of the goods or cash involved. I note that the right hon. Gentleman mentioned the amount of £137. The practice adopted by most companies involved in the sector is to write to individuals demanding payment. Failure to pay is followed by a threat of a court action for unpaid damages and the subsequent use of debt collection agencies. Such individuals are advised that their details will be entered on a national database, which can be accessed by retailers, prospective employers and credit providers.
Let me be clear that the Government are entirely satisfied that retailers have a legal right to recover the value of any goods lost or destroyed as a result of an individual’s actions. Defendants can go to their local CAB and receive advice about what to do with the claim. The Government accept that a retailer arguably has a legal right to recover any additional costs or losses directly caused as a result of dealing with a case. However, we appreciate that there is no statutory or other clear basis for setting the amounts of such costs or losses that can be recovered in an individual case. Therefore, the amount of money, if any, that a retailer can recover from an individual accused of low-level theft in respect of its wider costs is entirely a matter for the courts based on the circumstances and facts of the case.
I say “if any” because my officials have not yet been able to identify any cases in which the issue has been tested before the courts and a definitive judgment given. A specialist recovery company confirmed to Citizens Advice in 2010 that it had never issued a claim seeking recovery where an alleged shoplifter had failed to pay the sum requested. Therefore, that area of the law remains untested. CitA—the new name for Citizens Advice—has undertaken a lot of valuable work, for which we are grateful, to highlight what it believes are the relevant problems. I will refer to that valuable contribution later. However, given that some civil recovery is clearly entirely legitimate, we consider that the question deserving further examination involves the means used and the proportionality of losses recovered.
Has any work done by the Minister or his officials confirmed that the amounts sought in such cases have no relation to the costs incurred? People should be entitled to recover the £5 cost of a stolen item, but the £135 or £235 top-up fee does not appear to have any basis in reality.
That would be a matter for the courts to decide, and as I have just tried to explain, there has not yet been a test case. A test case might be a good idea.
There is no clear basis for setting claims for additional costs at a specific level. Indeed, retailers can seek to recover such additional costs only to the extent that they can show that they have been incurred directly as a result of dealing with a case, so it is not at all clear how such costs could be set at standard levels. However, as I said, the point has yet to be tested fully in the courts.
As I said, Citizens Advice has raised a number of concerns about how civil recovery companies operate and has conducted valuable work on the matter, culminating in two reports. “Uncivil Recovery”, which was published in December 2010, set out detailed case studies drawn from 300 CitA-reported cases in which individuals had been accused of shoplifting or employee theft and were then pursued for substantial sums of money as compensation for what was described as
“loss and damage caused by your wrongful actions.”
I understand that in the vast majority of cases the police were not involved, nor were criminal charges brought. CitA suggested that it is unfair to use the civil courts in such circumstances, argued that the practice of civil recovery effectively relies on fear and ignorance of the law for its effectiveness and made a series of recommendations.
We believe that the recommendation that the law should be clarified to prevent any civil recovery unless there has been a criminal trial and conviction would result in undesirable additional pressure on the criminal justice system. As I have mentioned, the Government accept fully that some civil recovery is entirely legitimate. Accordingly, we consider that the question of the means used and the proportionality of losses recovered might deserve further examination. However, we accept that one important issue is what approach companies acting on behalf of retailers adopt when pursuing such cases.
In that context, I am pleased to be able to tell my right hon. Friend that the topic, and whether any guidance needs to be issued or other action taken, is being considered across a number of Departments, and good progress is being made. For instance, the Law Commission intends to seek views on the question in a paper soon to be issued on consumer redress for misleading or aggressive practices. The Law Commission project reviews the directive on unfair commercial practices implemented in the Consumer Protection from Unfair Trade Practices Regulations 2008 and asks whether consumers should have a right of redress of breaches of the regulations, and that includes the question whether civil recovery is a commercial practice within the meaning of the directive.
The issue is not beyond doubt, but on a broad interpretation of the meaning of a commercial practice, the directive could apply to civil recovery where it is used against shoplifters. That would not make civil recovery illegal, but specialist recovery companies would not be permitted to send misleading or aggressive letters. More generally, the Law Commission is also considering whether there should be a statutory right of redress for people to reclaim, along with moderate and appropriate damages for distress and inconvenience, any moneys that they might have paid as a result of a misleading or aggressive letter.
The Citizens Advice report implies that civil redress is sometimes uncalled for, but the Government do not support that position. The report is certainly useful in raising important issues, not least those that concern aspects of consumer protection, but I accept that some technical issues need to be resolved.
I see that the Minister is on his last page, so I will ask him one last question. A Law Commission report is imminent. Do the Government have a plan to bring together views across Departments and produce a coherent collective response later in this parliamentary Session? I am sure that it would be welcome in both Houses.
Sitting adjourned without Question put (Standing Order No. 10(11)).