Tuesday 29 March 2011
[Martin Caton in the Chair]
West Lothian Question
Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Dunne.)
It is a great pleasure to serve, as always, under your Gower chairmanship, Mr Caton. I welcome the opportunity to have this debate for a number of reasons. It gives me the chance to reflect on an issue that was important in the 10 years that I spent as a territorial Minister in both the Wales Office and the Northern Ireland Office. In the case of Northern Ireland, my job was to oversee the talks that led to the establishment of the Assembly and the Executive. In Wales, I worked with the Welsh Assembly in the first decade of its life. I have, therefore, a particular personal interest in this issue.
Secondly, the Government, it seems—I am not quite sure that I have seen the detail; I am certain that the Minister will enlighten us later—have called for a commission to look at constitutional issues, and specifically the West Lothian question. I hope that when the Parliamentary Secretary, Cabinet Office, the hon. Member for Forest of Dean (Mr Harper) makes his winding-up speech, he can tell us about the nature of that commission—who will sit on it; when it will meet; whether its recommendations are likely to be binding; whether, although this would be unusual, it will be consensual—and all the details that surround the issue.
Thirdly, the constitutional issues that have affected Wales as a consequence of the Government’s policies have had little chance of being debated in the House of Commons. Those issues affecting Wales—the loss of its Members of Parliament and other issues—did not reach the stage of being debated on the Floor of the House, and as you will know, Mr Caton, we were refused a meeting of the Welsh Grand Committee to discuss those important issues of constitutional change.
On the consensual nature of the commission, what hope does my right hon. Friend hold out that it will be consensual, bearing in mind the constitutional changes of the past eight months, including the alternative vote, which is simply to please the Liberals, and the equalisation of seats, which is simply to please the Tories?
None. The Welsh dimension is important, but the West Lothian question affects Northern Ireland and Scotland as well. The issue is of particular interest to Welsh Members because, as the Chamber will know, a few weeks ago the referendum result in Wales was a decisive vote in favour of increased powers and the right of the Assembly to pass its own legislation. Of course, the West Lothian question was being debated and discussed well before that.
I have quite significant sympathy with elements of what the right hon. Gentleman has said, particularly as so many of the Welsh-related issues in the Parliamentary Voting System and Constituencies Bill were not even debated in the House, which was highly regrettable. Equally, surely he must understand that one of the problems with the West Lothian question is the idea of over-representation of particular parts of the UK. Does he feel that it is sustainable for Wales to be so massively over-represented in the United Kingdom Parliament, given its population? Does he feel that it would be wrong to have a reduction on a pro rata basis, to ensure that all parts of the UK were equally represented in this place?
I do not think that Wales is over-represented. I think that in the House of Commons, Wales is represented differently from England, as are Scotland and Northern Ireland. I will come to that in a moment, because the issue of how Wales, Scotland and Northern Ireland exist constitutionally within a United Kingdom is very important. That is why I think that Wales’s current representation is right. When the next election comes—assuming that it will be in four or more years’ time—we will have the lowest number of MPs in Wales since 1832. The hon. Gentleman may recall that in the referendums on devolution in 1997 in Scotland and in Wales, part of the settlement on which the Welsh and Scottish people voted was the retention of the number of MPs for both Scotland and Wales. That was in order to ensure that there was proper representation within the Union. By that I mean decent representation, with advice being heard; I am not necessarily talking about numbers, though of course if there are more, there is a better voice.
Does the right hon. Gentleman not understand that there is an equally deeply felt concern in England? Not only is there a devolved settlement that gives the Scots a Parliament, and Northern Ireland and Wales an Assembly with additional powers, but there is a relative over-representation, in the sense of fewer constituents for MPs. Does he not see that there is one leg—a rather important leg—of the United Kingdom that feels very much under-represented and unloved, and that that is one of the reasons why the West Lothian question is becoming more high-profile in England?
It is one hell of a leg, actually, in terms of its size. That is the point; 85% of MPs, 85% of the population, and 85% of the resources spent on public services in the United Kingdom are English. The voices of Wales, Scotland and Northern Ireland, within that enormous big brother, have to be heard, because that is the strength of the Union. I am a unionist with a small “u”; I believe that the Union should be maintained, but it is best maintained by recognising the diversity of our countries and regions within the United Kingdom. A disproportionate loss in Wales of a quarter of our MPs in one fell swoop will, in my view, affect the efficacy and significance of the Union.
No, I do not accept that for one second, because the Union is not an union of shires. The Union is a union of countries and regions: the Province of Northern Ireland, the old Kingdom of Scotland and the old Principality of Wales make up the Union, together with England. I will come to that in a second. The problem of England is difficult—I have no doubt about that—but the maintenance of proper representation, weighted differently for Scotland, Wales and Northern Ireland, helps to maintain that Union. I will come on to the issue of weight in a moment, because on the one hand the Government argue that there should be equal weight for Members of Parliament, but on the other, when we are elected, they argue that we have different weights in the House of Commons.
Does my right hon. Friend agree that the resounding yes vote in the recent referendum showed that the people of Wales have accepted devolution and are very happy for the Welsh Assembly to have more powers, and that the process is irreversible? Would it not be possible, if we are looking at a future system for the United Kingdom, to have a system that would embrace not only independent Parliaments in Wales and Scotland, but, possibly, a newly forged link with the Republic of Ireland?
Yes, indeed. I very much accept my hon. Friend’s point about the result of the referendum. Devolution is unquestionably here to stay. People accept that devolution is the best way to deal with the issues in Wales, Scotland and Northern Ireland within the United Kingdom.
The issue that affects us at the moment, with regard to the West Lothian question, is the so-called English question—the question of English issues. Should Welsh, Scottish and Northern Irish MPs vote on what are termed to be specifically English issues in this place? I maintain that there are no such things as absolutely English issues. In the first instance, the money that comes to Scotland, Wales and Northern Ireland is decided by Parliament, which is overwhelmingly English—85% of MPs are English. I quote, for the convenience of hon. Members, the Kilbrandon commission, which met, as many will know, in the 1970s:
“any issue at Westminster involving expenditure of public money is of course of consequence to all parts of the UK, since it may affect the level of taxation and indirectly influences the level of a region’s own expenditure”.
Every time the Barnett formula is used, in each public spending round, the amount reached depends on the amount of money spent in England on public services that are devolved to the other countries. If health spending in England goes up, or education spending in England goes down, that has complete consequences for the budgets of Wales, Scotland and Northern Ireland. Financially, there is no such thing as an English issue—they are British issues.
On that point, would the right hon. Gentleman accept that English constituencies feel that there is great unfairness? We feel under-represented but over-taxed. For example, we wonder why we are subsidising university education for Scottish pupils, and free prescriptions.
The whole business of the devolution settlement is that devolved areas can decide what they spend their money on. It could equally be argued, incidentally, if one lived in north-east England, the midlands or the north-west, and if one were to divide England into regions, that certain regions do better than others. That is a matter not for today’s debate, but for future financial policy. I merely say that when the Barnett formula is applied to Wales, Scotland and Northern Ireland, it is applied on the basis of whether spending in England goes up or down.
May I add a further complication to my right hon. Friend’s argument? He knows that I represent a Welsh border constituency. One third of my constituents use the Countess of Chester hospital in England; 400 of my constituents work at Vauxhall in Ellesmere Port, which is supported by the Department for Business, Innovation and Skills; Crewe station and the airports at Manchester and Liverpool serve my constituency; constituents go to Chester university and West Cheshire college. Am I not to have a vote or a voice on those things on behalf of my constituents?
I apologise for the fact that I have to leave in a moment to chair the Welsh Affairs Committee. I thank the right hon. Gentleman for giving me this opportunity to say, as a proud Welshman and a Unionist, and in support of my hon. Friend the Member for Totnes (Dr Wollaston), who made the very point that I wanted to make, that we cannot possibly have a situation where Welsh MPs can tell the English what to do with their health service and education, but English MPs cannot have any say over what goes on in Wales. Surely the answer for all Unionists across the United Kingdom is to give the English their own Parliament, with powers similar to those of the Welsh and Scottish Parliaments, and have some kind of a federal structure to deal with everything else that matters to the UK.
The issue of whether England, by which I mean English regions—I shall come to that in a second—should have its own regional governments is a different matter. That is, ultimately, the answer to the question. Incidentally, I say this to the hon. Gentleman, who is leaving: I recently read a quotation from a senior Conservative, who said in the 1960s, in a discussion on the West Lothian question—it was not called that at the time—that
“every Member of the House of Commons is equal with every other Member of the House of Commons.”
That was Peter Thorneycroft, who was then the shadow Attorney-General. He was the Member of Parliament for Monmouth, so that will be of interest to this hon. Member for Monmouth (David T. C. Davies). His party had a different view of such things in those days, but I will come to that later.
My right hon. Friend the Member for Delyn (Mr Hanson) mentioned cross-border issues.
On that point, my constituents are in the opposite position to those of the right hon. Member for Delyn (Mr Hanson): they live in England, but many use public services in Wales, in the constituency of my hon. Friend the Member for Monmouth (David T. C. Davies). Some of them live in England, and have their general practitioner in England, but are registered in Wales. They are subject to the Welsh national health service, the policies of which are set by the Welsh Assembly Government, but they have no democratic say at all about those policies.
Of course they do not, but they sometimes get the benefit. There was a time when people from the Minister’s constituency were able to come to Chepstow to claim free prescriptions, although I believe that that has been stopped. I agree with him that cross-border matters are particularly complicated in our part of England and Wales. It is not quite the same on the Scottish border, because very few people live alongside it. However, on the Welsh border, in both the south and the north, to which my right hon. Friend the Member for Delyn referred, it is an issue, and the Minister also makes that point. If we start trying to disentangle all of this, we would get into an awful muddle as to who does what, and who votes on what.
Policies developed in England have implications for the rest of the United Kingdom. Look at student fees, for example. When we are elected, we are elected as MPs for our constituencies, but we are also elected to represent the UK as a whole. We represent the UK in the sense that we take decisions that affect the whole of the UK, not just our own constituencies. Also, who is to define what is an English issue? I rather fancy that that would put the Speaker of the House of Commons in a difficult position.
The right hon. Gentleman has touched on the idea that perhaps we need to move, in time, towards some sort of federal structure, and I do not disagree with that, but the contributions made by my hon. Friend the Member for Totnes (Dr Wollaston) and the Minister go to the heart of the point, particularly on the health issue. Ultimately, it is a fiction that we have a national health service in the UK. Nothing could be further from the truth. We have four separate national health services, one for each of the four constituent parts of the UK. Therein is one of our key problems. Ultimately, we have to be a little more open with the public at large about how that structure operates. It is to a large extent inconsistent, as the right hon. Member for Torfaen (Paul Murphy) points out, but it is not enough simply for us to say that we put the UK’s interests first.
There are issues around transport and policing in London on which I, as a London MP, have very little say, and I feel uneasy about that, to a certain extent. I feel uneasy about speaking on some of those issues, given the devolution to the London government. That is not an entire devolution, in the way that it is for the right hon. Gentleman; he does not represent a single person on health matters, because they have been entirely devolved to the Welsh Assembly.
But I do represent people on health matters because of decisions made by the British Government on health spending. As I said earlier, if they put spending up, that has a direct consequence for the people of Wales: their spending will go down. My right hon. Friend the Member for Delyn referred to cross-border implications; the English health service is important to Welsh Members because of those implications.
Let me say to the hon. Member for Cities of London and Westminster (Mr Field) that I voted on the Bill to set up the London authority. I also voted on issues that affected only Scotland before devolution, and all of us could vote on matters affecting Northern Ireland. There were times when those decisions were highly controversial, such as when the poll tax was introduced in Scotland. That was done on the basis of English MPs agreeing to it, but we had to accept that the principle of British MPs voting on British issues was still important, however disagreeable we thought it might be.
Northern Ireland is a good example, because it had its own devolved system from the early ’20s to the ’60s. The Stormont Parliament dealt with all the issues for which it was responsible—education, health and so on—but Northern Ireland MPs still had a say and a vote on matters that affected England, Scotland and Wales. Indeed, it was when Harold Wilson complained in the ’60s that although steel nationalisation was not a matter that affected Northern Ireland, Northern Ireland Members were voting on it, that the Conservative party pointed out that all Members in the House of Commons were equal, in terms of their constitutional rights.
Another problem is that of creating two classes of MPs. I quote again from Kilbrandon:
“in our view, therefore, all Members of Parliament, whether or not they come from regions with their own legislative assemblies, must have the same rights of participation in the business of the House of Commons”.
No European country has two-tier MPs. The nearest country to us in terms of asymmetrical devolution is Spain. I asked the Library to have a look at that situation, and it assured me that all Spanish MPs have exactly the same rights in their Parliament as we do in ours, despite the fact that virtually every aspect of domestic policy is heavily devolved to parts of Spain such as the Basque country and Catalonia.
There would be a problem—the hon. Member for Monmouth has left—if we were to accept two classes of MPs, and if Welsh Members could not vote on English issues, whatever they might be. The UK Parliament is in danger of becoming an English Parliament, and that is very dangerous. What about the House of Lords? This has never been an issue, but it may vote on anything, including matters on which Welsh Members of Parliament could not.
The biggest single issue, however, is that when I vote, as a citizen of the United Kingdom who happens to live in Wales, I vote on the policies of the parties as they affect the United Kingdom, but as a Welsh Member of Parliament, I vote on issues that affect, for example, the English health service. That happens in Scotland. All that cannot be disentangled. What would happen if there were restrictions on Members of Parliament and a Government could not carry a majority on English issues, but could on United Kingdom issues? When a potential Prime Minister goes to the palace, having won a United Kingdom general election, does the Queen ask whether they have a majority in England? That is the problem, because there would be a constitutional mess that we have never previously experienced.
I am listening to the right hon. Gentleman’s argument with great attention, and agree with much of it, but the key issue is that the real change in governance in Wales was voted on by the whole House of Commons, including all English MPs, and they presumably understood the implications of the decision.
Presumably they did, but when English, Scottish and Northern Ireland Members of Parliament voted for the Welsh settlement, they voted for something that was put to the people in 1997: first, that there would be a devolved Assembly; secondly, that there would be the same number of Members of Parliament; and, thirdly, the issue of whether Welsh Members of Parliament were not able to vote on certain issues in the House of Commons was specifically excluded. People in Wales, Scotland and indeed Northern Ireland voted in referendums that in no way denigrated the power or responsibilities of their Member of Parliament.
I am listening with interest to the right hon. Gentleman, but he and other Welsh MPs underestimate the resentment in England that has been referred to, which is growing. I shall give one small example on the point that he was making. I forget the year of the legislation on tuition fees—it was in the late 1990s—but he knows as well as I do that English MPs voted against the introduction of tuition fees in England, and that Bill applied only to England. It came in only because of the votes of Scottish MPs—[Interruption.] It is true. I am sorry, but the majority of English MPs voted against tuition fees.
The argument could be made on other issues, such as the poll tax. People in Scotland, who were soon to have their Parliament, deeply resented that; it was something that they did not want. Another issue that caused resentment in Wales—I see no way out of it without English regional government—is the Olympics, which are being held in London. There is great dissatisfaction in Wales about the fact that a huge amount of money is being spent on something in London that has no impact on Wales.
Whatever the rights or wrongs, a lot of money that would have come to Wales did not, because it went to the London Olympics. I am not saying that that is good or bad; I am merely pointing out that there was disagreement in Wales. That will always happen. It could be argued, for example, that the southern part of England during the 1960s and 1970s, and recently, voted for more Conservative MPs than Labour or Liberal Democrat MPs. They could feel aggrieved that their part of England has been done down by a Labour Government for whom they did not vote. That is the nature of the United Kingdom legislature, and we cannot change that.
The right hon. Gentleman must accept that it was precisely that resentment in reverse that led to the devolution settlement. In the run-up to the 1997 election, his party recognised that 18 years of Conservative rule had dismayed many people in Scotland and Wales, and that is why we went down the devolution route. He cannot have it both ways. That was an important part of the momentum that led to the devolution settlement that we have today.
I think that is probably right, and that was reflected in the referendum result in Wales. People preferred decisions affecting their lives to be taken in Cardiff instead of Westminster, but that was certainly not the only reason for devolution. Wales, Scotland and Northern Ireland wanted it for various reasons, and people voted accordingly.
At the end of the day, the Government changed their mind, and the Conservative party changed its mind over the years, partly because of such arguments. After all, the Conservatives have only one Member of Parliament in Scotland, eight in Wales and none in Northern Ireland. Is the Conservative party still a Unionist party? I sometimes doubt it. I also sometimes doubt whether, if there were a majority of Conservatives in Wales, Scotland and Northern Ireland, it would have the same appetite for change. I am sorry about that, because the Conservative party has a long and proud tradition in its own right of protecting the Union, but that is not so now. I sometimes wonder whether it would prefer Wales and Scotland to go their own ways. That would be a dangerous step, particularly in view of the Prime Minister’s respect agenda for Scotland, Wales and Northern Ireland, although I am not convinced that that agenda would be respectful if the powers, responsibilities and duties of Welsh, Scottish and Northern Irish Members of Parliament were removed. I sincerely hope that the Government will rethink the issue, because it could imperil our constitution, weaken the Union, and do a great disservice to the people of Scotland, Wales and Northern Ireland.
I shall speak briefly, because I know that many other hon. Members want to contribute to the debate. I congratulate the right hon. Member for Torfaen (Paul Murphy) on securing it, because it is important, and such constitutional issues are close to all our hearts. There are no easy solutions.
A major issue would have blown up after the last general election—the right hon. Gentleman alluded to this—if the Conservatives had tried to form a minority Administration. The coalition now has 12 MPs in Scotland, whereas the Conservative party alone has only a single MP, and has won only three contests in total in the last four general elections. The West Lothian issue would have come much more to the fore, and perhaps that would have been good thing.
I hope that the Minister will say a little about what the Government are planning to do in this regard. The past nine months have been a period of substantial constitutional change, and I share many of the reservations on the Opposition Benches, as my voting record shows. I abstained on Second and Third Readings of the Parliamentary Voting and Constituencies Bill, but I voted against the Government on some occasions. I was uneasy about the Bill’s being seen as slightly partisan along the lines that the right hon. Gentleman pointed out. I was one of three Conservative MPs who voted to retain the overall number of constituencies at 650, although I would try to equalise them, and we are now moving towards that.
We should consider the whole constitutional issue much more broadly, and it is regrettable that we are making significant changes to the House of Commons when we all know in our hearts that this rapid pace of change will not be represented in any of the changes that will be presented to the House of Lords. There is much speculation that the Deputy Prime Minister, particularly if the AV vote does not go the way he wants, will be given the House of Lords issue and rush ahead with it in the second half of the year. I think we all know that not only is there division in the House of Commons, there is probably rather less division that we would like in the House of Lords, and I suspect that many life peers on both sides will want to retain their position, and will stall on any fundamental reforms.
I shall explain what I would like, which is a pipe dream at the moment, but touches on solving some of the issues that the right hon. Gentleman pointed out.
The hon. Gentleman seems to measure his party’s support in Wales and Scotland by the number of MPs it has. In two of the last four general elections, the Conservative party had 20% of the vote in Wales without a single MP. Would he not be better engaged in proving that first-past-the-post is a rotten, out-of-date electoral system, and campaigning for AV to obtain justice for his party?
However much the hon. Gentleman would like to tempt me in that direction, I will not go down that path as it does not apply to today’s debate. However, he makes a serious point. In many ways, devolution was the saving of the Conservative party in Wales in the immediate aftermath of 1997, or at least after 1999 with the Welsh Assembly elections. We now have a stalwart group of Welsh MPs, roughly one quarter of whom are present today—that is until the boundaries change. [Laughter.] I will not be unkind to my colleagues. The Minister is blanching at the prospect of a cross-border Welsh-English seat if some people have their way.
Thankfully, I do not think it is possible with the legislation that has been carefully put into place.
I know that other hon. Members wish to speak, so I will say just a few words about what I consider would be the ideal situation. It is very much a pipe dream and an ideal. I agree with what my hon. Friend the Member for Monmouth (David T. C. Davies) said in his earlier contribution. We need to move towards the idea of an English Parliament. We do not need a whole lot more politicians—I hasten to add—but I would like to see all parts of the United Kingdom come under a federal umbrella, with identical powers for the Scottish, Welsh, Northern Irish and English Parliaments. There would also be the United Kingdom Parliament into which Members of the constituent parts would organise themselves on a pro rata basis. The United Kingdom Parliament would look at bigger strategic economic issues such as foreign affairs and defence. Many things that are already taken for granted in Wales and Scotland, such as policies on transport, health and a whole range of issues that are dealt with through the Assembly or the Scottish Parliament, would be tackled at national level. That is important because a huge amount of resentment is building up in England about what is seen as an unfair arrangement. Having a Conservative-led Government has probably helped to assuage that in the short term, but I fear that sense of resentment will become stronger as we go forward.
The hon. Gentleman presents a measured and characteristically sensible argument. Does he agree that England is a large country containing very disparate regions? I was born in the north-east of England, which in many respects has more in common with Wales than with Essex. Therefore, the type of targeted health policy that makes sense in Wales would not make sense in England because the needs of the various regions are so different that they could not be adequately dealt with by an English Parliament.
There may be something in what the hon. Gentleman says. I was describing my ideal, but I recognise the chief concern that, unlike any other federation, having a single group that contains 85% of the land mass or population, and its Members, would present some difficulties. The Federal Republic of Germany was set up as a post-war construct. Even after the reintegration of East Germany in 1990, there were essentially smaller units. There are particular areas of power—for example, Bavaria is strong due to historical factors and is a powerful Land, and North-Rhine Westphalia is the big industrial heartland, but even the smaller states have an important role to play. Safeguards exist in the United States of America in that each state has two Senate seats, irrespective of size. That means that states work closely together despite great disparities in size and economic power. I accept that point, but as the hon. Gentleman knows, coming from the north-east, there is not much love or great affinity between that region and the area of the United Kingdom immediately to the north. By the same token, when the people of the north-east had the opportunity some seven years ago to sign up for their own government, that move was overwhelmingly defeated. It had been anticipated that that region would have been the most likely to go down the route of a devolved English Government.
I think the hon. Gentleman has hit the nail on the head. Does he agree that the major problems we have had with devolution are because we have never looked at it from a constitutional point of view? Perhaps there is an argument for some sort of written constitution with a Bill of Rights and a clear separation of powers.
There is very much an argument for that. It is not particularly a Conservative party idea, but I do not disagree with the hon. Gentleman. The nub of his point is correct. We have tended to look at devolution as a political settlement. In 1997, after 18 years of Conservative rule from which the Scots and Welsh felt disfranchised, political momentum allowed devolution to go ahead in a way that would not have happened 20 years earlier.
If the logic of the Conservative party—not necessarily the hon. Gentleman’s point of view—is that Scottish, Welsh and Northern Irish MPs should not be allowed to vote on health and education issues that affect London, should that logic be carried forward to London MPs who have the Assembly?
I think it must be to an extent. As I have said, I feel slightly uneasy about issues of policing and transportation. In the dim and distant past when I was on the Front Bench of my party, I was asked to be a transport spokesman. Because of this issue I did not feel able to take up such a role, and I was offered something else instead. It is an issue, although it is a more byzantine and mixed situation. The Home Secretary still has overall control of London policing—
One would not necessarily know it from articles in The Daily Telegraph from the past 24 hours, but it is a slightly more complicated situation and therein lies part of the difficulty.
I look forward to hearing what the Minister has to say about these issues. From my point of view—this is my individual point of view, rather than that of my party—it is regrettable that we have not looked at all issues concerning the constitution so as to try and obtain a relatively logical patchwork. I accept that historical analysis of such matters means that logic is often thrown out of the window. The worry is that we have moved ahead with breakneck speed in a way that will have a big impact on the House of Commons and affect our relationship with our constituents and within our countries. The House of Lords has not been part and parcel of that, and 117 peers have been added at the same time as we needed to reduce the size of the House of Commons on cost grounds. That is illogical. We may have considerably more peers given that the coalition agreement mentions equalising the proportion of peers for each party based on the vote at the last general election. That suggests there will be another couple of hundred peers, and some older Members of the House of Lords are very hacked off at the idea of not getting a seat in their own Chamber. It is regrettable that we have not looked at that matter, and I hope that as part of the West Lothian question, we will look at all those constitutional issues together and try to obtain a position for the whole constitution over the years to come, including an analysis of the separation of powers referred to by the hon. Member for Islwyn (Chris Evans).
I am grateful to my right hon. Friend the Member for Torfaen (Paul Murphy) for securing this important debate. Despite the chuckles that I detected from Government Front Benchers, there has been a lack of opportunity to talk about these hugely important issues as they affect not only Wales, but the United Kingdom. The Parliamentary Voting System and Constituencies Act 2011 that we have just seen rammed through the Commons was entirely partisan in its composition. Crucially—this point was picked up by the hon. Member for Cities of London and Westminster (Mr Field)—it basically ignored the position of the House of Lords and dealt only with the House of Commons. In terms of a constitutional settlement that is a massive mistake, and these issues must be addressed. House of Lords reform will be on the political agenda, and it was a massive mistake not to consider that when looking at the number of MPs in Wales, Scotland, Northern Ireland and England.
The Conservative manifesto made no reference to removing the right of MPs from Wales to vote on matters relating to England. Characteristically, it made little reference to Wales and stated:
“Labour have refused to address the so-called ‘West Lothian Question’: the unfair situation of Scottish MPs voting on matters which are devolved. A Conservative government will introduce new rules so that legislation referring specifically to England, or to England and Wales, cannot be enacted without the consent of MPs representing constituencies of those countries.”
That is the nub of the issue.
Since the general election, however, Ministers have taken a different tone. We have, of course, heard about the commission that will be set up to address the West Lothian question. The Minister has stated that the commission’s work
“will need to take account of our proposals to reform the House of Lords to create a wholly or mainly elected second Chamber, the changes being made to the way this House does business and amendments to the devolution regimes, for example in the Scotland Bill presently before the House. We will make an announcement in the new year.”—[Official Report, 15 December 2010; Vol. 520, c. 822W.]
It is very unfortunate that a major constitutional Bill has gone through the House of Commons before the commission has been set up. We do not know the detail of the commission and we all hope that we will hear something about that later today. It is very much to be regretted that the House of Lords and the House of Commons are not looked at together when this issue is considered.
There has been no substantive discussion that I am aware of with Members of Parliament from Wales of whatever party about the issue. It was absolutely disgraceful that the Secretary of State for Wales refused to engage in a debate in the Welsh Grand Committee about the number of Members of Parliament in Wales under the Parliamentary Voting System and Constituencies Act 2011. That showed extraordinary constitutional illiteracy, because the settlement that exists in the United Kingdom at this time is very complex. As we all know, it is partly written and partly unwritten and has been established as a result of centuries of history. It has been reached as a result of huge political events that have affected the islands that lie off Europe, including Ireland and, of course, Great Britain.
The changes that were put through, for what I believe were partisan political purposes, in the recent Bill changed that constitution without any real consent, and what was extraordinary in that context was the lack of involvement of Conservative MPs from Wales, who of course voted like turkeys approaching Christmas, but also took no substantive part in the debate. As a consequence, the views that had been recently expressed by members of the public in the general election in Wales were in effect excluded when the number of Members of Parliament in Wales was reduced by one quarter.
We all know that opportunities for Welsh Members of Parliament to discuss these matters were extremely limited if not non-existent in the Chamber. I think that I made a speech on Third Reading, but we did not get to the point of making any submissions on amendments because of the timetabling. As a consequence, there is a real sense of frustration among Members of Parliament from Wales about the matter.
The lesson that I learned is that the Conservative party has changed. My right hon. Friend the Member for Torfaen referred to the Kilbrandon review in the 1970s. There was a time when the Conservative party was the Conservative and Unionist party and did not simply represent the views of English MPs. Increasingly as I sit in the House of Commons now and listen to speeches from those on the Government Benches, I am learning—this has been evidenced again in today’s debate—that the Conservative party does not speak for the United Kingdom any more. It speaks for England. It is not driven by any wish to reach out to the peoples of Scotland and Wales.
For present purposes, I will resist that temptation because I am talking specifically about Scotland and Wales. We know that the Conservative party has done very badly in elections in Scotland since 1997 and still has only one Member of Parliament in Scotland, despite huge numbers of relaunches in that country. We know also that even last year, the share of the vote that the Conservative party secured in Wales when it ended up forming a Government with its friends the Liberal Democrats was less than it secured in 1992. It has not made the progress in Wales that it would have liked to make.
The lesson that I would have liked the Conservative party to learn from that is that it needs to reach out more to the peoples of Scotland and Wales than it has done. My view is that it has done exactly the opposite. It has withdrawn from the battlefield. We saw, for example, that the Secretary of State for Wales did not feel able to make her position clear on the recent referendum in Wales before it took place. The Prime Minister is in effect treating Scotland and Wales at the moment as a franchise—something that is given over to someone else and that does not really affect the person who gives it over. It is the political equivalent of SUBWAY.
The hon. Gentleman, in an otherwise thoughtful speech, is being a little unfair to the Conservatives in Wales. Clearly, since 1859 we have been a minority party in Wales. As the hon. Member for Newport West (Paul Flynn) pointed out, we got 20% of the vote even in 1997. However, it is fair to say that the Conservative group in the Welsh Assembly has worked very hard to make the Assembly work. Obviously, there has not always been agreement, because it has spent the past 12 years in one form of Opposition or another. None the less, it has made it work. The Welsh Conservative party is not only doing its best to make the Welsh Assembly work, but playing a very important part in the whole polity of Wales within the United Kingdom, so the hon. Gentleman’s criticism is rather unfair.
As always, the hon. Gentleman makes a very interesting point. The Welsh Conservative party may be seeking to take matters forward as far as devolution is concerned. For example, the Conservative group in the National Assembly for Wales felt able to support the recent referendum. However, the key point is that the Prime Minister of the United Kingdom did not feel able to support the Conservative group in the National Assembly for Wales. The Secretary of State for Wales did not feel able to support the Conservative group in the—
Give me a moment. The Secretary of State for Wales did not feel able to support the position of the members of the Conservative group in the National Assembly for Wales. That is why they are a franchise. They are out in the wilderness as far as the national Conservative party is concerned. They are of no concern to the Conservative party based at Westminster, because that party does not take heed of any of the MPs from Wales who represent it.
Although it slightly pains me to say this, will the hon. Gentleman not accept that if he applied the 2010 election result to a political map that took account of equalisation, he would not be able to make the comments that he is making about the irrelevance of the Welsh Conservatives? We would have had a far more realistic result as a consequence, which would have forbidden him from making those slightly inaccurate comments.
I do not think that my comments are inaccurate at all. My concern is that we now have one political party that is committed to the Union and to devolution within that Union—the Labour party. The Liberal Democrats are in effect—[Interruption.] They are an irrelevance, as has been indicated from across the Chamber.
Of course, we have nationalist parties, but the Conservative party no longer seeks to reach out to the people of Wales and Scotland. I never thought I would say this, but that pains me. The Conservative party should speak up for the United Kingdom, and it is a great shame that that no longer happens.
Does the hon. Gentleman agree that the United Kingdom’s cohesion and unity might be helped just a little if the Prime Minister made more visits to the countries of the UK—Scotland, Wales and Northern Ireland? He has not been to Northern Ireland since the general election.
I must confess that I am extremely surprised by that. I agree entirely.
Whatever constitutional arrangements these isles—Ireland and Great Britain—settle on, the lesson of the past hundreds of years is that we must have constitutional arrangements that work. We have an opportunity to have a measured, non-partisan debate about the UK’s constitutional arrangements. Bearing in mind the constitutional changes that have happened since 1997, there is a strong case for some kind of written settlement. There was a time when I would never have believed that I would say that, but the current flux in devolution settlements needs to be resolved so that the devolved institutions can focus on policy delivery, which is what our constituents are mainly interested in, rather than on constitutional settlements. I would therefore like to see non-partisan engagement by the Government—that has not happened to date, which I am very sorry about—on issues relating to the House of Commons and the House of Lords.
The answer to the West Lothian question, if there is one, lies in regional government in England, and I speak with some knowledge of the north-east. One major reason why the devolution proposals were passed in 1997—the hon. Member for Cities of London and Westminster was correct about this—was that there had been 18 years of Conservative Government. I am not sure that devolution would have happened if there had been a Labour Government in the period before 1997. One major reason why the north-east voted not to have an assembly was that people took the view that they had a Labour Government in London so they did not need an assembly in the north-east. If we asked people today whether they would like protection like that offered by the National Assembly for Wales extended to the north-east of England, we might get a very different answer.
The issue of regional government will come back. If we are to have a devolved settlement in the United Kingdom—we must not forget that there is a devolved institution in London—we will revisit the issue of regional government in England in due course. I know that that is unpopular among Conservative Members, but they should consider the point raised by my hon. Friend the Member for Vale of Clwyd (Chris Ruane), who noted that the Conservatives are still weak in areas in the north of the country, which is probably why they did not win the general election last year.
These are massive issues, and politicians have struggled with them not only in the past few years, but in the centuries before—as we all know, “one in, one out” defeated Gladstone. My right hon. Friend the Member for Torfaen is a wise man, and when he says that having two classes of MP will lead to the break-up of the UK, the Minister should listen. He should speak to the Secretary of State for Wales, who should start to listen to MPs from Wales; that might help her start doing a better job.
I shall make two brief points, which have crossed my mind recently, largely because of my experience as a Minister in the Wales Office for the best part of two years in the previous Government.
The first point is that the devolution settlement is far from straightforward. It is not neat; as we say in Wales, it is not tidy. Reference has been made to the block grant, which goes exclusively from Westminster to the Assembly. The assumption is that health and education are devolved matters and are nothing to do with England, but things are not quite that straightforward. For example, even after the referendum, which gave the Assembly legislative powers in clearly defined areas, we still have English and Welsh legislation on health and education, and it is still possible to put forward Welsh clauses with the support of the UK Government.
We in Wales are also mindful of the fact that we have a large border with England. One thing that continually struck me in the Wales Office was the time devoted, quite rightly, to cross-border issues. Offa’s Dyke is not that significant or that high, and our border is more apparent than real in many ways. Cross-border issues will therefore always be significant for the UK Government in Westminster and the Welsh Assembly.
It is also important to recognise that devolution is very asymmetrical in the UK as a whole and in Wales and England. Wales is relatively small compared with England, and what happens in England inevitably has a tremendous influence on Wales. We see that even on issues that are primarily devolved, such as health and education. The debate on higher education in Wales cannot be conducted in isolation from what is happening in England, as we have seen recently. That reality cannot be denied and it will not go away.
Much, but not all, of the responsibility for the environment is devolved to the Welsh Assembly; for example, the Environment Agency in Wales is still responsible to the UK Government. That complex interface is a reality, and parliamentary processes must take account of that. Another example is the economy. Certain aspects of micro-economic intervention are devolved, but macro policy is not devolved at all. Again, what happens at a UK level has a huge impact on the Welsh economy. My first point, therefore, relates to the sheer complexity of the devolution settlement, which has not been fundamentally altered by the recent referendum result.
My second point is that devolution has certain unintended consequences. One is the frequent assumption in Whitehall and Westminster that the devolution of powers to Wales goes much further than it actually does. For example, when I was in the Wales Office, I was continually struck in the discussions that were necessary with the Home Office by what people thought the devolution settlement meant for Wales. Despite the excellent efforts of my right hon. Friend the Member for Delyn (Mr Hanson), who was a Home Office Minister, the assumption—primarily among civil servants—was often that the Home Office did not need to bother with Wales any more, because Wales had an Assembly. The incorrect assumption was that Home Office responsibilities, including for policing, were devolved, but that is not the case. It is important to recognise that.
Following on from that, the Home Office had a tendency, which had to be corrected time and again—it is still there, but I fear that it is not being corrected—to make policy as though it applied only to England and not to Wales. Little consideration was given to how the relationship with the Welsh Assembly should develop over the foreseeable future, and there was little understanding of the particular needs of Wales. The assumption was that Wales had an Assembly so the Home Office did not have to concern itself with Wales. That is wrong, and something of which we must be mindful. That leads me to the conclusion that it is important for Welsh MPs not to be confined to certain areas, but to continue to have an influence on all legislation relating to England and Wales. Two categories of MPs would be intrinsically wrong. It would be bad for Wales and also for England.
Is it not also important, therefore, that MPs representing constituencies in England use the facilities of the Wales Office—where my hon. Friend once worked, as I did 10 years ago with my right hon. Friend the Member for Torfaen (Paul Murphy)—to raise Welsh issues through the Secretary of State for Wales’s office?
Yes, I think that is very important. It is necessary, in this complex mosaic of devolution in Britain, that we have a series of different relationships. Quite often the representation of English MPs to the Wales Office is indeed important. One concern I have is the lack of proactivity from the Wales Office. Increasingly people are asking—
Yes, where is she, and what is the point of the Wales Office? The Wales Office has a point; there is a need for a Secretary of State for Wales, but he or she has a job to do. That job needs to be promoted effectively, which is not being done at the moment.
I want to pick up something said by my hon. Friend the Member for Wrexham (Ian Lucas). As someone who passionately believes in devolution—as power should rest close to the people—and who believes in Wales and the United Kingdom, my concern is that there is almost an unholy alliance, an inadvertent alliance, between Welsh nationalism and the Conservative party. Although they might sometimes be pulling in different directions, the common ground is the break-up of the United Kingdom. The Conservative party is becoming an English party. That worries me intensely. It goes against the whole grain of history. Nevertheless, it is becoming an objective truth.
The fact is we have eight seats; the Conservative party is the second party in Wales. As the hon. Gentleman will know, only two years ago, we got more votes in the European election than the Labour party, for the first time in living memory. I do not think that there is any sense that the Welsh Conservative party wants to break away. In many ways we are very committed to the United Kingdom and to Wales.
Yes, but my hon. Friend the Member for Wrexham made the important point that it spoke volumes when the Secretary of State for Wales had no opinion in the recent referendum. That shows the attitude of the Conservative party towards Wales. At the very least, it is not interested. It does not want to know.
That brings me to the last point I wish to make. It is extremely important to have this England and Wales debate and to recognise that the United Kingdom has particularities, but there are also many things that unite us.
I cannot resist starting my contribution by responding to the extraordinary revelation by the hon. Member for East Londonderry (Mr Campbell) that the Prime Minister has not yet been to Northern Ireland. Perhaps that pays tribute and is testimony to the excellent work done by my former right hon. Friend Tony Blair in securing a lasting peace in Northern Ireland. Of course, many hon. Members worked over many years, if not generations, to secure that.
The debate on this question has run long in the House. I arrived only 10 months ago but, as a Welsh Member and historian, the debate was familiar and dear to my heart. However, I did not imagine that the debate would raise its head again so quickly, and would gather this degree of momentum, within a few short months of my arrival. The phrase “the West Lothian question”, coined by Tam Dalyell, has been around since the 1970s, but the question has been around a lot longer. It was inherent in Gladstone’s first Home Rule Bill in 1886. The lack of representation for Irish Members addressed by that Bill was effectively the first instance that the West Lothian question was raised in legislative terms. That prompts the question why it has not been satisfactorily addressed. We can all see that there are issues relating to representation across the nations and regions of the UK.
Why has it not been addressed? Why has it been placed so often in the “too difficult” box? Is it that those issues are so fiendishly difficult that we cannot possibly address them, or that they are insoluble? I think it is not a cop-out that it has not been addressed. In some respects it is a reflection of the intelligence of this legislature, this House, in realising that certain things—given our unwritten constitution and the historical evolution of our Parliament and representation—will be imperfect, asymmetrical and untidy. To interfere with those things and seek a perfect solution is, in my view, misguided, unrepresentative of the historical evolution of our country and fundamentally problematic. I believe many hon. Members would share the view that an undesirable consequence would be the break-up, the disaggregation of Britain.
As we have heard, asymmetry is a key feature of our settlement in the UK. That should not unduly concern us, as it has been a feature of our country and others for a long period. All of our nation states in pre-modern Europe were fundamentally asymmetrical, in the nature of the division of power between legislatures, Churches and other aspects of the state. Post-Union in 1707 there has always been asymmetry. The first representation from Scotland after the Act of Union was fundamentally asymmetrical and predicated not on populations but on the relative contribution to the Exchequer of the Scots versus the English. We have subsequently moved to a position based more on relativities in respect of population, and have now taken it to its conclusion in the partisan Parliamentary Voting System and Constituencies Bill. After the next election it will be based on relative population size, and that solves lots of the issues.
That is of course right. I was using shorthand and have fallen into the trap set by the Minister in so many of those debates, even when we did not get to the Welsh clauses.
Asymmetry also exists in other countries. Canada has an asymmetrical system of devolution, as has Spain. One could argue that de facto we have a federal system of sorts, a unique British federal system, but it is certainly asymmetrical. Why is the issue raising its head? Why are we so worried about it now? It has never been true that any individual Government have held a majority purely predicated on the basis of Scottish and Welsh votes. There can be no concern that political imbalances arrive by virtue of there being more Scottish Members, or having misrepresentation from Wales and Scotland. That issue has ostensibly been dealt with by the Government. I fear the headlong rush is due to opportunity, momentum and a partisan view from the Government. There is a sense that the iron is hot, the moment is right for the Tories to strike and secure electoral advantage. That underpins the decisions taken in respect of the constituencies Bill, and I fear it is driving the considerations we are looking at today.
It would be foolhardy to pursue that. History tells us that inevitably not just in this country but others, when constitutional reforms are pursued for electoral reasons and the partisan politics of one party, they fail.
That is an important point. My hon. Friend the Member for Wrexham (Ian Lucas) was extremely eloquent in making a persuasive case that we should be worried about pursuing constitutional changes of this magnitude—[Interruption.] On the back of an envelope, as we heard. These are deep-rooted issues, and they require deep consideration. They should not be treated in this fashion.
We have heard a lot today about resentment in the English shires, and that is a worrying position for the Tory party. It is a little Englander position. The party has spoken on a broader canvas for the whole of its history. It should reflect on that and offer leadership to the country. It should not be driven by English nationalism.
It is always a pleasure to speak under your chairmanship, Mr Caton. I congratulate my right hon. Friend the Member for Torfaen (Paul Murphy) on securing this debate.
It is particularly interesting that the West Lothian question is being debated without the benefit of advice from Scottish Members of Parliament. The Liberal Democrats were here briefly, and three Conservative Members joined the debate briefly and then left. The level of passion and excitement that some Conservative Members say that there is on the subject is not quite as evident as they suggest. It is interesting that it took a Welsh Member of Parliament to bring the matter before the House. I also congratulate my hon. Friends the Members for Wrexham (Ian Lucas), for Caerphilly (Mr David), and for Pontypridd (Owen Smith) on their important contributions to the debate.
Although many people think that Welsh MPs have been attending Parliament since 1542, it is worth bearing in mind that Wales had representation before then—but only in the shape of four bishops, who attended from the very first Parliament. In 1327, 24 Members of Parliament from north Wales were invited to attend, but only from the north. They were to attend the Parliament that was meant to depose Edward II, but because Isabella thought that they might vote the wrong way, half of them were arrested and kept in captivity. They were not allowed to attend Parliament, which seems to be rather the sort of attitude that the Government now hope to advance. As we have heard, Scottish MPs arrived in 1707 and Irish MPs in 1801, although with the creation of the Irish Free State the number changed.
Two contradictory political forces are at work, not only in British politics but elsewhere in the world. The first is globalisation, in that every street has the same sort of shops, we all see the same images on television and, broadly speaking, everyone has similar experiences. As a result, people regularly say that they do not want a postcode lottery. They resent the fact that one town may be able to get a drug on the NHS that is not available in other parts of the country. We were reminded earlier that tuition fees are not being imposed in Wales because of the decision by Welsh Assembly Government, but that they are being hiked up to £9,000 in England. The second is this: people resent the postcode lottery, but at the same time a passionate desire is pulling in the other direction; people want much more local decision making, and want to be able to decide what happens to the configuration of local services. In the end, one of the biggest problems is the pushmi-pullyu force that we are seeing in British politics.
I admit that there is concern in England about what seems to be the unfairness of Welsh, Scottish and Northern Irish Members being able to vote on matters that substantially affect England, but English Members not being able to vote on matters that affect only Wales, Scotland or Northern Ireland. I say to those who want to go down the route of change that that is a meretricious argument. In this context, all that glisters is not gold. For a start, it is difficult to decide precisely what is England-only legislation.
The Minister will know that I have used this example before, but it is an important one. The Health Act 2006 was going to introduce a ban on smoking in public places, among other things. When it was being debated, I remember saying to a Welsh group of Labour MPs and then in the Chamber that if we voted in a particular way it would mean that clubs and pubs in Wales would not have the opportunity to make special rooms available for smokers. Everybody disagreed with me; the Clerks disagreed, and the Speaker disagreed, but in the end I was proved right. That is a problem when trying to advance legislation; all too often, the complexity with which it is drafted means that it may seem to be an England-only matter when, in truth, there is a real debate to be had. As my right hon. Friend the Member for Torfaen said, if the Speaker decided what was England-only legislation, there would be a danger of bringing the Speaker into party political debate—into debating the substance of how to advance the legislation.
We could instead choose another route, and multiply the number of Bills. However, when drafting, we would have to be rigorous in ensuring that we never allowed a single clause that related to Wales or Scotland, or that had financial implications of any kind. To take up the point made by my right hon. Friend the Member for Torfaen, any financial implication is an implication for the whole of the UK, so any legislation with financial implications must by definition be UK legislation. If we wanted to draft legislation solely for England, we would have to have extra Bills that were Wales-only, Scotland-only and Northern Ireland-only. The multiplication in that process would be a real problem.
The core concern for many English voters is this: the hon. Gentleman referred to health, but he does not speak for any of his constituents in Rhondda on the subject because health is a devolved matter, yet he is able to influence decisions that are made throughout England. Health, of course, is a particularly incendiary problem because of the whole idea of a national health service. The concern of many English voters is not so much that people in Wales have the opportunity for a broader range of services and free prescriptions, but the perception that English taxpayers are footing the bill.
I know that the hon. Gentleman is a fair man, so I hope that he will explain to his constituents that it is not quite as simple as that. I know that the vast majority of our constituents could not describe the present constitutional settlement. As a result of devolution, they could not say who is in charge of policing, or who is in charge of this, that or the other element of environmental policy. A case in point is that the terms and conditions of GPs are not a devolved responsibility. When decisions are made about what GPs do in England, Welsh Members have to be able to vote because implications for Wales will follow from them. If the Speaker had to decide that Welsh Members could not speak in a debate, there would be a terrible row. That would be a problem.
If my hon. Friend will forgive me, I have a few more points to make. We could see a vast multiplication in the number of Bills, with many more Second Readings of minor Bills that affected only specific parts of the country. I suppose one could then say that if a piece of legislation was not on a devolved matter but affected only Wales, only Welsh MPs should be able to vote on it. That is the logic of the argument of those who say that English legislation should be voted on only by English MPs. The danger is the effect on Government; a complicated Venn diagram would be needed to show who are the Government on any particular subject. We would have England-only legislation; England and Wales-only legislation; England, Wales and Scotland legislation; and England, Wales, Scotland, and Northern Ireland legislation, and a different set of people would be voting on each sort. There would be at least five versions of the Government of the United Kingdom. That is potentially problematic and could be dangerous.
My right hon. Friend the Member for Torfaen wisely referred to Welsh peers. Would one suddenly decide that Welsh peers should not be able to vote? How does one decide what constitutes a Welsh peer? It is difficult enough deciding what nationality the Secretary of State for Wales is. At a recent reception held at the Foreign Office, I gather that the Secretary of State for Wales made a little speech. As the Bahraini ambassador was saying thank you, he said, “It’s great finally to discover, Cheryl, after all the years that I’ve known you, that you’re Welsh”—and he is a diplomat.
She was not clear about it until she became Secretary of State for Wales. The final point is the effect on Parliament. There have been times when there have been different categories of Members of Parliament. In particular, the burgesses and knights of the 13th century occasionally sat separately because they were able to secure different grants from the Crown. However, that has not happened since the 13th century. As my right hon. Friend the Member for Torfaen said—others have alluded to this—no other country in the world has different categories of Members of Parliament. The confusion and difficulty that such a system would lead to would be very dramatic.
The Government have said that they will set up a commission to consider the issue. I hope that that commission will be as interesting as the one that was set up in relation to the Human Rights Act 1998. Many of us would like to buy tickets to sit in and watch those meetings, as there are people on it with completely and utterly diametrically opposed views. When the Minister clarifies what he is doing about the commission, which the Secretary of State for Wales has said will be in place by the end of this year, I hope that he will assure us that people with diametrically opposed views will be on it, so that we see absolutely no progress on the matter.
As ever, it is a pleasure to serve under your chairmanship, Mr Caton. I congratulate the right hon. Member for Torfaen (Paul Murphy) on securing the debate, as it allows us to kick around some of the issues. However, the debate was, as I suspected it would be when I saw the cast of characters in front of me, a little repetitious of the debate that we had on the Parliamentary Voting System and Constituencies Act 2011. Perhaps that does not apply to the right hon. Gentleman, but it certainly does to one or two others.
The history of the issue goes back a long way. I will not repeat it, as the hon. Member for Pontypridd (Owen Smith) did at least mention Scotland; he referred to the origins of the West Lothian question, and the fact that the phrase was coined by the then Member of Parliament for that constituency. Given the cast of characters here today, and the fact that Wales is so well represented, I am tempted to use the description that my right hon. Friend, the very excellent Secretary of State for Wales, has sometimes used, and to call it the West Clwydian question.
I should just say to the hon. Member for Rhondda (Chris Bryant) that my hon. Friends the Members for Monmouth (David T. C. Davies), and for Totnes (Dr Wollaston), had said that they were not able to stay for the whole debate because they were serving on Select Committees. My hon. Friend the Member for Totnes is on the Health Committee, and my hon. Friend the Member for Monmouth does an excellent job chairing the Welsh Affairs Committee.
I hear reports of his excellent chairmanship. The right hon. Member for Torfaen talked about the commission, and I will come to that at the end of my remarks. A number of Members talked about the settlement that we reached in the Parliamentary Voting System and Constituencies Act 2011. As I have said many times, it was not partisan; it was about treating every single part of the United Kingdom in the same way to ensure that each had the exact number of seats for the number of electors they have. There were many who said that because of devolution, we should ensure that Scotland, Wales and Northern Ireland had fewer seats in this House per head of the electorate, but that was something that the Government did not want to do; we wanted to ensure that we treated each part of the United Kingdom—Wales, Scotland, Northern Ireland and England—in exactly the same way, and that is what we have done in legislation. We have been very fair and even-handed.
The right hon. Gentleman talked about the Welsh Grand Committee. He should be aware that the hon. Member for Rhondda thinks that the Welsh Grand Committee is a Welsh grandstanding Committee. When we were debating the Legislation (Territorial Extent) Bill in the House of Commons, the hon. Member for Rhondda said:
“The truth is that, all too often, the Welsh Grand Committee has been a pretty futile body.”—[Official Report, 11 February 2011; Vol. 523, c. 638.]
Given that that is the view of Labour’s official spokesman, I am amazed that hon. Members made so much fuss about whether the Welsh Grand Committee could discuss the Parliamentary Voting System and Constituencies Act 2011. I drew the remarks of the hon. Member for Rhondda to the attention of the Secretary of State, and very interesting she found them.
The point is simply that Welsh MPs did not have the opportunity to discuss the issues, or any of the amendments, in the main Chamber. It would not have been difficult for the Secretary of State for Wales to have allowed a Welsh Grand Committee to take place, so that we could discuss the issues.
I sat through all the debates on the 2011 Act, and of the 40 MPs who spoke on Second Reading, a large number were Welsh Members of Parliament. Although we did not have as long to spend on the groups of amendments as we would have liked, we spent a long time talking about the Bill and its effects on Wales. Welsh MPs spoke for a great deal of time, and I had tremendous pleasure in listening to the arguments that they put forward.
My hon. Friend the Member for Cities of London and Westminster (Mr Field) drew our attention to the over-representation of Wales. That is something that many people in England—not Conservative Members of Parliament but members of the public in England—resented, and we sorted that out in the 2011 Act. We have dealt with every member of the United Kingdom in exactly the same way and treated every part fairly.
I will not give way, because I have only five minutes to deal with all the issues that have been raised. The right hon. Member for Delyn (Mr Hanson), who is no longer in his place, referred to the fact that a number of his constituents living in Wales use English public services. He said that he should have a say in those services. The point that I made in my intervention was that many of my constituents have to use public services, such as the health service, in Wales. They have no say over how those are set up, because those policy decisions are made by the Welsh Assembly Government.
In my experience as a constituency MP, the protocol does not work well. The cross-border issues, which, as the right hon. Member for Torfaen said, are much more important between England and Wales than they are between England and Scotland because of the way in which the population is distributed, were not very well thought through when the devolution settlement was arrived at. Many things do not work very well across borders. The experience of my constituents is that the English-Welsh border has become more of a real barrier since devolution than it was before. The hon. Member for Brecon and Radnorshire (Roger Williams) referred to that issue when he asked whether English MPs knew what they were voting for. I am not sure that they did, because the cross-border issues were not very well thought through.
The right hon. Member for Torfaen asked—at least he was fair enough to ask the question; one or two other Members put it as a statement—whether the Conservative party was still a Unionist party. It absolutely is; it is the Conservative and Unionist party. We were the only party that contested seats in all four parts of the United Kingdom. It is fair to say that our experience of contesting seats in Northern Ireland did not go as well as we had hoped, but we did contest seats in all four parts. We are a Unionist party, and we want to keep the Union together. Indeed, that is why we want to tackle the West Lothian question. Some commentators believe that any threat or damage to the United Kingdom would stem from the resentment of English voters—not MPs—so it is important to deal with the issues to keep the United Kingdom together.
My hon. Friend the Member for Cities of London and Westminster pointed out what would happen if we had a United Kingdom Government who did not have a majority in England but insisted on governing as if they did. Given that we have a devolution settlement in Wales and Scotland, the resentment that would ensue could have the effect that the right hon. Member for Torfaen fears.
This debate shows the complexity of the issue. A number of Members leapt into potential solutions, mainly focusing on what the Conservative party had set out before the election. Of course, the two coalition parties come at the issue from different angles. Unusually, my hon. Friend the Member for Cities of London and Westminster may find the Liberal Democrat federal solution more to his liking. The Conservative party had a different approach. Our agreed solution is to get the commission to examine the issue so that we can try to reach a thoughtful and sensible conclusion. We are thinking about the composition, scope and remit of that commission. Once we have finished setting that out, we will announce it to the House.
Yes, this year. I have experience of setting up such a commission; in a written statement, I announced the very excellent commission on a Bill of Rights, which has a very well-qualified team of people. It will make considerable progress on that issue and on reform of the European Court.
We will announce the composition of the commission. The right hon. Member for Torfaen referred to the importance of the House of Lords; we will shortly publish our proposals and a draft Bill on House of Lords reform. Once they are published, we will set out our plans for the commission on the West Lothian question. This was an important debate that highlighted the complexities and challenges of the problem, and for that the right hon. Gentleman should be thanked.
Financial Services (Rural Communities)
I am very pleased to have the opportunity to bring this matter to Westminster Hall today. I can understand why the Minister might be a little reluctant to interfere in it, because presumably he would not want to micro-manage the affairs of many of our financial institutions. However, I may be able to suggest one or two ways in which the Government could have influence in the matter and ensure, by working with communities, that financial services and advice on financial matters are available to our communities.
Looking around Westminster Hall at the Members present, I wonder if the fact that my name is associated with this debate means that people think that it is a Welsh issue, but of course it is not. It is very much a reserved matter and one for the Westminster Parliament and the UK Government.
I was very lucky to secure this debate almost immediately after applying for it. Sometimes hon. Members apply for debates over a long period without securing them, but as soon as I applied for this debate I was very fortunate to receive the opportunity to have it.
The reason that I put in for the debate is the worrying trend of high street bank branch closures in rural areas. According to the Campaign for Community Banking Services, in the past 20 years 7,388 bank branches have closed and most of those closures have been in rural or suburban areas. The CCBS estimates that, in Wales alone, 56 communities are left with just one bank each.
I will use an example from my own constituency—hon. Members will understand that often these debates are initiated or spurred on by Members’ experience in their own constituencies. For the past six months in my constituency, the local Welsh Assembly Member, Kirsty Williams, and I have been trying to save a branch of Barclays bank in the small market town of Rhayader. Rhayader has a population of approximately 2,000 people, with many more people living in its rural hinterland and catchment area. Members present will understand that Rhayader is a marvellous market town in the Cambrian mountains, very close to the Elan valley. More than 100 years ago, the Birmingham Corporation built dams in that valley to provide water for the wonderful city of Birmingham. The Elan valley has now become a tourist area, along with other attractions in the Cambrian mountains.
Unfortunately, Barclays refused to keep its branch in Rhayader open and the people of the town are now served by a solitary HSBC branch, which is open for a total of 18 hours each week, between 9.30 am and 3.30 pm on Mondays, Wednesdays and Fridays. The Barclays branch in Rhayader closed last Friday and already the building is being gutted, the “For Sale” sign is up and the cash point, which was a very valued facility for the town, has a sheet of plyboard across it. There is no more money to be had from the ATM in Barclays in Rhayader.
There is some strength in Barclays’ argument and I understand its argument. Barclays argues that the people who used the branch in Rhayader were not buying enough of its financial services and financial products to make the operation of the branch profitable. However, there is another argument that many of those people who used the branch actually bought services from Barclays in the past. They had their mortgages, pensions, saving products and general insurance from the bank and the fact that many of them have paid off their mortgage or are now receiving their pension means that there was not a good enough case for Barclays to say, “I’m afraid that from now on you won’t be able to have that face-to-face service that you have enjoyed in the past.” I believe that banks have a duty of care to the people for whom they provide products.
Another argument used for the closure of the Rhayader branch is that local people can use other branches nearby. However, let me give an example of the geography of this area. The nearest Barclays bank branch to Rhayader is in Llandrindod Wells, which is a 24-mile round trip from Rhayader. In mid-Wales, there is very little public transport, so that journey is very difficult for some people.
I want to give a few local examples to provide a little local colour. Daisy Powell runs the local newsagent in Rhayader, in the shop right next door to the branch of Barclays. She has banked at Barclays for a modest 52 years, during the time that she has run her business. She used to bank cash three times a week, but now she either has to drive for miles to bank cash or faces the anxiety of keeping cash on her premises. Another example is that of Jo and Chris Walton, who run a very good electrical appliance shop that was set up by their father. They have also had a business account with Barclays for more than 50 years and they too now face having to make long journeys to do their banking.
Now there are no banking facilities in Rhayader on a Tuesday, which is the livestock market day. Rob Lewis farms 150 beef cattle and 2,500 sheep at Pistyll farm, which is just outside Rhayader at Cwmdauddwr. As many local farmers did, he used to pick up his cheque from the auctioneers and bank his money at Barclays on the Tuesday after the livestock market.
There are also disabled and infirm residents, for whom the type of journey that I have mentioned would cause major problems. Ed Narborough is almost totally blind and uses a wheelchair. He has had to choose between changing banks to HSBC, which would mean not having a five-day banking service, or trying to make the journey to Llandrindod Wells.
One effect of the closure of the Barclays branch in Rhayader is that the town is now left with only one cash point. We all know how temperamental cash points can be. Just when someone wants that £10 to buy the last round of drinks that will bring an evening to a wonderful conclusion, they find that the cash point has run out of money or is failing to pay out for some technical reason. Rhayader relies on tourism for much of its income, but it is faced with having only one cash point machine and if that machine goes out of action at the beginning of a weekend or, even more worryingly, at the beginning of a bank holiday weekend, people will be unable to get cash within the town and are likely to move on to another town where there are better cash point facilities.
Barclays has argued that many of its customers are moving to online banking as an alternative to using a branch.
I congratulate the hon. Gentleman on securing this debate. Lest we concentrate too much on Barclays, I am sure that it is right to say that other banks have taken similar steps to those that Barclays has taken. Does he share my concern about the potential closures arising from the announcement by Lloyds TSB bank that it will be divesting itself of perhaps 600 branches in the very near future and does he believe that such closures might have as bad an effect on local services in rural Wales and elsewhere as the closures of Barclays branches?
I thank my hon. Friend for that point. When a company such as Lloyds TSB indicates that it will make branch closures, we can readily anticipate where those closures will be made. Indeed, I have some statistics about other companies and I do not wish to concentrate on Barclays. It is just that Barclays is in the forefront of my mind at the moment. It is not only Barclays that has been closing branches. In 2010, HSBC closed 52, Barclays 40, NatWest 18 and Lloyds TSB 11. As my hon. Friend pointed out, more closures are in the pipeline.
Online banking is, to an extent, a generational problem. To draw a parallel, in a debate on fuel poverty in this Chamber, it was pointed out that many people now have the opportunity to take advantage of competition in the fuel sector. A number of hon. Members were in the debate, but only two of us had never switched suppliers—me and my right hon. Friend the Member for Twickenham (Vince Cable). We were, I think, of a different generation. Many people who bank at small rural branches are not willing or readily able to switch to online banking. I know that my hon. Friend the Member for Ceredigion (Mr Williams) will be making a point about access to broadband and the internet, and such points were made very well in the rural broadband debate that the hon. Member for Penrith and The Border (Rory Stewart) secured in Westminster Hall last week. Many of these people do not have access to fast, safe internet, so even if the will is there it might not be possible for them to bank online. I commend the Government for the excellent steps that they have already taken on rural broadband, but more must be done so that rural businesses, people and communities are not left behind.
I shall finish, as far as Barclays is concerned, by saying that during the process I have been speaking about it was announced that Barclays had made a profit of £6.1 billion, and that its chief executive, Bob Diamond, was receiving a £6.5 million bonus. Bob Diamond’s fan club in Rhayader is not full, and if anyone wants to make an application to join I am sure that there is plenty of capacity. Having said that, Barclays did not take any public money during the banking crisis, for which it should be applauded. It certainly benefited, however, from the liquidity measures and the quantitative easing that the Government implemented to help the banks through the credit crunch, so it should show more thought for its customers, whose taxes assisted in keeping it afloat during that difficult time. I should, of course, point out that it is not only Barclays that has been making closures, as my hon. Friend the Member for Arfon (Hywel Williams) has pointed out.
I understand the commercial pressures that the banks are under, but they must understand the effects that closures have on tourism, economic development and customers in rural areas. What is the solution? The Campaign for Community Banking Services suggests that we set up a community bank—one centrally run facility in the community with face-to-face services operating on behalf of all banks and building societies. There would be only one set of overheads, and the massively reduced costs would be covered by all the participating banks. I understand that it would use the same technology as that which links ATMs, so the set-up costs would be not too large. A similar system in the United States has proved very successful. It seems an ideal solution, with our constituents continuing to receive the service that they so desperately need. Will the Minister outline any discussions that he has had on a similar community banking facility for the UK?
I want to say a few words about mutuals and credit unions. I am a member of the Brecon credit union, am well aware of the part that such organisations can play, and have recently met with representatives of the building societies that have remained in the mutual sector. They do a very good job of providing services in local areas, and are able to lend not just on an arithmetic income multiple but on their better understanding of the local economy and of the quality of employment in which many people who wish to get a mortgage are involved. The smaller mutual building societies complain that the reporting and regulatory requirements are more fitted to larger financial organisations. They would like the Government’s approach to be more risk related, and some of the very onerous regulations to be moderated in some way.
It is not just the closure of bank branches that is of concern. I am very pleased that the Government have announced that they intend to maintain, as far as possible, the post offices, which are the financial and social hub of rural areas but which have too frequently been closed. The Communication Workers Union says that 1,000 post offices—one in 10—closed in 2010, and about 2,500, many in rural areas, have been closed in recent years.
Although I am aware that mail volumes are falling, and that other services that branches offer, such as benefit payments, are moving online, I ask that the Minister, in conjunction with his colleagues in the Department for Business, Innovation and Skills, seriously take on board the value and worth of rural post offices. According to Age Concern, 44% of pensioners use post offices to collect their pensions, 43% use them for access to cash and 56% use them to pay their bills. At both a local level and a Government level, we must do what we can to prevent widespread closures and long-term temporary closures. There has been an announcement that the long hoped for post bank will not be proceeded with, but does the Minister have any thoughts on whether a similar facility could be set up to address many of the issues that we are debating today?
The next issue that I want to talk about could be a huge problem for all our constituents. The cheque has been an integral part of our lives for more than 350 years, but there are plans to phase it out by November 2018. We currently write more than 4 million cheques per day, and despite the decline in usage we will still be writing 650 million a year in 2018. Cheques are essential and irreplaceable in many situations, and they are particularly important in rural areas. There is currently no easier, safer or more efficient way to pass money from one person or organisation to another.
Cheques are easy to use, virtually fraud proof, can be posted or handed over anywhere, and are cheap, safe, popular and understood by all. The use of credit and payment cards has, of course, hugely altered payment methods by virtually replacing cash in most everyday transactions, but only larger businesses can afford the technology to install card machines and we are light years away from the day when every individual will be able to receive payments by card.
There is only one reason to get rid of cheque books— profit. Cheque books are more expensive for banks than credit or debit cards. Handling paper is not efficient according to the bean counters, and as all British taxpayers know to their cost, banks are driven by many things other than providing a convenient service for their customers. The abolition of the cheque will lead to an increase in the black economy, as people will start paying cash when a cheque would have previously been used. It could also lead to an increase in crime, as older and more vulnerable people who are unable or unwilling to use other methods start storing significant amounts of cash at home. We do not currently have a viable alternative to the cheque, and until we find one not even the thought of it being abolished should be entertained. Will the Minister ensure that no decisions are made on the abolition of cheques before a viable alternative is found?
In conclusion, these are difficult times for rural constituents, with rising oil prices and the necessary cuts to public services. People need good and proper access to financial services so that they can grow their small business, obtain a mortgage for their first home, or cash and pay in their cheques so the local economy can grow and flourish. Thank you, Mr Caton. I open the floor to my colleagues.
I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on securing this important debate. I am sad that so few of us are in the Chamber, as the issue is vital to communities in general, and specifically to rural communities such as those in my constituency and, even more so, in my previous constituency of Caernarfon, which has a large rural hinterland, now part of Dwyfor Meirionnydd. I also congratulate him on his early-day motions, which I have signed. I checked; I have signed at least one of them. He has a track record on the issue.
A great deal of attention has been given recently to the bonus culture and high salaries in banks, but the changes in banking that have the most intimate and direct impact on our constituents happen on the high street: particularly, for the purposes of this debate, in the towns and rural villages of Wales. That impact has had less attention, as has the effect on jobs in the banking sector. A job in the banking sector is always seen as a safe and effective career. Several of my contemporaries at school went into banking. I come across them occasionally, and they are now on extended gardening or golfing leave. That is the effect when banks close, as many have done in the past few years.
We have been given briefing material for this debate. I will refer particularly to the Countryside Alliance’s briefing, which I found useful. According to my briefings, 7,000 branches have closed in the past 20 years, leaving about 10,000. That is a 40% change—ish; my arithmetic is not very good this morning—in provision, which is substantial. Rural banks face a threat. It is not only Barclays, which the hon. Member for Brecon and Radnorshire mentioned, but HSBC and the other members of the big four. In my constituency, the Campaign for Community Banking Services has identified Llanberis as an area of potential difficulty, with only one remaining bank serving a large tourist area visited by many thousands of people during the summer. A couple of other communities in my constituency are in the same situation. Elsewhere, in Bangor, Betws-y-Coed, Wrexham and throughout rural north Wales, the provision of banking services is fragile and under threat.
Unfortunately, the banks have been less than candid over the years about what they are doing. The Select Committee on Welsh Affairs, of which I used to be a member, took evidence from banks some years ago about closures in rural communities. Interestingly, one bank provided us with a map showing that there was a bank within five miles of a community where another bank was closing. Unfortunately, a large mountain was in the way. One would have had to travel all the way down the valley and back up it to get to the bank that was allegedly five miles away, and the return journey would have taken most of the day on public transport. Banks have been less than candid.
I referred in an intervention to the potential danger that some Lloyds branches might close. I understand that Lloyds is in a difficult position—it must divest itself of parts of its operation due to European Community state aid rules—but about 600 branches are threatened, and I fear that they might be sold off. I understand from the press that the new chief officer of Lloyds, Mr Antonio Horta-Osorio, has announced that the plans to sell off the banks are to be accelerated, so the change will happen quickly. That is not only a threat to the Lloyds network; Lloyds also controls Cheltenham and Gloucester and TSB. People do not realise that it has several brand names. I am not sure whether the Government can do anything about that, but I will be interested to hear whatever the Minister has to say.
Local bank branches are vital to commercial activity. The hon. Gentleman mentioned shops in his constituency; the same is true in rural parts of my constituency. Equally importantly, local banks are also a good way to address financial exclusion, which I know concerns this Government greatly, as it did the previous Government. A bank in a community allows for a measure of inclusion; the converse is also true.
Assisting older people, people with a disability and vulnerable people with their banking needs is also an issue. Not everybody can do their banking over the phone or broadband. The Government have at last announced an initiative to bring superfast broadband to parts of Wales, including my hometown of Pwllheli, but that will not extend to all communities. I must mention Rhiwlas, as I always do when I refer to this issue. It is within sight of the university city of Bangor but has appalling broadband service, and there seems little prospect of its being improved. That is not a way out for many people and, as the hon. Gentleman mentioned, we might see the end of cheques, which would also be a tragedy.
On the current trend towards automated banking, my branch, HSBC in Caernarfon, is an excellent branch in the middle of town, but it has recently been largely automated. There are banks of machines for printing statements, depositing money and withdrawing money and a telephone that one can use to talk to somebody far away. The counter space has been reduced to two positions. I was there the other day. A member of staff was hovering around the machines to seduce customers into using them, but there was an enormous queue for the two positions, one of which was closed. People are voting with their feet. They would rather queue for 10 or 15 minutes than use the machines. That says that people appreciate the face-to-face nature of banking transactions. Banks divest themselves of that way of promoting their business at their cost.
HSBC has also introduced its own radio station. I do not know whether hon. Members have heard it. When one queues for a position, one must listen to pop music, news and advertisements for the bank’s own products. I almost think that HSBC is doing it deliberately to drive customers away; it certainly drove me to use the automated facilities. As I said, banks will have to learn—as have Departments, such as Her Majesty’s Revenue and Customs and the Department for Work and Pensions—that people like to discuss their business face to face. I would also say that face-to-face business is of itself good business.
My party’s policy for many years has been to set up local community-based banks. In fact, it was one of the central planks of our 2007 manifesto. If local community-based banks cannot be set up wholesale, we would like pilot schemes. I know that this Government and the previous Government thought carefully about setting up post banks, but if a scheme cannot be introduced wholesale, can pilot schemes be tried, just to see what would happen? Post offices offer themselves as ideal locations for providing access to personal and small business banking. I will not pursue the question of post office closures, Mr Caton—I am sure that you would stop me in my tracks if I did—but I note that there were 200 closures in Wales during the last wave of closures, 11 in my constituency. However much local people complained—I organised a series of public meetings in my constituency that were very well attended—the net effect was that 11 closures were proposed, and 11 closures went ahead. I was not sure from the hon. Gentleman’s remarks whether it is still Liberal Democrat policy to have post banks or community banks. It would be sad if that has changed.
Finally, in Cardiff we have a One Wales Government made up of Plaid Cymru and the Labour party, and we have invested recently in credit unions, which are an excellent way of providing small amounts of money—small loans—for people, and of saving small sums of money. The One Wales Government have invested a further £3.4 million in credit unions.
One of the points on which I could have expanded is that there does not seem to be a root from which a credit union can progress to become a larger, more responsive financial service, such as the mutual building societies, which, of course, originated in small communities such as ours.
Indeed. There is a gap in the market. Credit unions are very good for people who need small amounts of money and need to save, but it is not so easy for businesses to access small amounts of investment. There have been huge complaints about the way in which the large banks have been acting in that regard recently. I am loth to mention cases, but a holiday business in my constituency closed down because trade was terrible and the bank withdrew its banking facilities. Without going into details, all I need to say is that it was winter—trade is always terrible in winter—and the bank would not wait until summer. I would say, therefore, that there certainly is a gap in the market. Our proposal as a party is for a postal bank—a people’s bank, as it were.
I will end by saying that I would like the Welsh Assembly Government to have the legal power to intervene in the market in that way if this place does not do so itself. I think that everybody understands that there has to be change. Banks are commercial organisations, but there has to be much greater social responsibility in their business.
It is a pleasure to serve under your chairmanship once again, Mr Caton. I pay tribute to my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) on securing this important debate. He may not be rewarded by a mass turnout this morning, but he knows that this is an important issue for those of us who serve rural communities, not least in north and mid-Wales.
Much concern has rightly been expressed today about the total number of rural bank branch closures. There has been a 43% net reduction in branches since 1990 and an 18% net reduction since 2000. Figures from the Campaign for Community Banking Services show that the UK has significantly fewer branches than other comparable European states. There are 170 branches per million inhabitants in the UK, compared with 440 in France, 570 in Italy, 480 in Germany and 1,010 in Spain. I do not know what the trend is in those countries, but I suspect that some of their communities have been better served by the banks than ours.
There are obvious reasons why banks choose to close less-well-used branches. They operate in a very competitive environment, but, none the less, access to banking services is essential in any community, and we have to find ways to ensure that that presence remains throughout the country. The CCBS has talked of the need for flexible format-shared branching, whereby third party providers provide services through a variety of channels, such as post offices, village shops or even community shops. I emphasise that the services provided are essential. The anecdotal evidence that we have heard from Arfon and from Brecon and Radnorshire makes that point strongly. I concur with what has been said about duty of care. Anger is felt in communities such as Rhayader over the billions of pounds that the banks currently earn.
In 2009, a report by the Commission for Rural Communities, “Rural Money Matters”, considered the difficulties associated with rural financial inclusion in England, but much of what it says also resonates throughout the rest of the UK, including rural Wales. The report points out the consequences of the lack of access to financial services. For example, the fact that most employers require wages to be paid into a bank—many do not—limits the employment opportunities for those without a bank account. Many will miss out on the discounts available for direct debit and online payment, and even the ability to shop around for credit could force those in rural areas to pay more.
Another impressive organisation, Consumer Focus Wales, published a report, “The Cost of Cash”, in November 2009. It recommended several steps, including face-to-face support for those opening a bank account for the first time; explaining how direct debit works; and exploring alternative arrangements for electronic payments, such as setting up sub-accounts solely for bill payments, to alleviate some of the fears associated with direct debit payments. The infrastructure needs to be in place, however, if many of those suggestions are to become a reality.
The number of free ATMs has increased, but, in smaller communities and the more rural areas, many of our villages are five miles or more from a cash point, which is a concern, particularly when we also see deficiencies in public transport. My bank for the past 27 years has been Lloyds in Aberystwyth, and I live six miles away from that town. My community is still served by some modest public transport and I own a car, but many people in my constituency do not have that luxury and live considerably more than six miles away from their nearest bank.
We also need to look at the impact—this is a fundamental point—on the local economy. It is very difficult for small businesses to operate in rural areas without immediate access. My hon. Friend mentioned the proprietor of the newsagent in Rhayader taking her cash in. I can guarantee that, at 4.30 pm on any day of the week, local businesses are queuing at Lloyds bank in Aberystwyth to pay cash over the counter. In Ceredigion, we have the largest proportion of people employed by small businesses anywhere in the UK, and those businesses are vital to our community. I think we could multiply a thousand times the anecdotal evidence that my hon. Friend has given from Rhayader. It is a big issue for our small businesses.
One of the additional barriers that we face to accessible financial services is the lack of digital inclusion. Those of us with rural constituencies will be familiar with the figure that is bandied around of 99% of exchanges being broadband enabled, but the picture is very different on the ground. Even those who are able nominally to receive broadband often find that their service is slower and less reliable. The Government have indicated welcome investment in superfast broadband, but it is also key that they tackle existing not-spots as a priority, so that those who currently do not have access to broadband, who are often also likely to be those without access to physical services, are able to access things such as online banking. I pay tribute, in a cross-party way, to some of the initiatives undertaken by the National Assembly. Certain communities in Ceredigion have certainly benefited from remedial action by the Assembly Government.
Another broadband-related issue that we face in rural areas is that, as well as generally receiving a slower line speed and a more patchy service, people have had to pay rather more for it. In areas where BT is the sole wholesale provider, internet service providers have been charged line rental, which has then been passed on to the customer, meaning that many of the cheap deals advertised by ISPs are out of reach for many living in rural areas. In January, Ofcom proposed that BT reduce those charges, and it would be helpful if the Minister or one of his colleagues could update us on that.
The lack of bank branches and, indeed, other financial services means that there is a need to use the facilities that we have, most obviously post offices. The Government have announced plans to make post offices what they call a front office for Government. Those of us who have been arguing against the retreat of Government from our post offices would certainly welcome that in order to make services accessible and to safeguard the remaining post office network. There was disappointment that the Government did not advance the suggestion of a post office bank, but they have reached an agreement with banks, whereby 80% of current accounts will be accessible at post offices. I think that that will have a significant impact where those post offices exist for those communities. It would be helpful if the Minister could outline what steps have been taken to ensure that the aspiration to provide Government services through the Post Office is realised, and that the network can benefit from additional revenue streams.
Another crucial issue—I shall broaden the definition of financial services slightly—is the availability of financial advice and help for people with debt problems. I very much support the efforts of hon. Members, such as the hon. Member for North Swindon (Justin Tomlinson) in talking about compulsory financial education in schools. That would be of great benefit in establishing financial literacy from a young age. It remains the case that when people have debt problems, financial advice is harder to access. In some rural communities, it is physically harder to access that advice. In Ceredigion, we have two excellent citizens advice bureaux—one in Cardigan and one in Aberystwyth. My wife is the trustee of one. We are lucky because, this Thursday, they will merge to make a county-wide CAB service. However, that still presents a difficult journey for people who live outside towns—although the CAB has undertaken good outreach work in some scattered communities. I welcome the Government’s extension of the financial inclusion fund but, particularly in these difficult economic times, there is still an issue with people accessing such financial advice.
Both my colleagues have expressed concern about the demise of the cheque. I echo the difficulties that that presents for many, especially the elderly. I appreciate that that matter is the responsibility of the Payments Council and not the Government, but it would be helpful if the Minister could assure us that the Government are committed to ensuring that any decision on cheques will not be taken without considering the impact on those who still use them, particularly the elderly. I include myself in that.
In rural areas, we often have debates—both my colleagues have participated in debates for many more years than me—about the importance of retaining services in our communities and the principles of rural entitlement. We have heard both the current and previous Governments talk about how difficult it is to justify the costs of retaining services because of the increased reliance on online methods. However, it is often more difficult to access services online in rural communities. Hon. Members should be in no doubt that rural communities will disappear unless we protect those services. I congratulate the Government on their early pronouncements on the Post Office and the investment—necessarily limited as it is—in superfast broadband. However, much more can and needs to be done.
When we consider community and services, I take a slightly holistic view. Let us reflect on why young families might want to move into the kind of community that I represent. When we consider the specifics of why young families move into a community, there are certain essential ingredients. First, there is an implicit need for a job. Secondly, people might consider the presence of a village school, certain retail outlets, a public transport system, a post office and access to financial services. Those factors are all part of the mix that means we can still have vibrant communities in rural areas. That is why this debate is so important and why we look forward to hearing what the Minister and his shadow, the hon. Member for Nottingham East (Chris Leslie), have to say on the matter.
I congratulate the hon. Member for Brecon and Radnorshire (Roger Williams) on succeeding in securing the debate. This is an incredibly important topic for a number of hon. Members. As he has said, I am surprised that more hon. Members were not aware that the debate was being held this morning. The issue that we are discussing comes up in rural communities particularly, precisely for the reasons the hon. Member for Ceredigion (Mr Williams) gave when talking about the crucial ingredients that help to create a vibrant town, village or community. A critical, tipping-point questions is: how many of those vital services can be removed before a village or town becomes less attractive, viable and functional?
I shall start by stepping back and looking at the current range of financial service providers in the UK. What should banks—financial service institutions—have as their core purpose? Ultimately, banks are utilities; they are a necessity in modern life. We are not talking about a discretionary activity; people do not choose to have a bank account, or, necessarily, to borrow or save. Credit and its availability is part of the warp and weft of modern live, so we need to treat banking and financial services in a similar way to water, electricity, gas and so on.
I sincerely hope that the Independent Commission on Banking, chaired by John Vickers, which is due to report in the summer, will take as its starting point the social purpose of financial services, and the issue of what banks are for. I hope that it will move from that basic philosophical concept to the question of what consumers need as a basic level of service across the country. Ideally, consumers should have choice and diversity in the services that they consume. We need to look at the current provision of financial services, particularly in rural communities, and ask whether we are really providing that choice and diversity to local people. I am not convinced that the current arrangements are ideal. The credit crunch and the banking crisis have hindered rather than helped a move in that direction. As hon. Members have said, we need new entrants in the financial services market.
There is a specific issue surrounding the rural poor. The hon. Member for Brecon and Radnorshire (Roger Williams), who secured the debate, represents Powys. That is one of the most rural counties and it has, I think, nearly the lowest wages in Wales. Incidentally, it also has the highest level of car ownership, which is a further burden on people. The rural poor are particularly excluded in the situation that we are talking about—I am sorry that my intervention is so long, Mr Caton—and last night I saw an advertisement on television for a company that provides loans based on a week’s wages. The interest rate is around 2,000% per annum. People are going to fall prey to those sorts of temptations.
Absolutely; the hon. Gentleman makes an incredibly important point. The pay-day lending industry has tried to fill the gap where the mainstream financial services sector has pulled back. In rural communities—this certainly happens in urban communities, such as my constituency of Nottingham East—people have had difficulty accessing mainstream financial services, so those less desirable players have moved in to fill the void. The gap available is being filled not only by high-interest legal players, but the illegal loan-sharking sector. That is a real and growing problem. In recent years, surveys have demonstrated that financial service deserts have grown up across different parts of the country. It is therefore incredibly important that when the Independent Commission on Banking reports this summer, we take the opportunity to step back, take stock and say, “What should good, responsible, social banking involve?” That is not a party political point; we are talking about something that communities need and deserve.
I am concerned about the points made about branch closures in some of the mainstream banks, as they start to retreat from rural communities. Hon. Members have already referred to the Campaign for Community Banking Services and its survey about the number of bank branches that are closing, particularly where a bank is the last one in a town. That leaves those towns or villages without any banking cover at all. I shall mention briefly some of the places affected. Barclays is closing the last bank in town in Kelvedon and Southminster in Essex, and Bedfont in Middlesex. Lloyds is closing the last bank in town in Potton in Bedfordshire, Wainfleet in Lincolnshire, Bilton in Rugby, Barton-under-Needwood in Staffordshire, Netley Abbey and Stockbridge in Hampshire, and Yarmouth. HSBC is closing the last bank in town in Whitburn in Tyne and Wear, Stamford Bridge in Yorkshire and Hoylake in Cheshire.
In addition, although it is not exactly a rural area, we had a debate the other night about the Nationwide closing a number of branches in south-east London. A number of big financial players could be criticised for diminishing the services to long-standing and loyal customers who really appreciate access to a branch.
The hon. Member for Brecon and Radnorshire made a point about access to online banking and the requirement for broadband. High-speed internet is very important, particularly in rural areas, but it is not always available. The hon. Member for Ceredigion talked about the broader concept of financial services, and financial advice. I would add to that the controversy about access to independent financial advice and independent financial advisers, or IFAs. Sometimes, IFAs are one of the only providers of independent financial advice in small communities. Hon. Members may be familiar with the retail distribution review being conducted by the Financial Services Authority, and the impact that that might have on the ability of communities in rural areas to access independent financial advice.
The IFAs are under pressure, not only as a result of the FSA review, in terms of the extra qualifications that they need to gain, but as a result of changes to commission structures, which need to be handled far more carefully. There are also increasing pressures as a result of the levy placed on them by the Financial Services Compensation Scheme. There a number of factors, some of which have reasonable arguments behind them, that together could place in jeopardy the ability of individuals to get free or low-cost financial advice. Will the Minister confirm that he is conscious of that strategic risk to the IFA community? What steps will be taken to ensure that that advice will still be available, despite so many proposed changes?
The hon. Member for Ceredigion congratulated the Government on maintaining the financial inclusion fund for another year. That is one of those strange things that happens in politics when something that is valued is initially scrapped. There were howls of protest in the previous Budget when the Conservative-led Administration decided to scrap the £27-million financial inclusion fund. The fund pays for at least 500 debt advisers—largely face-to-face citizens advice bureaux advisers and so on—and I think it helps to support approximately 100,000 appointments each year. Those howls of protest helped to bring about a partial U-turn from the Government, and a few weeks ago they announced that they will keep the fund going for another financial year. Are we supposed to show gratitude for that? Well, perhaps, but it is not enough to say “Thank you for continuing the fund for another year.”
I want to know what the Government’s plans are for the end of the 2011-12 financial year. What will happen, in April 2012, to the financial inclusion fund? We are in the spending review period, so there is no excuse for not knowing the available finances. The Minister needs to say now what his plans are for the financial inclusion fund from that point; at the very least, it is surely necessary to give charities and organisations that provide debt advice certainty about what will happen over the spending review period, so the Minister needs to answer that point.
I appreciate the point that the hon. Gentleman is making. I share the general direction of his comments. None the less, it would be churlish not to congratulate the Government, because they listened to the strong concerns that were expressed on the issue. I was certainly relieved that two debt advisers in my constituency would carry on their excellent work in helping 500 families.
Absolutely. It would be churlish not to be glad that there is a continuation of that, but it is such a pity that it is on a piecemeal, ad hoc, year-by-year basis, when the fund should be a strategic plank of the Government’s approach to providing financial services and advice, especially in rural communities.
It is tragic that the areas where banks and post offices are closing are the areas where it is also so difficult to access financial advice, and more general advice from the citizens advice bureaux and from lawyers in public service. Banks and post offices are closing and creating deserts, as far as advice is concerned, throughout large parts of rural Wales.
The hon. Gentleman is completely correct. Of course, it is not just the financial inclusion fund that gets thrown into the mix, in terms of supporting CAB and others. Local government grant services are as critical, and the spending reductions are also having an impact on that area.
It is important to remember that some banks and other financial services institutions are subsidised heavily by the taxpayer, so they have a wider community duty that we MPs have a right to call into question. They serve a customer base, too, and the degree to which they serve their customers is intriguing. In recent years, bank mark-ups on the cost of borrowing have become considerable. The availability of decent interest rates for savers has gone down and down—that is the so-called interest rate spread issue—so consumers are paying a heavier price. That affects people in rural communities, as elsewhere.
The bank base rate has fallen from 5% to 0.5%—a change of 4.5%—yet the charges on overdrafts have fallen by only 1.8%. Charges on credit cards have fallen by only 0.8%. The charge on fixed-rate loans has fallen by 0.4%, and on mortgages, according to the New Economics Foundation, there is a spread of approximately 3% in post-credit crunch extra profit that the banks are making from ordinary borrowers and households in rural and urban areas. The foundation estimates that there was something like £1.6 billion in extra profit in 2009, and a further £1.5 billion per year from 2010. Consumers are taking a considerable hit, but do they feel that they are getting services back in return? That question should not be neglected. It is not just taxpayers’ interests but consumer interest that we need to protect when we think about banking and financial services reform.
I am very sorry that the Government have decided to renege on the promise that they made in the coalition agreement, in respect of the Post Office bank plans. That idea was floated by the previous Government, and we thought it had been taken up by the new Administration when they mentioned it in the coalition agreement. In November, however, the idea for a Post Office bank, in which post office facilities were used for some sorts of basic financial services, especially in rural areas, was ditched. At the time, the Department for Business, Innovation and Skills said that the idea was too time-consuming and expensive to pursue, probably because of the privatisation process. That is a pity, and a huge missed opportunity. I note that the National Pensioners Convention said that that was an extremely short-sighted decision on the part of the Government.
I hope that the Minister will say that whatever happens to the Post Office, one requirement for future owners and operators of post office services will be, at some level, to have some sort of basic financial service transaction capability in those areas where post offices still exist. I would also like to explore the issue of local authorities, and encourage them to think about their role in community banking facilities. I know that many local authorities help supporting credit unions. That is a crucial dimension that needs to be encouraged, although local authorities, naturally, are retreating to their core activities.
[Miss Anne McIntosh in the Chair]
I am really glad that hon. Members raised the issue of the risk to the cheque, that paper-based payment system. Over the years, my aunts, uncles and grandparents have sent various little payments and presents in birthday cards. Many of us enjoy writing cheques and using that basic facility that we take for granted. The cheque is valued not just in rural areas or by older people, but in all walks of life. It is a simple and comprehensive system, and very popular as well. It would be an incredible pity to lose the cheque capability simply because the banks do not wish to provide it anymore. We know that free banking services are already at risk, so the Minister needs to take a more proactive stance and step in. Rather than leave the issue completely to the Payments Council, he needs to think about what powers the Treasury may need to consider in order to preserve that basic social function, should no alternative easy and simple method of payment be devised in the meantime. That is a crucial point.
The Treasury needs to stop its usual habit of giving the banks carte blanche on many of these issues, and it needs to start speaking up for communities, especially in rural areas, when it comes to the financial services that customers and taxpayers need. It would be a tragedy to forget the social necessity of banking and financial services. We need to ensure that the consumer perspective is at the heart of public policy.
I congratulate my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) on securing this debate. There may have been relatively few participants in it, but the quality of contributions has been high, and Members have recognised the importance of the issue.
Access to financial services is not just a rural issue. On a Friday afternoon a couple of weeks ago, I responded to a debate secured by the right hon. Member for Greenwich and Woolwich (Mr Raynsford) on access to financial services in south-east London. There are some common strands, but the particular nature of rural communities creates an additional challenge that we need to reflect.
I shall respond to several points that were made before I cover most of the rest of the issues in a few brief remarks. On automated teller machines, it seems that hon. Members should be in Rhayader on a Friday night if the hon. Member for Brecon and Radnorshire is in town, since he is keen to ensure that he is able to get that tenner out of the cash point to buy us all a drink. He is right to highlight the fact that there is only one cash point in the town. He may be aware that since the report in December 2006 by a parliamentary working group on cash machines, LINK has received nominations for sites, particularly in low-income areas, for about 600 free cash machines. I encourage him to contact LINK directly to suggest that there is a need for one in his community.
My hon. Friend and several other hon. Members spoke about the future of the cheque, a matter which I take seriously. The previous Government turned a blind eye to the threat to the cheque. I have met the UK Payments Council and discussed with it the need to ensure that there is a viable alternative to the cheque before its operation ceases. I made it clear that that is a priority for this Government. It is not clear to me what the alternative would be, given the many qualities of cheques: they are easy to use, people are familiar with them and it is easy to post them. We wait to see what the council says, but I made it clear that it should proceed only if there is a viable alternative that is accepted by many of the groups that currently use cheques.
However, I add a note of caution. The diminishing use of cheques means that the cost per cheque is rising. Clearly, that cost has to be covered in some way, so no one should see cheques as an entirely free option.
The hon. Member for Arfon (Hywel Williams) spoke about Lloyds Banking Group’s plans by to divest itself of 600 branches. He may recollect that the European Commission made that a condition of state aid before signing off the significant investment that the previous Government made in bailing out Lloyds after its merger with HBOS. The Commission required Lloyds to make a significant divestment, and it is making progress on that. There is a great opportunity for that divestment to be used to create a new challenger to UK banks. None of the existing banks in the UK that have a share of the personal account market of more than 14% can buy those branches, so there is an opportunity for someone to become a challenger—to enter the market, buy the branches and provide competition. There is not enough competition in banking at present. A new challenger in the market would help ensure a better deal for consumers, and that banks focus much more on their customers.
My hon. Friend the Member for Ceredigion (Mr Williams) spoke about broadband services in rural areas, and how important it is to ensure that people in such areas have access to online banking. He will know that broadband is not a reserved policy, but work is being done through the UK Government and the Welsh Assembly on improving access to broadband.
In the spending review, we provided more than £500 million of funding for superfast broadband over the next four years, and some of that money can be used to pay for superfast broadband roll-out in areas that the market alone does not reach, including rural areas. The Welsh Assembly are now in discussions with Broadband Delivery UK on how its work will be supported in future.
I agree with my hon. Friend that there are huge opportunities if we can roll out superfast broadband to rural communities. It will help tackle the digital divide and not just enable banking services to be more easily accessed by people in rural areas but create new wealth opportunities, and encourage economic growth and development in those areas.
My hon. Friend also spoke about the future of the Financial Inclusion Fund. I am pleased that the Government will make funding available to continue the face-to-face advice project until April 2012. However, we have been clear that the debt advice sector needs to be put on a more sustainable footing in the long term. There is considerable investment already through the Consumer Finance Education Body, which is looking at financial advice more broadly. We have asked it to take forward debt advice as part of its work of running the money advice service. That work will be funded not by the taxpayer but the financial services industry, which benefits most directly from good quality debt advice being available. He made an important point about access to advice.
I will, if the hon. Gentleman will be patient for a moment.
My hon. Friend the Member for Ceredigion made points about face-to-face advice and issues in rural areas around accessing advice. Part of the challenge is to ensure that advice is available when people need it. Sometimes that is difficult, given that citizens advice bureaux and other providers operate at fixed opening times, but there are other ways. The Money Advice Trust runs an effective telephone helpline service, as does the Consumer Credit Counselling Service, and we need to look at online tools. It is important that we have a holistic approach to financial advice, and that is why I am keen that the CFEB takes this forward and provides a coherent view about how we provide advice to people, not just in urban areas but across the country.
I accept what the Minister says about online and telephone advice, but, on face-to-face advice, can he confirm that, as far as the Government are concerned, the £27 million fund will not be available from April 2012 onwards? It is his decision that it will end next April.
The reality is that the previous Government expected the project to end at the end of this month—that was in their spending plan—but we have extended it for a further year. However, it is important that the financial services sector picks up the bill for it. It is important to integrate it as part of the CFEB—it is its responsibility to take it forward. Of course, we will work closely with that organisation and monitor it to ensure that it delivers that advice. It accepts that it is its responsibility to develop a model of debt advice that meets the needs of people across this country. That is an important goal for that body. The hon. Member for Nottingham East (Chris Leslie) was not around in the last Parliament, but the CFEB had support from his party as well as mine. His colleagues in the then Government saw it as an important way of improving financial capability and advice, so there is shared interest in ensuring that it is successful.
I have two brief points to make about the hon. Gentleman’s remarks. He should be very clear that the Independent Commission on Banking is a focused piece of work—perhaps he ought to read its terms of reference. It is about stability and competition in the banking sector, not the greater issue of banking’s social role. The ICB’s mandate is narrowly focused. The hon. Gentleman is looking perplexed.
With respect to the Minister, surely competition is integral to the wider social and consumer interest. If his Administration have so narrowly defined the ICB’s activities, is there not at risk that some more important questions might be neglected by Ministers in their future decisions?
We were keen to ensure that the ICB has a focused remit to enable it to deliver its work on time, so that we could take forward some of the lessons that should be learned from the financial crisis, when large banks posed a greater risk to the economy. UK banking was consolidated, partly as a consequence of the Lloyds and HBOS merger, and the building society sector became more concentrated. That is different from imposing additional social obligations on banks, which the hon. Gentleman seems to favour.
The hon. Gentleman also touched on independent financial advisers. He should be aware that their advice is not free; it is paid for through commission, and it is not always entirely transparent how much is being paid. A move to a fee-based system will help improve transparency. It is important that consumers receive good quality advice. We live in a complex world of financial services, and as a Minister I deal with too many cases of consumers being given bad advice and paying a high price for that. There is a strong consumer-friendly element in the reforms.
The hon. Gentleman also talked about the financial services compensation scheme levy. It pays for the cost of failure among IFAs. It is an important part of the mechanism to give consumers confidence that if something goes wrong, the bill is picked up so that they are not left out of pocket. If the hon. Gentleman believes that the Financial Services Compensation Scheme should be reformed, and that someone else should pick up the levy, he should be clear which sectors should do so. My experience is that people are keen to offload the responsibility to someone else, but never clear who that should be. The scheme ensures that the sector swallows its own smoke.
Turning to the main issues raised by my hon. Friend the. Member for Brecon and Radnorshire, I recognise his concerns about the significant impact of branch closures in his constituency, and the fact that the HSBC branch in Rhayader has only limited opening hours. I also recognise that although people in rural areas experience the same financial challenges as people in towns and cities, living in a rural area may bring additional challenges. Exclusion from financial services may be less visible in many ways in rural areas compared with urban areas.
My hon. Friend referred to micro-managing banks’ activities. I am not interested micro-managing them, and that is as true for the banks in which the state has a significant stake as for those in which we have no shareholding. However, banks and building societies should serve the economy, and we are committed to improving access to banking, and transparency of financial products for consumers. Decisions on opening and closing branches are taken by the management team of each bank and building society on a commercial basis, and the Government do not intervene in such decisions.
My hon. Friend should recognise that the role of banks is not just about branches. They play a much a wider role in helping the UK economy, and we reached agreement with them earlier this year to encourage them to work in partnership to support the recovery, to increase the amount of money they lend to small and medium-sized enterprises, and to pay out lower bonuses than last year. They are more transparent about their pay, and are making an additional contribution to support business growth and the big society bank of £1.2 billion. However, there is more work to do to improve access to financial services, certainly among the most vulnerable groups, by supporting financial mutuals, and improving competition in the banking sector.
We are committed to improving access to basic financial services, especially for those who are vulnerable to exclusion, and we are working actively to ensure that all consumers can access an appropriate mix of financial services. Bank and building society branches are not the only channels for accessing financial services, nor are they necessarily favoured by consumers on low incomes. For many people, the barriers are significantly greater than simply having no local bank or building society branch to visit.
It is important that financial services adapt so that they fit the grain of how people run their lives. For example, many consumers without bank accounts express a preference for managing their finances in cash. They want direct control over their spending, and often believe that a bank account takes that away from them. For many, the financial services with which they engage most often are not in bank branches.
That brings me to the post office network, which has more branches than all the retail banks put together. An important part of the Post Office’s future sustainability will be the continued growth of revenue from financial services. The Government have promised that there will be no programme of post office closures, and in last year’s spending review we promised to provide £1.34 billion for the Post Office to modernise the network and to safeguard its future, making it a stronger partner for the Royal Mail. We have also said that expansion of accessible and affordable personal financial services available through the Post Office should be a priority. Our ambition is that all UK current accounts should be accessible through the post office network, making post offices the convenient place for people to access their cash.
I thank the Minister for his comments on the debate. On a practical issue, people tell me that the one thing they value about banks is that they can talk in private about their financial concerns. That facility is not available in post offices. If the Post Office is to deliver more financial services, it must address that issue, as well as availability, with the public.
My hon. Friend makes an important point. As it expands the financial services that it offers, the Post Office will have to think about how to encourage take-up, and how to provide support and advice, if that is the route that it wants to take. I was about to acknowledge that the range of services that the Post Office will offer will not be the same as a community bank, which is an idea that he outlined.
There is a real challenge in putting in place the right model of financial services in rural communities. It is not right to mandate a particular model as being right. The impetus for new ways of developing services should come from the financial services sector. The hon. Member for Arfon complained about the HSBC branch that has become highly automated. The challenge there is whether that meant that the branch could stay open, and whether new technology is being used to keep more branches open by changing the way in which services are offered. There are some interesting challenges, and banks must work their way through them.
When thinking about how financial services best support families and businesses, particularly in rural areas, we must think more carefully about their changing nature. There is a risk of getting stuck in a particular view of how banking should work. People are turning increasingly to prepayment cards or e-money. For example, Tesco is making payment to short-term employees with an e-money card, instead of paying money into a bank account. We can learn from other countries how they have tried to get around lack of bank branches. We should think about developing new safe and convenient financial services using different channels.
Mutuals were mentioned a couple of times, and I am conscious of the excellent work done by credit unions, particularly in the constituency of my hon. Friend the Member for Brecon and Radnorshire. Mutuals can be more accessible for those who cannot or do not want to access banks. The coalition is committed to a strong mutual sector that should have the capability to enrich British society. It is in everybody’s interest to do whatever we can to help the mutual sector prosper and grow, and for that to be achieved sustainably. Over the past few months, I have had the opportunity to start a meaningful dialogue with the mutual sector about its ambitions, looking at what services it can offer and how it can overcome the hurdles that have been holding it back.
Although mutuals benefit from not having to pay dividends to their shareholders, they have an obligation to their members. They have to strike a balance between meeting their wider obligations and providing returns to their members through higher returns on savings or lower borrowing costs, ensuring that they remain viable and competitive. Such considerations are at the heart of every decision made by a building society.
As a consequence of the financial crisis, there is clearly an appetite for change in the way financial services operate, and mutuals stand well placed to respond to that challenge. To help achieve it, the Government are implementing several legislative reforms to help create a more equal playing field in financial services, thus promoting diversity and providing a challenge to banks.
The legislative reform order on industrial and provident societies and credit unions has been a long time coming. It will be re-laid before Parliament shortly, and will introduce basic yet far-reaching reforms that will enable credit unions to modernise and grow. We will also take forward the implementation of the Co-operative and Community Benefit Societies and Credit Unions Act 2010 after the legislative reform order comes into force. That will bring the industrial and provident society name into the 21st century, and modernise the powers available to update legislation in the future.
My hon. Friend the Member for Brecon and Radnorshire asked about reducing the burdens on building societies. We will shortly lay an order that gives mutual societies—including building societies—the option to use electronic communications to engage with members and distribute certain statutory information, as opposed to sending it by hard copy. That will reduce costs to businesses and enable them to invest more in services.
In recent years, credit unions have made great progress in providing affordable financial services to people who could not otherwise access them. They provide an alternative to payday lending, loan sharks and home credit, and I want them to continue to develop and strengthen. We are providing additional support to those institutions outside the regulatory legislative process. Building on the financial inclusion growth fund, the Department for Work and Pensions will continue to support credit unions for four years through a new expansion and modernisation fund worth up to £73 million. The fund will seek to extend access to basic, appropriate financial services to many people on lower incomes, through modernising delivery and customer support systems.
One concern relayed to me by mutual societies, particularly building societies, is about the burden of reporting that has to be done on a regular basis, presumably to the Financial Services Authority. That seems to be out of proportion to the risk that building societies present, and certainly to that presented by large commercial organisations.
My hon. Friend makes an important point to which I should have responded earlier. He lays down a challenge about the burden imposed on building societies and other financial services organisations. The FSA has looked carefully at the regulation of building societies. He will be aware that building societies were affected during the financial crisis, and there were several rescues as they had to consolidate. The concern is that a number of them moved into areas in which they were not entirely comfortable or well resourced to deal with, and that put the building society and depositors at risk. We need to ensure a proportionate regime for regulating building societies that recognises the risks posed to members and financial stability.
One area in which the Government are taking forward further work to support building societies, and an issue building societies have raised as a consequence of the financial crisis, is the need to find new sources of capital. We are working closely with building societies to identify an instrument that enables them to raise capital markets, will help absorb losses if they occur in the future, and is consistent with enhancing the stability and security of the building society sector. We are taking active measures to strengthen the mutual sector because we believe that its diversity can act as a spur to further challenges to the banking sector. It is an important part of the architecture of financial services, not just in terms of providing mainstream products, but in trying to provide greater access to groups that are harder to reach.
I have been fortunate to have enough time to expand on the subject at some length. I hope that my hon. Friend will recognise that although the Government cannot intervene in the individual decisions taken by banks and building societies to close branches, we are committed to taking further steps to improve access to financial services throughout the country, in rural and urban areas alike. We recognise that particular challenges face financial services in rural areas, and we will continue to look carefully at those issues and listen to concerns raised by hon. Members.
Solar Power and Feed-in Tariffs
I am delighted to have the opportunity to raise this issue today. I was astounded by the number of people who contacted me when they saw this debate was coming up, asking me to speak out against the Government’s proposals following the fast-tracked review of the feed-in tariff which has been in place for just 11 months. I know that the matter is subject to a consultation, but early in my speech I will be bold enough to suggest that the Minister and his team follow the example of the Secretary of State for Environment, Food and Rural Affairs over the sell-off of our forests, ditch the consultation and think again about the whole matter.
The feed-in tariff was designed under the assumption that the cost of a given technology comes down with increases in installed capacity. That has been the case in the solar PV market, and there have been impressive reductions in cost over the past 12 months, thanks in part to the feed-in tariff. I am told that in the past 12 months, market volume and competition have brought UK domestic prices down by at least 20%. In the same period, volatile oil prices have risen by 50%.
I congratulate my hon. Friend on securing this debate. Is he also aware that 300 new jobs have been created by Sharp Solar in my constituency on the back of the introduction of the feed-in tariff? Is he aware of any other policy that has been so successful so quickly?
I am not aware of any policy that has been so successful so quickly, and I know that across the north-east of England, many jobs have been created as a result of that policy. Many more jobs could be created, but that could change under the Government’s change in policy.
The aspiration of the industry—and, I hope, the Government—is to bring the technology to the point where renewable energy will compete with grid electricity without subsidy. To put the matter firmly on the record, I have been told that even BP concedes that electricity from solar PV will be cheaper than fossil fuels by 2020—a startling and very welcome statistic. To be clear, the Government’s decision to significantly reduce the tariff for schemes that are larger than 50 kW will cause havoc in this fledgling industry and make it less likely that community groups and schools, hospitals and churches will contemplate solar energy schemes, as they will simply be unaffordable. Schemes over 50 kW in size will see the feed-in tariff reduced by between 39% and 49%.
I will come on to some of those specific issues about the size of projects and the tremendous fear that the Government seem to have about larger projects, which could be controlled in the way that the hon. Gentleman mentions.
A 50 kW scheme is not a large scheme in any way, shape or form, despite what the Government would like us to think. We are talking about an area that is just the size of two tennis courts—hardly the large solar farms that the Government claim to be worried about. But do not just take my word for it. The Government should be listening to the Renewable Energy Association, which says that the industry has been “strangled at birth”, and to the Solar Trade Association, which calls the decision “a total disaster”.
The fact is that solar energy is hugely popular. A study of public attitudes to energy generation technologies that was undertaken by Cardiff university last year showed 88% support for solar PV. It had the highest level of support of all technologies. More than 70% of people agree that supporting renewable energy sources such as solar or wind is a better way of tackling climate change than nuclear power.
Back in 2008, the hon. Member for Wealden (Charles Hendry), who is now a Minister of State in the Department of Energy and Climate Change, stated when speaking about 5 MW projects:
“The idea behind it is to allow the inclusion of non-commercial scale projects, such as those that will be installed by homeowners, small businesses, local authorities, community groups, farmers and others. That would help out hospitals and schools that want to facilitate greater use of renewables and ensure low emissions as part of our 2020 targets.”—[Official Report, 18 November 2008; Vol. 483, c. 144.]
I cannot understand why the Government’s policy now goes against that very sensible statement. The Government are trying to present the decision as a choice between supporting home owners who want to install solar PV panels, and supporting big, commercial-scale schemes. The reality is that many community groups interested in medium-sized schemes—you know, the big society—will also lose out thanks to the proposed changes to the feed-in tariff.
In my constituency, a local project at the Norton sports complex has been hit hard by the Government’s decision. The complex was due to secure much needed funds through the FIT by using some of its previously unused land to install solar PV panels. The project was expected to be 1.5 MW in capacity, meaning that, thanks to the Government’s changes to the FIT, it will no longer be viable. I cannot emphasise enough what a disappointment that is. The Norton sports complex does tremendous work in the community, providing sporting and social facilities to local people, but has faced a difficult financial situation in recent years, as attendance at the social club part of the complex, which raises the money, has fallen by 60% thanks to the difficult financial circumstances in which many local people currently find themselves; many are out of work.
The chairman of the Norton sports complex was optimistic that FITs would provide a long-standing income for the complex and guarantee its future, but it will now have to go back to the drawing board, as the Government have pulled the rug out from under its feet.
I agree with pretty much everything that the hon. Gentleman is raising. He makes the point that a lot of time and money have already been invested in chasing a scheme for which the rules have suddenly changed. That puts groups such as the one that he has highlighted in a very difficult position.
Exactly, and there are countless schemes throughout the country that will now not happen as a direct result of what the Government have done. The Norton sports complex is only a few hundred yards from where I live, but I have been told of many projects further afield that were in the pipeline but will now fall by the wayside.
I want to pick up on the point made by the hon. Member for North Swindon (Justin Tomlinson) and to develop the point being made by my hon. Friend. The worst aspect is that the stable business framework that was in place previously has been wholly undermined by the Government’s decision. Does my hon. Friend agree that stability for business investment is hugely important and that the decision drives a coach and horses through the Government’s pretensions to be providing a stable framework for business?
On the point about uncertainty, I accept what has been said, but does the hon. Gentleman not agree that the REA, 165 of whose member companies are from the solar PV technology industry, has come out firmly and said that the review is the first step in a process that should ultimately end all uncertainty around these schemes?
I do not think that the process will end any uncertainty. We will simply be saying to people, “Look, just walk away, because it won’t be financially viable for you to develop the sorts of project that you have in mind.” The Government policy is wrong. We need to ensure that the incentives are in place to develop these projects.
In Herefordshire, work is under way on a 300 kW installation on farm buildings that will not be viable when the new tariffs come into effect. Similarly, the UK’s first ever community-owned solar power station is due to be launched in Lewes in April and is expected to save more than 40 tonnes of carbon dioxide annually. Without the feed-in tariff, that development, to be built on the roof of a warehouse, will not go ahead either, as it is 100 kW in size.
I thank the hon. Gentleman for securing the debate. Can he expand a little on the thought that there ought to be a difference between companies that are looking to take on this fantastic new way of producing energy for the country and would use it to run their factories, and venture capitalists who might want to jump in on it? Can he not understand that, ultimately, if there is no more money, there is no more money, but perhaps the Government might consider changing the arrangements for companies that are producing energy, so that they will be green companies for the future and will look after their local environment?
With respect to the hon. Lady, that is not what this is about. It is about the feed-in tariff. I am all for companies developing their own solar power stations on the roofs of their factories or wherever to run their own businesses. They may well have a little surplus that they can feed into the grid. However, many organisations can develop solar power projects without relying on the feed-in tariff at all.
I could go on, but sadly I do not have the time to list all the projects and examples that I have been sent information on during the last few days. The Renewable Energy Association estimated, before the fast-track review of the FIT was announced, that, nationally, 17,000 new solar jobs would be created by the end of 2011. Those jobs are now unlikely to materialise as medium and large-scale projects are axed. At a time when the number of people unemployed stands at 2.5 million, we should be doing everything that we can to encourage the creation of green jobs. The Government’s review could end up costing jobs, rather than creating them.
Just as important is the renewables target, which aims to see 15% of UK energy coming from renewable technologies by 2020 under the EU renewable energy directive. We are third from bottom of the list of European countries in meeting our renewable energy targets, and the Government’s decision will not help. Many people in the renewables industry are very angry about that decision, and confidence in the Government has been shattered thanks to the mismanagement of the fast-tracked review.
Jeremy Leggett, executive chairman at Solarcentury, has said:
“Since the CSR, I’ve had numerous conversations with Ministers during which I have been assured that any urgent review of feed-in tariffs would be carried out after publication of a proper trigger and would in any case exclude built-environment PV. The Government has not only betrayed those assurances but today proposed feed-in tariff rates that would ensure the UK PV industry stalls. No renewables company or investor can easily be able to trust this Government again after the u-turn by Ministers who were so quick in opposition to call for a more ambitious feed-in tariff and so ready with empty promises in the early months of Government.”
That is quite a condemnation.
I have also been in touch with Eco Age, a company that has been involved in project managing the installation of a number of large 1 MW to 5 MW solar PV systems, which I am told have now all been frozen and are unlikely ever to happen thanks to the FIT review. I am told that just one of the projects—a 1.5 MW solar PV system on the roof of a 550,000 square feet UK super-warehouse—is likely to go ahead. That will be one of the largest roof-based solar installations in the country. Surely it is the type of project that we should be encouraging, but sadly, thanks to the Government’s decision, similar projects have now been scrapped. Eco Age makes the important point that large companies that were engaging with the idea of solar PV schemes have, as a consequence, also embraced other more sustainable practices across their businesses in relation to waste, water transport and procurement. That is a welcome development.
Various representatives from the industry have told me that DECC’s concerns about large-scale solar farms taking up too much of the FIT are unfounded. Large-scale roof-mounted systems are difficult to develop because most commercial property is leased to the tenant, who is not in a position to grant a lease for the roof to a PV company. Ground-mounted schemes, such as those on farms, are far easier because farmers really understand that we need 25 to 40-year lease arrangements to make developments worth while. Although interest in such schemes has been significant, the industry does not expect many actually to go ahead, because it is anticipated that many will struggle to get planning permission.
The hon. Gentleman is speaking eloquently about large-scale PV schemes, but is not the problem that the previous Government’s estimates of the feed-in tariff quantum allowed for zero commercial take-up of large-scale schemes, which is precisely why we have the problem we do? The hon. Gentleman has not even addressed that.
That may well be the case. The industry has been so excited that it has really cranked up its activity in this area, and more and more people are showing an interest in it. The examples in Germany show that we have a real opportunity to grow this industry, and, believe you me, the revenues that flow into the Government’s coffers as a result could more than compensate for the money that is being spent.
I am going to move on, because I need to get through my speech.
Even if we accept that such large-scale sites are a potential concern, why can the Government not restrict the use of greenfield sites and set a reasonable kilowatt capacity limit to curb industrial-scale developments, as suggested by my hon. Friend the Member for Ogmore (Huw Irranca-Davies)?At a time when oil prices are rising and volatile, and when the nuclear crisis in Japan is highlighting to all the dangers of nuclear power, I am not alone in suggesting that the Government should look at ensuring that popular, green methods of meeting our energy needs get the support that they deserve. Medium and large-scale solar PV schemes can be part of the solution to serious energy security and climate change problems, but the Government seem intent on focusing just on domestic-scale installations.
The REA tells me that the Department has underestimated solar’s potential and overestimated its cost. Disappointingly, I do not have time to go into the detail, but this technology has exceptional and proven potential. I am told that in Germany—a country with a climate similar to ours—solar PV could reach grid parity, where no subsidies would be required, between 2013 and 2016, which is just two to five years away. Where will the UK be? Yes, left behind again.
Does the hon. Gentleman agree that Ministers’ suggestion that slashing support for the solar industry does not matter because it affects only projects larger than two tennis courts really is ridiculous, given that an average secondary school could accommodate about 80 kW, which is considerably more than the 50 kW produced in an area the size of two tennis courts, which Ministers like to cite?
Indeed. The hon. Lady arrived late, and that was the very example I used when I opened my speech.
The fact is that we face a predicted energy gap in 2017, with power cuts anticipated for the first time since the 1970s. I am told that DECC had a taste of things to come last Thursday, when it was subjected to its own power cut, which meant that officials were unable to print important briefing notes for Ministers ahead of DECC questions on the Floor of the House. Perhaps that is why the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), was so badly prepared for questions that day and used the rather shabby comparison with Germany’s tariff scheme when seeking to defend the changes his Department has announced. He said:
“Community-based projects that are larger than 50 kW…and up to 150 kW…will still get a tariff comparable to that paid in Germany.”—[Official Report, 24 March 2011; Vol. 525, c. 1068.]
No, I have to finish.
The fact is that Germany’s solar industry is far more developed than ours. It has taken the Germans 10 years to build their industry, which employs 65,000 people, and they now have massive purchasing power and control supply chains. That enables them to undercut British construction companies by more than 25%. Indeed, solar generation in Germany exceeded nuclear generation for the first time just last week. The UK is a long way behind Germany, which is why we need to maintain effective feed-in tariffs if we are to have any hope of maximising the potential of this popular technology.
I hope that I have been able to outline the concerns in the renewable industry about not only the changes to the feed-in tariff, but the Government’s reluctance to acknowledge the real potential of solar energy. The decision to make medium-sized solar PV developments above 50 kW unviable is frankly bonkers. It is clear that the Chancellor, not the Energy Secretary, is dictating DECC policy, because the arguments put forward by Ministers for this shift in policy make no sense to those I have been in contact with in the renewables industry.
The fact is that this decision is dictated by the Treasury, not DECC. The spending review committed to finding £40 million—10%—of savings from the feed-in tariffs. We all know that the Tory-led Government are cutting too far and too fast—[Laughter.] We all get that in. The fact that the Government are cutting too far and too fast was made clear this weekend, when 250,000 people took to the streets of London to protest against the scale and pace of the cuts. The provisions we are discussing are one more victim of that ideologically driven policy.
We were told this would be the “greenest government ever”, but I think that that will be added to their growing list of broken promises, given that energy policy is now being dictated by the Treasury. It is time for the Government to admit they have got this one very wrong, choked off many schemes at birth, turned enthusiastic potential developers away, broken promises to the industry, lost the opportunity to create thousands of jobs and set back our chances of ever meeting our renewable energy targets. I hope to get an assurance today that the Government will start listening to the industry and the many others who will doubtless respond to the consultation on feed-in tariffs, as well as to organisations such as the Norton sports complex.
In summary, I would like to pose three questions. First, how do the Government propose to restore confidence in their renewable policy, which has been severely shaken thanks to the shambolic way in which the decision on feed-in tariffs has been handled? Secondly, what is the Government’s long-term vision for solar PV? Evidence from other countries demonstrates that it has the potential to play a significant part in renewable energy provision, yet the Government’s policy is geared towards sidelining it as a purely domestic, small-scale technology. We are not being ambitious enough when it comes to solar PV. Finally, will the Government promise today to listen to the industry during the consultation, because it is very angry about this unexpected change in policy? Will they then act to ditch that ridiculous change in policy? If not, they risk alienating not only the solar sector, but the whole renewables sector.
May I start by apologising on behalf of the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), who, for reasons I have explained to the hon. Member for Stockton North (Alex Cunningham), is unable to be here today?
May I also congratulate the hon. Gentleman on securing the debate? He has a long-standing interest in the subject and has forcefully and passionately put on record his views. I thank other Members who have taken the trouble to come to the debate, including the hon. Members for Wrexham (Ian Lucas) and for Brighton, Pavilion (Caroline Lucas), and my hon. Friends the Members for North Swindon (Justin Tomlinson), for Calder Valley (Craig Whittaker), for South Derbyshire (Heather Wheeler) and for Ipswich (Ben Gummer). I am grateful to everybody for having come along today and made this an interesting debate.
I have certainly taken on board what the hon. Member for Stockton North has said and I will endeavour to reply as best I can to the points that have been raised by him and others. To the extent that time limitations and other factors do not allow me comprehensively to reply now, I am more than happy to ensure that I or my hon. Friend the Member for Wealden give a proper reply subsequently.
The coalition Government are committed to renewables, particularly to meeting our European Union target of ensuring that 15% of all energy comes from renewable sources by 2020. The spending review shows that we are delivering on being the “greenest Government ever” and that we delivered an excellent settlement for renewables, which underlines the priority that the sector constitutes for the Government. Support for large-scale renewable electricity under the renewables obligation will be maintained over the spending review period, with the budget due to rise to £3.2 billion by 2014-15.
Heat makes up 49% of UK greenhouse gas emissions. It has long been neglected and requires significant investment.
I am glad that the hon. Gentleman, who is a reasonable man, is responding to the debate, and I hope that we will see some sense on this issue. I have campaigned on it for many years, but, for a long time, I did not get a lot of sense from the Government of the day. However, has he seen the article in today’s Financial Times about private investment in clean energy plunging in 2010? Is he not concerned by the reaction of investors, including Sharp in my constituency, to the announcement, which will strangle private, rather than public, investment?
I am grateful to the hon. Gentleman for his contribution. I remind everyone that we are in difficult economic times. Every area has to be looked at, including this one, where the review has been brought forward. We are keen to emphasise that there is no cut-off up to 50 kW. That will cover the majority of the domestic market, which we are keen to protect. I hear what the hon. Gentleman and the hon. Member for Stockton North have to say, but I am keen to emphasise that there is a cut-off point, which will ensure that, to a large extent, the domestic market is protected.
The renewable heat incentive, which will go ahead in 2011, represents more than £850 million of investment over the spending review period. That will drive a more than tenfold increase of renewable heat over the coming decade, shifting renewable heat from a fringe industry firmly into the mainstream. To prioritise those critical projects, we have needed to take hard decisions, reducing budgets to focus on the most important, and looking to reduce the burden on the bill payer. We will save money on support for small-scale electricity through feed-in tariffs, to prioritise the most cost-effective technologies and maximise value for money.
I understand the difficulty with pressures on budgets and the need to get the best return for the taxpayer. Surely the larger-scale schemes offer the better return to the taxpayer in terms of renewable energy produced and cost to install. Surely we should be considering those as a priority, perhaps at the cost of the domestic schemes.
Will my hon. Friend consider asking Ministers whether they would contemplate allowing the same feed-in tariffs to community buildings, including sports clubs and other local organisations, rather than large-scale commercial manufacturing of solar power?
I am more than happy to pass that on to the relevant Minister. I hope colleagues will forgive me: I have about eight minutes and I wish to make progress.
The coalition is determined to drive a step change in ambition for the deployment of decentralised renewables and clean microgeneration technologies. As part of that, we are fully committed to feed-in tariffs for small-scale, low-carbon electricity generation. To meet our 2020 and longer-term targets we need to make the best use of all technologies that deliver renewables. Solar photovoltaic is part of the total picture. We expect that it will deliver a relatively small proportion of the overall total, but it can make a real contribution, especially at the household and community scale.
Solar PV has the advantage of being the only renewable technology that can be delivered easily at scale in the domestic context. It can be deployed quickly and does not have the disadvantages of noise and other local impacts, and at the small end of the scale does not need complex and expensive grid connections. Through permitted development rights, microgen-scale solar PV does not need planning permission. It can provide a range of benefits to the wider green agenda by engaging households and communities in the energy that they consume, and taking action to reduce their carbon footprint. Solar PV can work hand in hand with other initiatives, including the green deal.
It is important to remember that solar PV can be deployed on a range of scales. That can be small systems of 2.5 kW on domestic roofs that will provide a typical household with about half its electricity needs, through community scale schemes on school and hospital roofs of 10s of kW, to industrial scale schemes of several megawatts in fields or on warehouse or factory roofs. We need to question whether all those types of installation are appropriate for bill payers’ support at the current level of technological development. That is why we have launched the comprehensive and fast-track reviews of the FITs scheme.
The hon. Member for Gloucester (Richard Graham) mentioned sports complexes, as I did. There is one in my constituency that is considerably bigger than the Government want to support in the future. Does the hon. Gentleman not have sympathy for that sort of local sports organisation, which could make a major contribution to the community and green energy?
With respect to the hon. Gentleman, I would like to think that he did not really mean to say that the Government are not supporting it. The Government are supporting it, but have to take a decision at the moment to have the cut-off point at 50 kW. That will clearly be reviewed on a regular basis, because that is the way forward. We recognise that, but, as the hon. Gentleman will appreciate, we have constraints given the current economic climate.
The first anniversary of the FITs scheme is fast approaching and we have been pleased with the success to date, which has seen more than 20,000 PV installations registered for FITs. When the FITs scheme was introduced by the previous Administration, it was made clear that all aspects of the scheme, including tariff levels, would be subject to periodic reviews and that, if necessary, early reviews could take place. I would add that the previous Administration were able to pass the measure because it was a cross-party matter, which had the support of the Conservative and Liberal Democrat parties.
“Feed-in tariffs: Government’s Response to the Summer 2009 Consultation” made that clear, and also provided examples of what reviews would consider. The context for the first review of FITs was set by last year’s spending review. The review made it clear that there are spending parameters within which the FITs scheme must operate. Put simply, there is no blank cheque for FITs. Particularly in the current climate, it is crucial that we take a more responsible and efficient approach to public subsidy to ensure that consumers receive value for money and new investors are not over-rewarded with public subsidy.
At the time of the spending review, we said that the first review of FITs would take place as planned in 2012, taking effect in 2013, unless higher than expected deployment triggered an early review. However, since then we have become increasingly concerned about the risk that larger-scale solar PV, unforeseen by the modelling undertaken prior to the start of the FITs scheme, could lead to long-term pressure on FITs costs. That risk provides a trigger consistent with the statements made at the time of the spending review.
Therefore, last month the Secretary of State announced the start of the first comprehensive review of FITs. As well as allowing the concerns mentioned to be addressed, bringing forward the review of FITs also allows for industry to be provided with certainty, sooner rather than later, about how the savings committed to as part of the spending review will be delivered. Many in industry have been pressing for that.
In the first scheme review, we want to secure the continued success of FITs, through sustainable growth rather than boom and bust. That means enabling industry to grow smoothly within the spending parameters confirmed by the spending review. Starting the review now provides us with a better chance of delivering the aim than allowing unsustainable growth, which might have to be reined in dramatically in the future. Furthermore, by fast-tracking consideration of solar PV larger than 50 kW, and farm-scale anaerobic digestion, we can address urgent concerns that have arisen.
The fast-track review is looking at FITs for solar PV above the microgeneration threshold of 50 kW. Solar PV mocrogeneration of up to and including 50 kW is not within the scope of the fast-track review and is therefore not being considered by this consultation, but will be considered as part of the comprehensive review.
I am mindful that time is pressing. I say in conclusion regarding the three points raised by the hon. Member for Stockton North that we believe that confidence is important, and we will continue to monitor. We firmly believe that by protecting the domestic market, confidence has not been damaged. On a long-term basis, this is the way forward, and we will continue to monitor. In response to whether the Government will listen, of course we will listen. We have listened today and will continue to do so. I am grateful to the hon. Member for Stockton North and all other hon. Members and hon. Friends who have taken the time to make their voices heard.
I start by thanking everyone involved in allowing me this debate. Many times in the six years in which I have been honoured to be a Member of Parliament, when people have come to me with a case of a medical nature, I have regrettably had to say that I could not assist them because there was no way to take the case forward. I want to make it clear that this case is not one of them.
I shall start with a brief case history, and the family’s attempt to understand how a normally fit woman went from being perfectly healthy to tragically losing her life during an everyday, routine procedure from which, I am told, no one has ever died. Carmel Bloom, a healthy 54-year-old woman, walked into Bupa Roding hospital on the evening of 27 August 2002. She was found to be suffering from pain in her left side, and was therefore admitted as an in-patient. Earlier that evening, she had gone to the accident and emergency department at the King George national health hospital in Ilford, but because there was a 14-hour wait, she had gone on to the Bupa hospital.
The following day, 27 August, a scan and blood test showed that she had a urinary tract infection and that a stone may have lodged in her lower left urethra. The following evening, exactly 24 hours later, an everyday procedure was commenced in an effort to bypass the blockage and enable the free flow of urine. That was done by inserting a JJ stent—a small J-shaped rubber tube—into her urethra.
Seven hours after the procedure, Carmel was transferred by emergency ambulance to the intensive care unit at the NHS Whipps Cross university hospital. During the transfer, Carmel collapsed into an irreversible coma; she never regained consciousness. Tragically, 10 days later, on 8 September 2002, her life-support machine was switched off, and she was certified dead. Carmel’s family has spent nearly nine years trying to discover what happened on that fateful night, and to understand how a normally fit and healthy woman could die of an everyday complaint with which, I am told, no fatality statistics are associated if it is properly treated in a hospital environment.
The family told me that following Carmel’s admittance to Whipps Cross university hospital’s intensive care unit, it quickly became apparent that the doctors and nursing staff were ill at ease, and I am told that they became quite agitated when asked for further particulars of Carmel’s condition by Carmel’s sister-in-law. I should explain that she is a qualified medical doctor; she resides in Canada, which is why that had to be done by telephone. Which one of us, if we had a qualified doctor in the family, would not ask that person to request information? However, the doctors refused to accept any further calls from her after she requested further details of Carmel’s condition and treatment. I cannot say why that happened.
On 9 September 2002, Carmel’s death was referred to the Walthamstow coroner, as it had become apparent that her death was anything but straightforward. The following time line demonstrates the due process that the family were obliged to follow in their quest to find out how and why Carmel died. As you will hear, my involvement came seven years down the line, as I was not Member of Parliament for Ilford North at the time. Nearly nine years after Carmel’s death, the evidence shows that questions about the causes of her death have still not been properly answered. A number of agencies come into play, but today I shall restrict my comments to the health aspects of the case. At a later date, I shall seek to revisit other justice matters.
In 2002, the first inquest was adjourned; coroner Dr Stearns stood down because of a conflict of interest. In 2003, the inquest was adjourned again; Dr Dolman, the second coroner, stood down but refused to disclose his reasons. In 2003, the third coroner, Andrew Walker, brought in a verdict of death by natural causes. In 2003, the Home Office suggested that application be made for a new inquest.
In 2003, Lord Goldsmith, the Attorney-General, intervened. In 2004, he granted consent for the High Court to quash the inquest verdict of natural causes. In 2004, in the High Court, Lord Justice Tuckey quashed coroner Andrew Walker’s verdict, and ordered that a new inquest be held with a jury. In 2005, the inquest jury overturned the natural causes verdict, finding that a series of failures had contributed to Carmel’s death.
In 2006-07, the Healthcare Commission investigated Bupa Roding hospital. I should say that it is no longer a Bupa hospital. The commission found a series of shortcomings and a serious lack of training and equipment in the hospital, together with false reports being given to them following Carmel’s death. The commission brought no charges against the hospital, stating that it had no power to act in retrospect. Following the investigation, Bupa sold its 26 hospitals.
In 2007, the General Medical Council started an investigation into the conduct and fitness to practise of Mr John Hines and Dr Paul Timmis. In 2007, the London ambulance service disclosed previously withheld evidence—the AS/1 emergency call receipt document and Bupa Roding Hospital’s 999 tape recording. I have seen the transcripts and heard the tape, and there is a gap of approximately 15 seconds in the recording; to the best of my knowledge, it remains unexplained to this day.
In 2007, the police began an investigation into Carmel’s death and looked into Bupa’s alleged false report to the Healthcare Commission on the events that led to her death. As I said earlier, I shall not speak about the police at this stage, except to say that, between 2007 and 2009, the Ilford criminal investigation department referred the case to the Metropolitan Police Service’s homicide and serious crime command unit, following the discovery of new evidence. In 2008 and 2009, the homicide unit referred the case to the Crown Prosecution Service. In March 2008, Bridget Matthews, the night sister on duty at Bupa Roding hospital on 29 August 2002 and the nurse in charge, was interviewed under caution by the Met’s homicide and serious crime command unit, SCD1.
In 2009, the Ministry of Justice investigated a complaint against the 2005 coroner. It was said that the coroner withheld key evidence from the inquest jury. Unfortunately, however, no inquiry took place; the judicial review office cannot investigate coroners’ non-disclosure of evidence to a jury. The non-disclosure of evidence enabled the court to understate Carmel’s condition, but that issue is not the object of today’s debate. I became involved in 2009, when my constituent’s family came to see me. I intervened, and approached the right hon. Member for Blackburn (Mr Straw), then the Secretary of State for Justice.
In 2010, the General Medical Council’s fitness to practise hearing against Bupa doctors Mr John Hines and Dr Paul Timmis commenced. At that stage, I wrote about the case in my newspaper column and in articles, and I thank the Ilford Recorder and the Wanstead and Woodford Guardian for printing them. In my writings, I asked if anyone had information relating to Carmel’s tragic death. I pay tribute to Julie Moody, who came forward as a whistleblower. She made a statement, which caused her great difficulty; that was done at great cost to her personal and professional life, and I record my gratitude for her bravery. She displayed enormous courage and compassion. She was a senior nurse and an ex-employee at the Bupa Roding hospital. She contacted me with vital new evidence about Carmel’s treatment during the night following her operation. I provided this new evidence to the Ministry of Justice and the Met borough commander, but it was withheld from the GMC’s fitness to practise panel hearing against Mr Hines and Dr Timmis. The GMC decided to proceed with the hearing, even though a whistleblower had come forward, casting new light on Carmel’s treatment at the Bupa Roding hospital, with evidence of serious negligence during Carmel’s operation. Entirely inappropriate post-operative treatment was also alleged.
Let me read out the remit of the General Medical Council:
“Our statutory purpose is to protect, promote and maintain the health and safety of the public by ensuring proper standards in the practice of medicine.”
It is vital, not only in this case but a number of cases, to decide whether the GMC is a union for doctors—if it is, fine—or whether it is there to represent patients’ interests.
In 2010, the Council for Healthcare Regulatory Excellence considered an appeal to the High Court against the GMC hearing’s decision not to prosecute or even issue a warning against the two doctors, even though, between them, they pleaded to, or were found guilty of, 79 charges, including one where the doctors’ conduct was so serious that it increased the risk of Carmel suffering hypoxia—I apologise for any mispronunciations of medical terms; I know that the Minister is medically qualified, but I am afraid that I am not—cardiac arrest, brain damage and/or death.
In 2010, there was an unsuccessful appeal against a decision of the Independent Police Complaints Commission. The Metropolitan Police Service’s homicide and serious crime unit interviewed the night sister. In an extraordinary development that has still not been explained, the night sister said in her statement that she had been given the whistleblower’s highly confidential statement. That statement had been given only to me—I immediately put it in a solicitor’s safe in north London—the police and the Ministry of Justice. I cannot explain how that could have possibly happened.
In 2010, the Crown Prosecution Service was approached for the third time by homicide detectives who were considering instituting a criminal prosecution, but the CPS failed to reopen the case. In the same year, the GMC referred the Bupa nurses to the Nursing and Midwifery Council for misconduct in relation to the care and treatment of Carmel, leading to her death. Bupa’s resident medical officer, Dr Darko, was also referred to the General Medical Council. Further evidence from the whistleblower—Julie Moody—and a 500-page report were provided to: the Met’s homicide unit; my right hon. Friend the Secretary of State for Work and Pensions; my right hon. and learned Friend the Lord Chancellor and Secretary of State for Justice; the General Medical Council; the Nursing and Midwifery Council; and myself.
All the way along the line, the family, who have suffered great distress over a prolonged period of time, have said that they simply want to know what happened, and want closure. That is why they asked for my assistance, and I have been trying to help to the best of my ability. We are awaiting a number of key developments: the Attorney-General’s consent to apply to the High Court for a fresh inquest; the outcome of a Nursing and Midwifery Council action against the two Bupa nurses; a decision to call for a full police investigation into the death of Carmel Bloom; the GMC’s decision to recharge the two doctors involved; and the decision by the health service ombudsman regarding the London ambulance service’s actions and the part that it played.
I have a number of questions for the Minister. I appreciate that she will not be able to answer them today. I let her see a copy of what I was intending to say last night, but it was too late for her to get any replies to me. The family are concerned that the GMC, the Nursing and Midwifery Council and the Healthcare Commission did not investigate the causation of death. I am not making any accusations against anyone; I am neither a lawyer nor a doctor. None the less, there are so many questions that need to be answered before the poor family can move on and have closure.
The coroner at the 2005 inquest wrongly withheld key evidence—I cannot give any reasons for that; I am not making accusations—contained in the London ambulance service’s emergency 999 call receipt document, to which I referred. That evidence was introduced into the inquest’s rule 37 bundle as an exhibit, but the detail and significance of this document was never pointed out to the jury. The information in that 999 call, which was made by the Bupa Roding hospital to the ambulance service, is significant.
The fact that there is a two-tier legal system is clearly demonstrated by the shocking and disproportionate lack of prosecutions. I am not saying who should or should not be prosecuted, or even whether anyone should be prosecuted. As I have said, I do not have the ability to go into that. However, there are so many conflicting reports and unanswered questions.
Before a fresh inquest for Carmel can be held, some medical personnel must be questioned and a number of medical documents must be disclosed. The X-rays taken during Carmel’s procedure, which would have shown the condition of Carmel’s kidney, have been removed from the hospital’s notes. The chest X-rays taken on Carmel’s arrival at the intensive care unit would show the condition of Carmel’s lungs. The hospital notes state that on her arrival, Carmel had a maximum four-star pulmonary oedema—fluid in her lungs—and no heartbeat. She was cold to the touch, had shut down, and her pupils were fixed and dilated. Forgive me—I am a layman—but those symptoms suggest to me someone who is, sadly, deceased. The operating department assistant anaesthetist who was present during Carmel’s botched operation needs to be questioned, and we need to know the identity of the radiologist who took the X-rays during Carmel’s operation. An investigation is also needed properly to establish the true identity of the anaesthetist who accompanied Carmel in the ambulance.
Let me stress again that Carmel was not suffering from a life-threatening condition. It was a regular occurrence that could happen to any one of us in this Chamber today. If a person dies unexpectedly in a hospital and relatives suspect wrongdoing, negligence or criminality, there is no Government body or organisation— apart from the police, who refused to get involved—willing to assist.
One of the difficulties that I have found with this case is that it falls under the remit of a number of Departments, which is why I have not included certain aspects of the case in my speech. The Minister could not be expected to respond to them, so I will have to revisit them at a later date. I will wind up, because time is moving on and I want the Minister to have the opportunity to reply. Let me, in a removed way, make my own comments. During this case, I have been moved by the dignity of the family and the whistleblower. There have been times when the family have been under great pressure and stress, and I have had to explain that there are things that I can do, and things that I cannot.
When I first met the family more than two years ago, I pledged that I would stick with the case to try to get the answers and the closure that they need and deserve. I pledge again today that I will stay with the case. When this first started, I received a phone call warning me off the case. To this day, I do not know who that was or what their reason was. I do not pretend to be a remarkably brave person, but if I give my word, I stick to it. I brought this case before the Chamber today, and I feel honoured to have done so. I thank you, Miss McIntosh, for your time and await the Minister’s response.
It is a pleasure to serve under your chairmanship, Miss McIntosh. I congratulate my hon. Friend the Member for Ilford North (Mr Scott) on securing this debate. He has set out, with considerable passion, some of the detail that led to the death of Carmel Bloom following her operation to remove a kidney stone. It was a moving speech and I commend him for the support that he has given to Ms Bloom’s brother, Bernard, who has worked tirelessly to try to establish the sequence of events that led to his sister’s death.
My hon. Friend has worked tirelessly to give support not only to Ms Bloom’s brother but to the family. I should like to take this opportunity to extend my sympathies to the family. Being unable to find out the circumstances of Ms Bloom’s death or to get any closure is a terrible burden to live with.
As my hon. Friend has eloquently said, there have been numerous investigations and inquiries into the treatment that Ms Bloom received. I know that in 2002 there was a coroner’s inquest that recorded a verdict of death by natural causes. The second post mortem did not provide conclusive statements and a further inquest in the presence of a jury found the cause of death to be
“progression of pre-operative infection following surgery, to which the absence of post-operative intubation, ventilation and monitoring contributed.”
However, none of those investigations or inquiries has brought the closure that is required by the family, or a feeling that they have found out the true circumstances of what happened.
As my hon. Friend has said, there were fitness to practise hearings into the behaviour of two clinicians, but those hearings found that the failings of neither clinician amounted to misconduct. The hearings came to the judgment that it was not necessary to issue a warning in either case. As I say, none of those investigations or hearings has resulted in an explanation that has satisfied my hon. Friend or indeed Ms Bloom’s relatives.
I have nothing but admiration for people who pursue answers to questions, sometimes, sadly, in the face of considerable adversity. Unfortunately, it is really down to their tireless efforts that we learn more and more about the failings of systems. What is important is that we ensure that we learn lessons and that those failings do not happen again.
As my hon. Friend said, Mr Bloom has taken up his case with the Metropolitan Police Service and so my hon. Friend will appreciate that, in the light of ongoing inquiries, I cannot comment further on any police action. I know that that might be a disappointment to Mr Bloom, but it is essential that due process is allowed to take its course free from interference from the influence of Government Ministers.
I also want to commend my hon. Friend for his tribute to Julie Moody. Whistleblowers, for want of a better word, are an important part of this process and we have strengthened the protection of people who have information that we feel is important. That information, when it reflects on the safety and efficacy of treatment, is absolutely vital and it is important that those people are protected.
Services provided by independent hospitals such as the Spire Roding hospital are subject to regulation and inspection. All health care providers in England, whether they operate in the independent sector or in the NHS, are subject to both professional regulation and system regulation. It is important that those things work and are effective.
Health care professionals are required to be registered with their relevant professional regulator. As my hon. Friend knows, in the case of doctors, that is the General Medical Council. He is absolutely right that the GMC’s purpose is not to act as a trade union—the British Medical Association is the trade union for doctors—but to protect, promote and maintain the health and safety of the public by ensuring proper standards in the practice of medicine. It does that by controlling entry on to its register, and by setting standards for medical schools and postgraduate education and training. The GMC registers doctors to practise in the UK and, where necessary, it has the power to issue warnings, remove a doctor from the register, suspend a doctor or place conditions on a doctor’s registration.
Interestingly, in preparing for this debate, I got out some figures about the GMC. In the last year that we have figures for, the GMC undertook 270 fitness to practise hearings, which resulted in 68 instances of doctors being struck off the register and 77 instances of doctors being suspended. I think that those figures give my hon. Friend some idea of the sort of activity that the GMC is engaged in.
At the time of Ms Bloom’s death, independent hospitals were registered with the then Commission for Health Improvement, but since that time a new system of registration has been introduced, which focuses on the outcomes of care that matter most to patients. Although I will not be able to respond to all my hon. Friend’s comments and questions today, it is perhaps important for me to set out some of the changes that have been made.
All health care providers are required, as part of their registration with the Care Quality Commission, to have an effective complaints mechanism that will enable them to learn from the experience of patients. That is an important point to make. Often we cannot change what has happened and we cannot always correct mistakes. People want to know what happened, but most importantly they want to know that things have changed as a result of what has happened to them or to their family and that lessons have been learned.
In the first instance, a complaint would be considered by the provider itself. In the case of the Spire Roding hospital, if a complaint is not resolved to the satisfaction of a patient at the hospital level, I understand that an independent review can be requested from Independent Healthcare Advisory Services. On 1 October last year, the registration of independent health care providers was transferred to the new registration system operated under the Health and Social Care Act 2008. Under that new system of registration, all providers of a regulated activity—whether they are privately or publicly funded—are legally required to register with the CQC. Providing a regulated activity without being registered is indeed a criminal offence and in order to be registered a provider has to meet and must continue to meet 16 registration requirements. Those requirements set out the essential levels of safety and quality for the provision of health care and adult social care in England. Those are essential levels of safety and quality, and as I have said already they focus on the outcomes that matter to patients and all service users.
Where a provider provides services that do not meet those essential levels of safety and quality, the CQC now has additional enforcement powers that were not available in 2002. For example, it can now issue a warning notice for non-compliance and a new financial penalty notice can be issued in lieu of prosecution through the courts. In extreme cases, the CQC has the power to close down a specific service or ward, or to cancel a provider’s registration and/or to bring a prosecution for non-compliance. If the CQC does bring a prosecution, the courts are now able to impose a larger fine of up to £50,000 where a provider has failed to meet essential levels of safety and quality. Those powers should provide some assurance to patients and service users that wherever they access health and adult social care they will receive a service that at the very least meets essential levels of safety and quality.
The CQC is risk-based and it should be a transparent regulator. That transparency is very important. Its inspections are informed and guided by the intelligence that it gathers about providers, and its inspection reports are publicly available on its website. I understand that there have been three inspections of the Spire Roding hospital in the last few years and that there were two inspections in 2009.
I can assure my hon. Friend that we want robust and effective regulation of health care providers and that we want to improve current arrangements. The health reforms that are currently before Parliament will strengthen the role of the CQC, by giving it a clearer focus on regulating the essential levels of safety and quality. In addition, we have also set up HealthWatch as a new and powerful consumer champion for users of health and social care services. It is very important that that voice for patients and the public is heard. HealthWatch will be established as a committee of the CQC and it will provide a direct route for the views of service users to reach the regulator.
I know that time is running out on us and I will certainly get back to my hon. Friend. My door and the doors of other Ministers are always open if it would be useful to have a meeting to clarify some of the issues that we have discussed. Of course, as I have said we cannot necessarily interfere in processes that are already under way.
I know that what I have said today will not change things for Ms Bloom’s brother and the rest of her family and friends, and I also know that the ripple effect of a case such as this one goes far and wide. Sadly, what I say today cannot provide the closure that they want, but hopefully I can work with my hon. Friend to give him and Ms Bloom’s family and friends some of the answers that they so desperately seek.
Road Vehicle Wheel Safety
It is good to see you in the Chair this afternoon, Miss McIntosh, and I am very grateful to have this opportunity to highlight the growing concerns about wheel safety, in particular in relation to commercial vehicles. I do so having been alerted to the lack of an adequate system for checking and inspecting heavy goods vehicle wheels by a company based on the Sharston industrial estate in my constituency. Motor Wheel Service is the largest distributor of HGV wheels in the UK and across Europe.
I am also grateful to the Minister for how he has responded thus far to my concerns. We have corresponded, and have met industry representatives to discuss the issue. Although I have yet to convince him of the need to take further action, I know that he is still listening and that he takes road safety extremely seriously.
I had always assumed that wheels and tyres were regulated in the same way, since the safety of one clearly has a direct impact on the other. Tyres are closely regulated; they all have an E-mark, which is a number printed on the tyre wall confirming that it is approved and meets certain standards. When it comes to wheels, however, there is no registration or marking, no regulated standards, and no testing or checking. It is an offence to fit and supply defective or unsuitable parts, but the problem is that people do not know whether a wheel is defective because the monitoring system is so weak.
As it stands, a wheel could be damaged in a serious accident and yet be back out on the road the very next day fitted to a different vehicle, without any inspection or accountability. The Vehicle and Operator Services Agency has never been tasked with routinely inspecting wheels when checking HGVs and, although I have no doubt that it would view the loss of a wheel in an accident very seriously, in other incidents it rarely looks to see if wheel failure has caused the problem. I accept that in the past there might have been less to worry about because of the very limited number of manufacturers and suppliers in the field, but the situation is changing, and wheel suppliers suspect that over the past three years there has been an annual increase of approximately 10,000 substandard and potentially hazardous second-hand HGV vehicles entering the UK market. The fear is that in difficult times companies will be tempted to cut costs and use wheels that are not fit for purpose, which would not only undercut legitimate business but put public safety at risk. There has also been a rise in the number of commercial vehicle wheels sourced from the far east entering the UK without any requirement to meet minimum standards of design, safety or maintenance. These wheels have no history or traceability but can be sold by anyone in the UK, with no requirement for technical procedures to assess their history.
An HGV wheel can be damaged in a number of ways. Dents and cracks can be caused by over-tightening the wheel nuts, and wheels can be involved in collisions or constantly pounded on kerbs and in the potholes with which we are all too familiar. They can also rust and suffer wear and tear as a result of age, weather or road surface conditions. The implications of purchasing a faulty wheel are enormous. A 45-tonne lorry travelling at 55 miles an hour can cause serious damage if a tyre fails, and numerous measures are in place to prevent that. It simply cannot be right that similar measures are not in place to prevent wheel failure from causing exactly the same type of damage.
Burton Copeland, a leading criminal practice in the north-west of England, has warned that the absence of regulation and testing would be no defence if HGV wheel failure caused a death and if an investigation by the Health and Safety Executive found that the company concerned had not carried out its own risk assessments or, perhaps as a cost-cutting measure, had fitted faulty second-hand wheels to the vehicle. In Burton Copeland’s view, if there was evidence of negligence, the company director responsible could face a police investigation, and even a charge of corporate manslaughter.
People in the industry should take their responsibilities seriously, and I know that wheel suppliers are playing their part in educating their customers about the risks of failing to adopt high standards. Nevertheless, the Government’s own monitoring and testing system should do more to hold companies to account and to prevent accidents from happening in the first place.
In our meeting last November, the Minister promised to review the available evidence. I was very grateful that he commissioned a review, and in a subsequent letter he confirmed that over a 15-year period there had been 23 accidents and a total of 103 cases involving heavy commercial vehicles with recorded wheel defects. It would be helpful if the Minister gave more details of the kind of problems that were identified in the search that his officials carried out. The Minister also told me in that letter that VOSA had identified 60 incidents of defective or fractured wheels. That was in a sample of 197,000 inspections, but the fact that the numbers are small is no reason for complacency. One catastrophic wheel failure could be enough to cause a very serious incident and loss of life.
VOSA’s findings are not really a surprise, as it is hardly likely to identify many wheel failures when it does not set out to look for them in its inspections. A hairline crack in a wheel could have disastrous consequences, but would not be picked up in a routine VOSA roadside check. Therefore, although the Department for Transport does not currently believe that wheel failure is a significant factor in accidents involving HGVs, the truth is that no one really knows, because the checks are inadequate. It is not possible for the Minister or his officials to be absolutely confident when the checks are not carried out as thoroughly as they should be.
I pay tribute to my colleague Brian Simpson MEP, who has been raising this issue in the European Parliament, where a draft report on European road safety up to 2020 is currently being considered. As I understand it, paragraph 33 calls on member states to monitor imported accessories and spare parts more closely, to ensure that they meet European consumer protection standards. In the absence of adequate standards and checks, it would be interesting to know what the UK’s response would be to such a call, and perhaps the Minister can tell us what the current thinking is. It certainly would not present a problem to his counterpart in the German Government, because there they have adopted a system known as TÜV approval, which includes a comprehensive system of wheel certification—the kind of system that we should seek to develop in the UK.
In order to make progress, I want to put to the Minister two practical suggestions, to at least make a start down the road to better safety. First, he should identify a senior official in the Department for Transport to act as a point of contact for the wheel supply industry, so that the industry can forward directly to that named individual any evidence of defective wheels. I have learnt from briefings by industry representatives that there are those on the front line of the HGV wheel supply industry who hear stories and come across evidence of faulty second-hand wheels being used irresponsibly. It would be a positive and inexpensive move in the right direction if those concerns could be reported officially and investigated properly, rather than remaining as mere anecdotes. We all know that when tales get told in that way and there is no point of reference for their investigation, confidence can be undermined unnecessarily. We need to have those reports made and proper investigations carried out.
Secondly, I would like the Minister to consider commissioning a year-long trial in one area of the country, in which VOSA would operate an enhanced testing programme, including greater scrutiny of wheel safety. He will argue—perhaps reasonably, based on his evidence—that moving to a full-blown system of enhanced inspection throughout the country is not warranted, especially at a time of difficult decisions about public expenditure, which neither his nor any Department can escape. However, a limited trial of one year in one part of the country could be justified, and would test his assertion that the problem is not widespread.
I do not argue completely against the Minister, as I do not have the evidence, but neither does he. If he were to commission the trial, we could begin to gather evidence to test his assertion. If he is right, I am happy to accept and abide by that, but if a trial such as the one I have suggested produced evidence to the contrary, it would argue for a more developed and widespread scheme across the country. I hope that the Minister is prepared to put his current view to the test. If a trial confirms that there is no major problem, I will be happy to accept the findings. Better that than waiting for a catastrophe before taking action.
When we are elected to this place, we come with our own experience and background, and we have the opportunity to raise issues that have become important to us in debates and questions. We meet constituents who reveal issues and problems that we can then bring to Parliament on their behalf. We also learn lessons from companies in our constituencies. I had never even considered wheel safety until a year ago. As I said, I assumed that wheel safety and tyre safety were bound up together, but I have discovered differently. When we find out such information, we are duty bound to bring it before Ministers and ask them to respond. Even when a conscientious Minister such as this one does not want to take action immediately, we do not give up easily. We persist and continue to look for evidence. If, in the end, the evidence does not exist, we accept that, but at least we know that a proper search has been carried out.
The company is based in my constituency on the Sharston industrial estate, close to the M56 and M60, and five miles from the M6. Every day, HGV vehicles pass in front of my house. I am only too aware of what could occur in all those scenarios if something went wrong. I now have nagging doubts about wheel safety, and I believe that it is important that the Minister follows up the matter. As I said, he is a conscientious Minister who has responded constructively and positively to the questions that I have raised. I look forward to hearing what he has to say and hope that we can take the issue forward in a more thorough way, so that the public can be satisfied that everything is being done to make the vehicles on our road as safe as possible.
It is a privilege to serve under your chairmanship, Mrs McIntosh, for the first time as either a Back Bencher or a Minister of the Crown. I congratulate the right hon. Member for Wythenshawe and Sale East (Paul Goggins) on securing this debate. I am not surprised that he put his name into the ballot for a debate after our meetings. It is natural for a Back Bencher to follow up meetings and correspondence with Ministers in that way. I gave him some assurances, which I followed up in correspondence, and I have more evidence today regarding what I promised when I met him and industry representatives.
It is a pleasure to set out the Government’s position on wheel safety. Having held an HGV licence for the past 34 years, I have been conscious of the issue for a long time. However, in all the time that I was driving, I never experienced or saw a wheel give way in normal service, except in a road traffic accident. In my 11 years of attending road traffic accidents with the fire service, I never saw a wheel buckle, unless—I will discuss this later—it was due to an ill-fitting tyre or to the vehicle’s being overweight. I have seen overweight vehicles on which a wheel could not take the pressure.
Road safety is crucial, and I am pleased that the right hon. Gentleman has raised it. It is one of my passions in life, given my background, and it is a priority for the Government. We have the safest roads in the world, but according to the most recent figures, 2,222 people were killed on them last year. Our roads are not safe enough yet. We intend to build on our history and safety programme. We are developing a new safety strategy, which will be published in the next few months. The overall approach of the framework is to focus on localism and targeted education, particularly remedial education, wherever possible. The right hon. Gentleman mentioned how we educate the industry. The industry has a role to play as well as the Government. We will be publishing on many other road safety issues at the same time, not least the problem of drink and drug driving. I know that the industry is looking particularly at drug driving, and I recently met the representative bodies of the haulage industry to discuss it.
On the specific points, I agreed when we met that I would consider carefully what existing data had been published and what had not. We considered the data for the past 15 years, as the right hon. Gentleman said, and they were fascinating. Of 197,000 roadside inspections, 60 found defective wheels. Admittedly, we do not know at present exactly what those defects were. They may well have been due to over-tightening of nuts or to incidents in which the vehicle was not involved; the wheels could have been transferred. It happens all the time. In salvage yards around the country, one can see it on cars as well as HGVs.
When I met the industry and the right hon. Gentleman, I said that I had considered the risk. That is crucial. We cannot wrap everybody in cotton wool; we must consider the risk. Out of 197,000 roadside inspections, 60 found defective wheels, which represents a failure rate of 0.006%. I am not saying that any risk is acceptable, but that is a pretty low rate. At the same time, we considered an analysis of more than 4,000 heavy commercial vehicle MOTs—in my time, it was called plating, but we have moved on, and everybody understands MOT terminology—in which no wheel was found to be defective. In considering the evidence, it is important that we consider the risk. I have kept an open mind throughout. In 2009-10, the last year for which figures are available, there were 198,000 inspections. We expect the figure for the first eight months of this year to be about the same, and we have found only 33 problems involving wheels. There were a similar number the previous year, and it looks as though the figure this year will be lower, unless we have a surge in evidence, but it does not look as if that will happen.
The reason is, I think, the rigour of annual testing on HGVs. Unlike MOTs, an HGV must have a test every year, no matter how old or young the vehicle is. A brand-new vehicle must have an MOT after 12 months. Anybody in the industry who says that the test is easy or that it is not taken with due rigour has not attended one. If the right hon. Gentleman likes, I will arrange for him to do so, either at VOSA or elsewhere—we are now outsourcing tests to the industry—to see for himself how rigorous they are. Defects are found on a regular basis. I remember vividly how, when I used to come home on leave and do part-time work, I would be asked to take one of the lorries down to the testing centre. It was one of the most frightening experiences that I had ever had. The lorry had been jet-sprayed and sandblasted, everything was spotless and still they found something wrong. That is why, as the junior guy, I used to be sent; the others were frightened of going down there. It is right and proper that the test should be rigorous.
The Minister makes a generous offer, and I would be happy to take him up on it, because I would like to test precisely what questions are asked and what examinations take place. I contend that the close scrutiny applied to tyres is not applied to wheels. That is the problem. Will he comment further? It is not surprising that the numbers are so small considering that those questions are not asked and those issues not investigated in the same depth as for other aspects of the vehicle.
I understand where the right hon. Gentleman is coming from, but there is a difference between a tyre and a wheel—in manufacturing and in actual product. The key to knowing what is going on is not what questions are asked, but visual inspection. Anyone can say whatever they like about where the vehicle has come from, what sort of work it has been doing, and whether it has been off-road or on-road. By the time a vehicle arrives for its plating or MOT, it has been jet-blasted, cleaned and painted, and everything looks immaculate, but if the inspectors get deep into the vehicle, they will find any defects.
The failure rates are also an issue. We are not picking up defects at MOT stage. As I have said, 4,000 had no defects. I accept, as the right hon. Gentleman has said, that they might not be looking closely enough, but one would still expect more failures for vehicles that are in use on the roads. A failure rate of 0.0004% does not seem to be huge. I promise the right hon. Gentleman, however, that I will keep an open mind.
On priorities in relation to funding and to where we need to put our assets, the right hon. Gentleman asked me to go to the next stage and announce a year-long inquiry into or validation of the issue, but it is difficult for me to do that, because I do not have the evidence that that amount of failure is occurring. If I did, I assure him that I would do not only a localised inquiry, but a national one. However, it has to be evidence based and, at the moment, the evidence is not there.
I have made sure that a senior official at VOSA, which is part of my Department, will be responsible for dealing with complaints, and he will probably be inundated with them. Anecdotal complaints are always difficult. The gossip machine and tribal drums go on and people talk about things, but we will try to identify genuine complaints and concerns. Local authorities also have powers under the Road Traffic Act 1988, and I am more than happy for the Department and my office to be contacted directly. If anybody feels that they have a problem that is not being dealt with or that they think should be taken straight to the top, they can bring it to my Department or office and I assure them that it will be investigated. As the right hon. Gentleman has said, a lot of complaints are anecdotal, but I have to base everything that I do in the Department, especially on road safety, on my evidence base. We have three separate pieces of research. The first mentions 4,000, the second notes 1,900, and it looks as though this year’s figure might show that failure rates are lower than they were last year. It is, therefore, difficult for me to respond to the right hon. Gentleman’s request.
Trading standards have a role to play, particularly in relation to the concerns about foreign imports. There is a concern about the quality and standards of Chinese imports. We will continue to look at that. I am aware of what the German Federal Government are doing. Their form of Government is different from ours, and I will leave it to others to decide whether theirs or ours is right. We have safer roads than Germany and I am sure that that will continue to be the case. It is entirely up to the German Government if they wish to operate under their own legislation. The general product safety regulations fit in with this. If there is evidence that the products coming in from abroad are defective or sub-standard, we should be made aware of that and we, along with other Departments, will investigate it fully.
It is difficult for me to accept the suggestion that minimum standards like those for tyres be set. If we stand back from the issue, we will realise that tyres are a completely different product. Wheels are solid steel in most cases, particularly on lorries and public service vehicles, while there are myriad different types of manufactured wheel-product for cars. They are a different product. I do not want to ban products that are still serviceable from being transferred from one vehicle to another because of the sheer expense that would cause the industry as a whole. The right hon. Gentleman is absolutely right that the product must be safe. Salvage is a form of recycling. We have all done it over the years. I certainly have—I have been in many a scrap yard over the years to get products that I could not afford directly from the manufacturer.
I mentioned in my speech the “E” number system that operates for tyres. Does the Minister think that a similar system would help in relation to wheel safety? If that stamp was on a wheel that was transferred from one vehicle to another, it would at least show that it had met the industry standards.
That is something that I am more than happy to look at. However, if we compare the failure rates of tyres with those of wheels, we will see that they are a very different product.
The right hon. Gentleman has asked me to look at two specific points, but I am sure that he will come up with more at a later stage. I do not say that in a derogatory manner, because that is the nature of a campaign. I cannot agree to do a specific year-long report, because the evidence from the three reports—this year’s report is about eight months in, so we will get its figure pretty soon, in about four months—do not show the failure rate to be as significant as the industry feels so passionately that it is. As I have said, I am more than happy for a senior official in VOSA to be the point of contact. If anybody thinks they have a defective product, not only do I encourage them to go to their local authority, but I am more than happy for them to report it to my own office and Department.
To reiterate, if there is a concern, we have to carefully look at the risk and make sure that it is evidence based. I know that this will be a disappointment to the right hon. Gentleman’s constituent and his business, and to the right hon. Gentleman himself, but I do not see the evidence to support Government expenditure on a further plan. I will, however, keep a close eye on the evidence that my Department receives. The way in which the right hon. Gentleman has raised the issue today, in correspondence and in meetings means that it certainly will not leave my eye for a considerable time. VOSA knows full well—my officials are present—that this is something on which I intend to keep a close eye, but the situation will not change unless the evidence changes to show that the failure rate is more significant. I apologise for citing the figure 0.0004% a few moments ago. The actual figure is 0.0006%.
I hope that the right hon. Gentleman understands my and the Government’s position. I congratulate him on his campaign and on bringing it to the Chamber’s attention today. I will work closely with him, based on evidence, but at the moment, I think the industry is doing fine.
Question put and agreed to.