House of Commons
Friday 13 May 2011
The House met at half-past Nine o’clock
[Mr Speaker in the Chair]
Regulatory Authorities (Level of Charges) Bill
I beg to move, That the Bill be now read a Second time.
This is a short Bill but an important one because it raises an issue that affects everyone in the country: the level of regulatory charges imposed on them. I think it was the Minister for the Cabinet Office and Paymaster General who coined the phrase “stealth taxes”. He did so more than 10 years ago, but it is still a highly relevant term, because when public sector organisations increase their fees and charges, they are essentially imposing additional taxes on the populace.
While I was looking into possible subjects on which to introduce Bills during this Session, I had some very unsatisfactory correspondence with the Care Quality Commission about the price it was charging for the registration of a children’s hospice in Dorset called Julia’s House. At that stage, Julia’s House had three residents rooms but it wanted to add a further room, and the CQC said it would have to pay a substantial additional fee of thousands of pounds. The hospice chairman wrote to me saying he thought that was unsatisfactory as the hospice is, after all, a charity and all its costs are covered by charitable donations, which in this instance were, effectively, going into the proxy coffers of the Government by way of a regulatory burden.
Following that, the CQC conducted a consultation on its level of charges in general. I will refer later to some of the conclusions to be drawn from that, but it is clear that the CQC is intent on increasing the burden of charges well above the rate of inflation from year to year, partly to meet the Treasury requirement that it should cover its costs by raising charges. We know, however, that it is possible for organisations to reduce their costs, although that option is very often not taken by regulatory authorities. Fortunately, the BBC is now being forced to reduce its costs because the Government have said the licence fee cannot be increased.
I wonder whether my hon. Friend might dwell a little further on this point and give us a little more detail because, contrary to what he has said, there are cases in which the introduction of a moderate and measured regulation may allow for other regulations to be lifted. That balance lies at the heart of the Bill and our consideration of it.
Yes I will, as I want to inform my hon. Friend’s contribution as well as I possibly can. There is a strong argument that the introduction of professional standards, and therefore some measure of quality, into certain parts of the economy may allow for the reduction of other regulations that are currently in place precisely because those professional standards are absent.
That is a rather general example, if I may say so. Perhaps when my hon. Friend comes to respond to the debate he will address a specific profession, such as dentistry. Dentists are already regulated by their professional body. They are also regulated under health and safety legislation and so forth, but the CQC is now insisting that it too should regulate them. It is going to cost dentists a minimum of £800 a year, I think, to register with the CQC. I hope that the Minister will in due course explain what added value will come from that, as there is an enormous amount of scepticism about whether it will lead to any improvement in the quality of dentistry in this country. When one looks at the CQC report, one finds that the income from the regulatory fees for dentists will far exceed the amount that will be spent on regulating dentists. That is a good example of what I am describing as a “stealth tax” or an “additional regulatory burden”.
May I gently chide my hon. Friend? It is open to someone who has a Bill before this House to provide explanatory notes to assist the House in considering the Bill. I understand from the Vote Office that he has not done so and perhaps he could tell the House why. It would have been helpful had he gone to the extra effort of providing those notes. Because he has not done so and because he has gone on about the Care Quality Commission, may I ask whether he intends the definition of “regulatory authority” in his Bill to encompass local authorities?
The short answer is that I do not intend that definition to cover local authorities. On the lack of explanatory notes, my right hon. Friend is a lawyer of considerable repute and he is capable of reading a two-clause Bill just as well as anybody else. This is not a complicated 100-page, six or 10 schedule Bill. We know that you, Mr Speaker, are saying that we must ensure we get good value for money, and we want to reduce our costs, so I thought it would be an unnecessary burden and an additional cost to have explanatory notes for something that is self-explanatory. I hope, in due course, to take my right hon. Friend through the terms of this short Bill, so that if he has any doubts, he can ask questions in interventions and so on. Perhaps I shall do so now, as I am being prompted.
Clause 1 refers to:
“No regulatory authority carrying out functions in England”,
so the Bill extends only to England. Although we have to say that it applies to England and Wales, it will apply only to England.
Clause 1(1) begins:
“No regulatory authority carrying out functions in England on behalf of a Minister of the Crown”.
My hon. Friend says that that is what the Bill is to cover and that he does not intend it to cover local authorities, yet I understand that the analysis of whether a property which is not connected to the water mains is receiving water of an adequate quality is carried out by the local authority, which is undertaking that duty on behalf of a Minister of the Crown, so surely his definition might include local authorities in some circumstances.
My right hon. Friend may well be right. It may well be that there are certain circumstances in which local authorities are undertaking a responsibility given to them by the Crown and so this Bill would apply to them, but it is not intended to cut across the discretion of local authorities to set their own fees and charges for the services they provide. That would be contrary to the principles of localism, which are supported so widely across the House now.
Clause 1 states:
“No regulatory authority carrying out functions in England on behalf of a Minister of the Crown may increase, over any given period of time, the fees charged in respect of any of its services by more than the rate of inflation, measured by the Consumer Prices Index, over that given period of time.”
Recently, these charges have been increasing very much above the rate of inflation, and I shall give the House some examples.
Anyone who wishes to travel abroad must have a passport, so one can hardly describe this as an optional extra for most citizens. In 1997, a 10-year renewal for an adult passport cost £17.50 but in 2009 the cost had increased to £77.50, which is almost a fourfold increase in real terms in 12 years. Why? Is such an increase not rather unfair, given that everybody needs a passport and especially given that children now have to have their own passports and cannot travel on their parents’ passports? How can such an increase be justified? Clause 1 would make it impossible for the Passport and Records Agency to increase its fees above the rate of inflation over a given period of time without getting specific authority so to do.
I had the great pleasure of working for the passport office to fund my way through university. While I was there, just pre-1997, it was outsourced to Siemens Business Services, and this was one of the reasons why the costs became so large so quickly. A failed IT project from a previous Government was involved.
My hon. Friend makes a very important point. Why should the users of passports be paying for this manifest failure of Siemens Business Services? That really does make the cost a stealth tax. Who knows, when applying for a passport renewal, that a significant part of the cost is actually to pay Siemens Business Services for an inadequate IT system? Having said all that, in 1997 the cost was £17.50, by 2002 it had increased to £33—by then the Siemens issue should probably have been sorted out—and it then increased to £77.50 in 2009, so I am not sure that my hon. Friend has the complete answer. However, what he says is interesting because it shows how these bodies are tempted to pass costs on to the users of their services, no matter how unreasonably those costs may have been incurred.
Another example involves the Driver and Vehicle Licensing Agency and the Driving Standards Agency. In 2006, the application fee for the UK driving test was £21, but by 2011 it had risen to £31. The fee for a UK driving test practical on a week day increased from £48.50 in 2008 to £62 in 2011. My right hon. Friend the Member for East Yorkshire (Mr Knight) has a great interest in this subject, but I wonder whether he knows the answer to the following quiz question: who was the first person to pass his driving test? If he does not know, I can tell him and the House. The first person to do so was Mr J Beene in 1935, and he had to pay 7/6d in old money, which is the equivalent of 37.5p now. These examples just show how these regulatory costs have risen over the years and how they continue to rise.
Other examples include the significant costs imposed for immigration settlement fees. A lot of cross-subsidy takes place within those and so in the current year the cost faced by a parent or grandparent of someone who has already settled in this country is £1,814, which is a significant fee for that application. You may recall, Mr Speaker, that there was a lively exchange of views a couple of years ago when the issue of fishing licences from the Environment Agency came before the House. Those licences produce a yield of £23 million for the Environment Agency, and my hon. Friend the Member for North Herefordshire (Bill Wiggin) raised his concern, and that of others, that the EA had arbitrarily increased by 37% the cost of concessionary rod licences for pensioners and disabled anglers. Why was that done? It was done to help the Environment Agency make a larger profit at the expense of the users of those licences. That is another example of a case that would be covered by the Bill, because if the Environment Agency wanted to increase its charges above the rate of inflation, it would have to get specific authority so to do.
At the moment, there is a proposal from the Police Federation that the cost of a shotgun licence should be increased by some 400%. Again, what could be the justification for that? Surely it is an abuse of the system.
Does my hon. Friend agree that such extortionate increases are in fact likely to lead many people to give up licensing their shotguns altogether, which will mean that the police will have to deal with many people holding unlicensed shotguns?
I think that that would be a danger were the increase in fees to go ahead. A similar danger arises in the case of 17-year-olds seeking their first provisional driving licence. Is it reasonable that they should have to pay a very large fee for that? That fee might be a deterrent to their getting a licence and they might choose—unlawfully, obviously—to drive without a licence. That was a challenge I faced when I was the Minister for Roads and Traffic because in order to keep down the cost of entry into driving for someone obtaining a provisional licence and in order to make ends meet, it was necessary to introduce a modest charge for people who wanted to renew their licence at the age of 70.
There was a big debate in the Government at the time, egged on by a false leader in The Sunday Telegraph, and the proposal to charge a modest fee for 70-year-olds when they renewed their licences was regarded as a tax on pensioners. Nobody really understood the point that my hon. Friend the Member for Bury North (Mr Nuttall) is making, which is that to increase the costs for the person seeking to get his first provisional licence would be a potential deterrent for that person. I have raised a similar issue in the context of the very high rates of insurance costs and the Government’s policy of having increases in insurance premium tax that bear directly and disproportionately on the costs for young drivers who want insurance. My hon. Friend therefore makes some very good points.
A constant problem is: if we have regulators, who will regulate them? That is essentially what the Bill is about. It challenges the Government in a time when money is tight and when we are told that family incomes will fall over the next two or three years. The Government are imposing quite tight targets on many Government Departments, but would it be fair if those Departments responded by increasing the fees and charges they impose on the tax-paying public by more than the rate of inflation? I do not think it would.
I am interested in that assertion. Of course my hon. Friend will know that the Government are sympathetic to the thrust of what he is saying. We understand that regulation is a significant issue for businesses of all types, but I wonder whether the debate about regulation is too often seen in quantitative rather than qualitative terms. My hon. Friend has made a case about the volume of legislation in respect of regulation and I wonder whether he could expand on the quality issue. When regulation is justified, how should it be devised and implemented?
My Bill deals with the cost of regulation rather than the wider issues of regulation that have been raised in, for example, Lord Young’s report. I have a number of other Bills before the House that cover various aspects of Lord Young’s recommendations.
My concern is that it is too easy for the regulatory authorities to say that they have to increase their charges because they have to carry out more activities. That is what they do. My hon. Friend will know this better than anybody, because he probably has the coalition’s programme for government on his bedside table, but that document talks about reducing the burden of regulation:
“We will cut red tape by introducing a ‘one-in, one-out’ rule whereby no new regulation is brought in without other regulation being cut by a greater amount”
“We will end the culture of ‘tick-box’ regulation, and instead target inspections on high-risk organisations through co-regulation and improving professional standards.”
I am unsure how what the Care Quality Commission has done to dentists fits in with the second paragraph on business in “The Coalition: our programme for government”. Perhaps all will be revealed when my hon. Friend the Minister responds to the debate.
Order. I am grateful. No debate would be complete without the legendary literary references of the hon. Member for South Holland and The Deepings (Mr Hayes), but I know that the hon. Member for Christchurch (Mr Chope) will not be tempted away from the path of virtue, whatever the enticements of the Minister.
We now know where my hon. Friend the Minister gets all these references from, but that is another story.
Let me give an example of a good regulator. Some of us had the privilege of listening to Colette Bowe from Ofcom earlier in the week. She said that Ofcom had been asked by the Government to reduce its costs by some 25%. It has already reduced its costs by more than 20% and it has not increased the costs of regulation but reduced the size of the organisation so that it acts more proportionately. There is a message there for many other regulators whose minds are not concentrated sufficiently because they have the option of always being able to increase their charges. That is why I have these provisions in the Bill.
The Bill does not say that regulators can never increase their charges, but clause 1(2) states:
“No regulatory authority shall introduce a charge in respect of a service currently provided free of charge in England unless a report has been laid before Parliament setting out the reasons for the introduction of the charge and that report has been approved by a resolution of each House of Parliament.”
Other colleagues will have different examples, but at the moment the Department for Transport is actively considering charging owners of vehicles a registration fee just for having a vehicle in their ownership. The statutory off road notification, which is a means whereby an owner can keep a car off the main road without incurring a fee, will be changed and the owner will have to pay the fee that is being introduced, even if they are keeping the car off the main road and not using it on the highway. That would be an additional new charge. Would it be reasonable? I do not think it would, but if it were introduced under the Bill, it would be necessary for a report to be laid before Parliament setting out the reasons and justification for it. If that were to happen, my right hon. Friend the Member for East Yorkshire would no doubt ask questions about the impact on those who have older cars that they do not use very often.
Does my hon. Friend agree that the introduction of such a charge would be outrageous? In effect, it would be a tax on ownership, which would be unique in this country. Does he share my shock about the reading matter on the Minister’s bedside table? Would the Minister not be better advised to have a copy of the Jensen Interceptor Mark III workshop manual by his bed?
One of the problems we face is moths—I can even see them flying around the Chamber—so I have a very heavy volume by my bedside to deal with them, particularly when I go home after a long sitting in the Chamber. They are eating every woollen thing in my house, so it is a real problem. The way to deal with them is to have a big tome on the bedside table.
I could give many examples of charges, but the significance of the Bill is that it imposes no additional charge on the taxpayer. There is no money resolution because there is no need for one. Clause 1(3) states:
“No Minister of the Crown may increase the level of any grant payable to a regulatory authority as a consequence of the provisions in this Act.”
Without that provision, it would be possible to argue that if we did not allow regulatory authorities to increase their charges, the Government, through the taxpayer, would have to give additional grant aid. That is specifically excluded under clause 1.
Subsection (4) gives a definition of “regulatory authority” that is inclusive rather than exclusive. It includes
“any authority or body which regulates the carrying on of any business or activity, or the practice of any profession.”
There is flexibility for the Government, as subsection (5) gives the Secretary of State power to make
“consequential, saving, transitional or transitory provision”
as he or she deems fit. Clause 2 sets out the title and commencement date and states that the Bill applies only to England and Wales.
I hope the Minister will commend the Bill for being short and to the point, and that he will use the opportunity presented by this debate to give some assurances to members of the public that we shall not see increases in the burden of regulatory fees and charges similar to those that took place under the previous Government. Will he assure us that the Government really are committed to ensuring that those stealth taxes are kept under control?
It is in the nature of Ministers not to like the idea that a Bill could not be improved by the Government. There may be problems with my Bill, but even if the Minister cannot accept it in its current form, I hope that the Government will suggest ways it could be improved or modified and that they will not block its Second Reading.
I commend the Bill to the House.
I am grateful for the opportunity to speak briefly in support of a most laudable Bill. I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on bringing the measure before the House this morning. The Regulatory Authorities (Level of Charges) Bill might be referred to more colloquially as the control of stealth taxes Bill, and when it reaches the statute book, as I hope it will, perhaps that is what it will be called.
Most people would see the Bill as right for the times in which we live—often described as an age of austerity. I am grateful to my hon. Friend for raising some of the problems that regulatory authorities cause. Whenever I have conversations with a professional, be it an accountant, a solicitor or an architect, it is not long before we reach the subject of the imposition of fees by regulatory authorities. From my time in practice, I know that a common source of concern was that bodies such as the Law Society or the Solicitors Regulation Authority seemed able to charge what they liked, without any real control over how they arrived at their fees.
For an organisation that is not in the competitive world, it is all too easy to increase the charges they make on those they have under their control, instead of cutting costs. In many cases, people have no choice about where they have to apply for the licence or certificate they need to conduct their business. That is why some measure of control over regulatory bodies is appropriate.
Many people see those bodies as above the law; they seem to operate in a parallel universe, immune from the pressures of the real world where there is a need to control costs and ensure that the prices charged to customers and clients are kept as low as possible. Those pressures do not exist when there is a captive market and people have nowhere else to go.
The problem with regulatory authorities is that in many ways they are a law unto themselves. Their activities rarely attract much attention. People may have to return to professional bodies every year, but in the case of many other bodies it is only every few years. My hon. Friend mentioned passports. Over 10 years, the cost of a passport increased from £17.50 to £77.50, which far exceeded the rate of inflation over that period, but nobody sat down with a calculator to work out whether the fee went up in line with inflation, or massively more than that. Businesses have to cope not only with the regulatory burden imposed by such bodies, but with the financial burden.
I fully accept that the Bill is not the ideal solution. I would prefer the abolition of the regulatory burden in the first place, and although I accept that in many cases regulation is essential, I am pleased that the coalition Government have been making excellent progress in culling the numerous public bodies and quangos. No doubt the Minister will refer to that later. However, despite the Government’s activities in culling quangos, hundreds will still exist, so the Bill is relevant and essential to protect both the public and businesses from excessive fee increases.
We might think that the onset of new technology, and the possibility for individuals and companies to file things online—in some cases, they have no alternative—would have the effect of driving down prices. Of course, we know from the licence fee freeze that has been imposed on the BBC that, when an organisation is told to cut costs rather than increase its licence fee, it can be done. A few years ago, when Companies House was given freedom from the Government, its filing fees actually decreased. I remember how pleased companies were that the filing fee for an annual return, for example, stopped increasing and started decreasing, so it can be done.
My hon. Friend mentions that Companies House almost went into private mode and was able to drive down its costs. Will he consider the fact that some licence fees have increased because they are no longer heavily subsidised by general taxation and because Governments have tried to ensure that licences should be paid for by the people to whom they are issued? That is why prices have gone up.
My hon. Friend makes a good point, and I agree with the general thrust of his comments: service users should contribute to the cost of the service that they use. It is right that, for example, solicitors and accountants pay for the costs of their regulatory bodies. People have no difficulty with that, but the problem comes when regulatory bodies, which are answerable to no one other than their own membership, feel that they can impose excessive increases way beyond the inflation rate, rather than considering ways to control their costs. That is particularly important when organisations across the public sector are being asked to live within their means, and that is the Bill’s thrust.
I certainly hope that the Bill receives the overwhelming support of the House this morning. I wish it well in its progress through the House and in another place. I look forward to hearing the Minister’s comments and to seeing the Bill on the statute book in the months to come. I am sure that it will be widely welcomed, not just in the House, but across the country.
I commend the hon. Member for Christchurch (Mr Chope) not only for his customary skill in securing such an optimal slot for his private Member’s Bill, but for his interest in this very important area. Not enough Members are sufficiently excited by regulation, but when growth is flatlining and businesses continue to struggle with the effects of a challenging economy, it is important that we discuss the role of regulators and particularly their impact on businesses.
As somebody who formerly worked for the telecoms regulator, Ofcom, which the hon. Gentleman was good enough to praise, I am familiar with the effect that regulation has on businesses of all sizes. I understand his deep frustration with the Government’s broken promises on regulation. Regulation protects consumers and employees’ rights; it ensures that our industries play their part in moving towards a green, sustainable future; and it keeps citizens safe. It has no doubt saved many lives. It is therefore important that it is effective and enforceable, but challenges arise when ill-thought-through regulation has unforeseen consequences or is interpreted bureaucratically and inflexibly.
I thank the hon. Gentleman for that intervention. We can all agree that the work of the police needs to be supported by effective regulation and by ensuring that our police have the rights needed to pursue their necessary duties in the best way possible.
Regulation can certainly represent an unacceptable burden on businesses, particularly small and medium enterprises, which may not have the legal advice to interpret regulation accurately or the resources to implement it fully. Like many hon. Members, I am a passionate advocate of effective measures to free businesses from red tape, but I do not believe that the answer is to impose arbitrary restrictions on authorities that could hinder their enforcement capabilities. I am afraid that I am not entirely convinced by the Bill. It would introduce restrictions on a wide range of different regulators, and it would therefore need considerable examination in detail in Committee.
When in power, Labour sought to reduce regulation, by introducing the Better Regulation Commission and the ongoing better regulation programme, and made a number of legislative changes to reduce the costs of regulation. I am sure that the hon. Gentleman would not be promoting the Bill if the Government had managed to keep their headline-grabbing promises on reducing regulation. As the director general of the Institute of Directors is quoted as saying in yesterday’s Financial Times, the Government’s rhetoric on red tape and planning has yet to be matched by action.
I am disappointed that the hon. Lady is not supporting my Bill. She compares this Government with the previous Government, but what does she say about the fact that, under the previous Government, some fees and charges, particularly those of the then Passport Agency, shot up by four times the rate of inflation?
I am expressing considerable doubts about the Bill, but I have not said whether or not we will support it—it is too early to say.
It is regrettable that charges have risen in regulatory authorities, not only for passports but in a number of other areas that hon. Members have mentioned. It is the duty of those to whom the regulators are accountable to ensure that those charges provide value for money for our citizens. I am not convinced that an arbitrary imposition of centralised regulation can effect the right kind of change in regulators’ behaviour.
Answers to parliamentary questions asked by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) revealed that, by February this year, this Government had introduced 424 new regulations while removing just 172. That is hardly one-in, one-out. It was reported at the time that the Secretary of State for Business, Innovation and Skills read the riot act to Cabinet colleagues about their lack of progress, while neglecting to mention that his own Department, which is responsible for regulation, had in 10 months of government removed precisely no significant regulations, while introducing 53 new ones. So I understand why the hon. Member for Christchurch expresses frustration.
The Opposition believe that it is essential to take a fresh look at existing regulation, how it is implemented and particularly how it is translated from European directives. However, I am concerned that this arbitrary blanket ban is, like too much of the Government’s current legislative programme, lacking in detail in many key areas. For example, some regulators’ charges are a percentage of their stakeholders’ turnover. Will the Bill limit the absolute amount or the percentage?
Regulators may at times be able to reduce charges. Would not the Bill create a perverse disincentive to reducing charges, given that regulators would know they have to come to Parliament to increase them? For example, in 2006 Ofcom raised the application fees for radio licences while reducing the ongoing fees in order to meet the important criterion of reflecting cost. Under the Bill it would not have been able to do that.
At the heart of the Bill there appears to be a principle of centralisation. Regulators operate in a wide range of industries and areas. Is it appropriate that one regulation should apply to all? In response to the question, “Who regulates the regulators?” the hon. Member for Christchurch answered, “This Bill,” but in most cases, regulators are answerable to Select Committees and Departments of Government, which are answerable to the people. Does not the Bill imply that these Select Committees and Departments are failing in their duty? Do not the many criticisms expressed by hon. Members who have spoken imply that the issue should be addressed directly, rather than obscured by a blanket ban?
We understand the hon. Gentleman’s deep frustration with the Government’s false promises on regulatory reform and we strongly support reductions in and improvements to regulation, but we fear that the Bill could have significant negative consequences for regulators and for industry. We need smart regulation, not blanket bans.
It is a pleasure to speak about the Bill promoted by my hon. Friend the Member for Christchurch (Mr Chope), who spoke with his usual clarity and consistency about the burden on business. He takes the view, which the Government broadly share, that it is crucial that business is free from all regulation but that which is necessary for it to go about its purpose. In a free economy, businesses must be allowed to do what is in their commercial interest and the wider public interest without unnecessary interference from Government. That is a fundamental aspect of what my hon. Friend advocated. It is at the heart of the Bill, and he will be pleased and perhaps even relieved to know that it is also at the heart of the Government’s thinking.
The Bill highlights some important ways in which regulation is enforced in this country. I made the point when I intervened on my hon. Friend that our attitude and approach to regulation need to be qualified by considerations of both quantity and quality. It is true that the Bill deals with cost, but cost has a direct relationship with both of those. It is certainly true that we should measure the volume of regulation quantitatively, and I shall speak at length—but not at undue length—about some of the ways in which that is already done by Government and others. However, it is also true that we should assess regulation qualitatively, because the quality of regulation has a direct bearing on its cost to Government and to the organisations that it affects. The Bill is both a quantitative and a qualitative assessment of regulation measured by cost.
For reasons that will become clearer later in my speech, I cannot support the specific approach that the Bill takes to regulatory change, notwithstanding the warm welcome that I have given to my hon. Friend’s commitment and the opportunity that the Bill gives to consider these matters in greater detail. I shall speak about the matters that it raises in considerable detail as we engage in this interesting debate.
The Bill provides an important reminder of the many ways in which regulation can impact on business and the best means of ensuring that adverse consequences are minimised. It would be helpful to consider some of the principal aims of the Bill. In a rather abbreviated contribution by his usual standards, my hon. Friend took us through the Bill, but I shall do so in more detail. First, the Bill seeks to limit the ability of regulators to recover the costs of the regulatory services they provide. Specifically, the Bill seeks to limit increases in charges to no more than the rate of inflation as measured against the consumer prices index.
My hon. Friend may feel that this is a rather technical point, but these are, after all, technical matters: many examples given in his speech would probably not be covered by the Bill as drafted. He said with typical humility when he was coming to the end of his peroration that he understood that, if the Government supported the broad thrust of the measure, it might be necessary to perfect its drafting, so I acknowledge that he anticipated that some of these technical problems might arise, as they often do when Bills are introduced through the method of a private Member elevating a matter for the consideration of the House and asking for the Government to respond.
I make that technical point because in existing regulatory law the definition is largely restricted to business regulation. Therefore, some of the matters with which my hon. Friend dealt—passports, for example, drivers licences and vehicle licensing—would not necessarily be covered, because those are matters affecting the private citizen. They are subject to the usual rules on public expenditure, managing public money and the normal oversight of spending. That is probably the most appropriate set of frameworks by which they should be assessed. On a purely technical note, therefore, it would be inappropriate to relate the detail of the Bill to the advocacy of my hon. Friend in the areas that I highlighted.
My hon. Friend suggests that the Bill applies only to regulatory authorities that regulate the carrying on of any business. As he knows, it also covers regulatory authorities regulating the carrying on of any activity. Why does he think the Identity and Passport Service, which is responsible for the carrying on of activities, is not covered by the Bill?
Activities of the kind that I mentioned and about which my hon. Friend spoke in his contribution are covered by other legislation and a different set of regulatory protocols, which the Bill would contradict. It would require considerable work to achieve a happy marriage between the two. It is impossible to pass the Bill in its current form without its having an impact on other legislation which itself sets up a series of regulatory mechanisms to deal with some of the matters that he described. I do not want him to assume that this is a criticism of the essence of his argument or of the principles upon which it is based; it is purely an observation that technically it would not necessarily be possible for the Government to adopt the Bill in its current form.
My hon. Friend seems to be saying that regulatory legislation is so complex that it is impossible to simplify it in the way that the Bill would simplify it. If the regulatory legislative framework is so complex, why do not the Government get to grips with making it simpler?
Later in my contribution I shall describe some of the ways in which the Government have done just that. They have taken a firm grip on these matters. Even in these early days of the long regime to which we can look forward and in which I hope to play a small part, we are making significant progress in the way that my hon. Friend wishes us to do.
It is not a question of the Government not intending to grasp the nettle—to take a grip on the subject, to use his terms—but of doing so in a way that is consistent, coherent and deliverable.
Lest I dwell too much on the first part of the Bill, let me deal with the second part. The Bill would stop a regulator, subject to specific conditions, introducing a charge for a previously free service. A regulator would be able to introduce new charges where previously there had been none on the condition that a report setting out the benefits of the new arrangements was laid before and agreed by the House. Were I a rather more sarcastic person than I am, and if I wished to tease my hon. Friend, which I would not do, as you know, Mr Speaker, I might say to him that he is himself in the Bill establishing a rather elaborate system, to put it mildly, for dealing with the test that he describes: a report to the House, which presumably will be debated, with no real clarity about the length or nature of that debate, and perhaps even referred to a Committee of the House. Who knows how long that process might take? It is absolutely right that these matters should be scrutinised, but the implication of my hon. Friend’s proposals is that we might lengthen, both in terms of time and substance, the mechanisms by which we assess, implement, gauge, and judge necessary regulation.
Order. Before the right hon. Member intervenes, may I say two things to the Minister? First, he is second to none in his respect for the courtesies of the House, and I invite him, therefore, to address the House and not continually to turn his back on the Chair. Secondly, although his preamble to his main thesis is of great interest to the House, I remind the House and those listening that there are two clauses in the Bill, which consists of one page and one line. I feel sure that it will not be long before the Minister wishes to address himself to the clauses of the Bill.
It is that part of the Bill that I am addressing, Mr Speaker, in very specific terms, and, yes, it could be argued that it makes the system more accountable, in the sense that it brings the matters before the House, but the spirit that lies behind the Bill and the powerful advocacy of my hon. Friend the Member for Christchurch, not just now but for all time, of the need to place fewer burdens on business, is that rather than extending and elaborating the process by which we implement, consider and, indeed, devise regulation, we should simplify it.
That brings me to the final provision of the Bill, which focuses on the duties of responsible Ministers and sets out plans to prevent them from increasing funding for their regulatory bodies. That would mean not only that the charging framework within which regulations operate was restricted, but that regulators should not have any additional funding from central Government as a result. I can understand why my hon. Friend argues that, and why the Bill seeks to put that argument into practice, but a better measure of the quantity and nature of regulation is required to consider these matters as fully as they might be considered.
Let me find common cause with my hon. Friend. It is absolutely right that the House, and indeed the Government, should consider the impact of regulation. The CBI has argued that regulation is one of the key elements inhibiting growth. Its April 2011 survey described a Nigeria-style regulatory regime—its words, not mine, I hasten to add. It said that only that country had a similar regulatory burden to that of Great Britain. Apparently, according to the CBI, we rank 89th out of 139 countries for having the biggest regulatory burden. Its concern was that that regulatory burden had a powerful influence on growth, and unless we deregulated, as my hon. Friend’s Bill would, we would inhibit growth. This is not the first time that the CBI has argued this case, nor is it the only organisation that does so.
My hon. Friend and others will be familiar with the Institute of Directors’ regulation reckoner, which it produces regularly, and I have here the 2011 issue. The IOD estimates that the total administrative costs of regulation for business for 2011 are growing and have a considerable impact on business both large and small. It argues that directors spend 17 hours a month on regulation administration and that the annual cost of regulation administration is £7,664 for each director. It says that work forces spend 106 hours a month on regulation. To put that in crystal clear terms, the IOD argues that the burden on work forces is equivalent to one member of staff working continuously on regulation from 1 January until 26 August, which is 34 weeks, to complete a business’s annual regulation administration. That is the kind of evidence that stimulates my hon. Friend’s concerns and motivates him in his mission to address these matters and to encourage the Government to do so too. This is why it is important that we debate these matters, and it is absolutely why the Government also take them seriously. The CBI argues that in order to avoid a double-dip recession the Government must deal with regulation. My hon. Friend suggests that his Bill, which is essentially about the nature and cost of regulation, would help us to do that.
The arguments of others suggest that regulation does not emanate only from this place. It is the view of the Bruges group, with which my hon. Friend is familiar, that the cost of regulation to businesses that we in this country enjoy—or perhaps I should say endure—is about £100 billion, with EU regulation accounting for about half of the total. I know that you will be as shocked as I am, Madam Deputy Speaker, to hear that, and as determined as I am that we adopt such regulation only where absolutely necessary, and that we certainly do not gold-plate it. Yet the IOD tells us that that is precisely what the previous Government did. That is the risk we face.
Not only must this House be diligent in ensuring that the additional regulatory burden I have described is not piled on to businesses large and small, but we must be even more mindful of the need to ensure that that which comes from other lands does not make the circumstances even worse. To that end, the Bill includes a definition of a regulatory agency in order to try to deal precisely with the matters I have described. However, I am advised by officials that the task of defining a regulatory agency, as the Bill does, is always a very complex one.
It might be helpful to build on that advice and start by reflecting on the range of agencies and organisations already involved in our system of regulation, because for the proposed agency to have effect it would need to sit comfortably with the existing framework of regulators and be consistent with the forms in which that regulation is constituted. The large number of organisations and individuals that play a part in securing compliance form a complex landscape. Businesses have the primary responsibility for meeting their obligations under the law, but a number of agencies in the public and private sectors, as well as civil society organisations, also play a role.
My hon. Friend the Member for Christchurch will know that national regulators secure adherence to the rules in many areas of modern life, including nuclear safety, pensions and health. He spoke earlier about some of the others, and I criticised him for using examples that would perhaps not be covered by the scope of the Bill, but none the less he made a powerful point about the range of areas of life and the range of activities and business on which regulation has an impact, and I understand his point.
Local authorities also have a role in enforcing the law in areas such as food safety, under-age sales and consumer protection. Were the Bill to proceed, the regulatory agency my hon. Friend seeks to establish would need an appropriate legal interface with those authorities.
I wish my hon. Friend would use some of this cold water to wash his car, rather than to pour over the Bill. Why does he not see himself as a reforming Minister and grasp the issues so that he can take this matter forward, rather than using them as an excuse for doing nothing?
I am disappointed in my right hon. Friend, as a fellow owner of a Jensen Interceptor Mark III and member of the owners club, because what I have said is merely my preliminary remarks on why the Government cannot accept the Bill in its current form. I will move on to why we feel that aspects of the argument put forward by my hon. Friend the Member for Christchurch are worthy and compatible with the Government’s determination to reform these matters in a way that reduces the burden of regulation. My right hon. Friend the Member for East Yorkshire (Mr. Knight) should not be so hasty in assuming that I do not share the reforming zeal that motivates him and others to make life more straightforward for our businesses so that they can add to the prosperity we all seek.
On the specifics of the Bill, my hon. Friend the Member for Christchurch advocates a regulatory agency. However, unless that agency were to interface with the existing mechanisms for dealing with regulation, it would be impossible for the Government to accept its establishment as framed in the Bill, because there are many agencies that play an important role in the regulatory system, in both national and local government, and also agencies that play a role beyond the framework of the law. Trade associations, in particular, provide a service to businesses in the form of regulatory advice and guidance. Lord Young’s review of health and safety law, which has been referred to, highlighted the extent to which other agencies, such as the media and private consultancies, can create their own regulatory burdens. We are therefore dealing with diverse responsibilities.
In some areas regulation is effectively free to business, which is why, as the Bill deals with costs, it is important that we assess which types of regulation impose costs and which do not. The costs of the regulator and regulation are often met by the Government. My hon. Friend, in his speech and in the Bill, makes no detailed assessment of the balance between the costs absorbed by Government and the costs imposed on businesses. The Government’s view is that in many cases it is in the interests of fairness that the costs of regulation are met by those who are regulated. Where such fees are charged, they can take a variety of forms, from licences to levies and charges for specific services.
In those terms, the Bill, as I have said, starts from the commendable idea that businesses should be given as much certainty and transparency as possible on how they are charged by regulators and that appropriate controls should be in place to govern the way in which they are imposed. In that respect, I find common cause with both my hon. Friend the Member for Christchurch and my right hon. Friend the Member for East Yorkshire, who call for a zealous approach to assessing those costs and measuring how Government activity might add to them. It is right that the system, with regard to the imposition of costs, how they are gauged and how they grow, is properly assessed.
Before I address the Bill’s specific points, I think that the House would expect me to put in context the scale and ambition of the Government’s approach to regulatory reform. Just yesterday I was looking at those matters with the Prime Minister and the Deputy Prime Minister in relation to apprenticeships. As you know, Madam Deputy Speaker, it is the Government’s intention to build more apprenticeships than Britain has ever had before, and we were looking at how some of the costs of putting in place the necessary regulation on apprenticeships could be lightened. For example, for large companies that are providing apprenticeships, we have announced that those costs—
Order. I am very grateful to the Minister for supplying the House with so much information, but I am struggling to ensure that he remains in order. I understand his point about burdens, but the Bill relates to fees already charged for services, not to increasing those fees. I would be grateful if he returned to that specific point.
Order. It might be helpful, but I have said very specifically to the Minister that this one-clause Bill, as Mr Speaker previously pointed out, is about fees charged, rather than burdens. The Minister must stay in order. If he does not, I will intervene on him again, so perhaps he will reflect on what might be helpful in those circumstances.
Of course, Madam Deputy Speaker. I am guided, as ever, by your advice in these matters.
The Bill suggests that the fees charged for services that are determined by law and part of the regulatory agenda should be gauged in a way that allows this House to make a judgment about their impact. The Bill, in those terms, needs to be assessed against its likely impact and effectiveness, but we are right to argue that it also should be gauged against the existing provisions, both in law and beyond, that affect costs and fees in respect of regulation, and the Government’s absolute determination to reduce that burden.
So, my hon. Friend will want to know that the moratorium on new domestic regulations for smaller companies, which the Government have put in place, certainly affect the provisions of this Bill. The determination of the Government to publish all regulations sector by sector will to some extent do what the Bill intends, because it will give us a clearer indication of the character and nature of costs, and how they rise.
Surely the effect of the Bill will be to ensure that regulators are not able to increase their fees and charges beyond the rate of inflation, and they will therefore have to reduce their costs and probably their regulatory activity, which in itself will be beneficial to business, will it not?
We are back—are we not?—to the point that was made earlier in this brief debate, about quantity and quality, because it is true that the Bill will necessitate the reconsideration of quality and effectiveness because of the link to charge. In other words, regulation will have to be legitimised around price, but it would be dangerous to assume that the effect of introducing that new provision—unless seen in the context of what is already there; the point made is existing charges and costs—might be as profound as my hon. Friend describes.
My hon. Friend will realise that HM Treasury’s guidance on fees and charges requires all regulators to cover their costs where they have fee-setting functions. Therefore, the Bill, by forcing regulators to reduce their costs, which they can pass on in the form of fees, will reduce their activities and, thereby, the burden of regulation.
That—ipso facto—is certainly the case, but the qualitative judgment about regulation that I have advocated would need to be applied, too. My hon. Friend says that the Bill needs to be set in the context of what the Government have already agreed. The Government have agreed, as he knows, that they will regulate only
“having demonstrated that satisfactory outcomes by alternative self-regulatory or non-regulatory approaches; and where analysis of the costs and benefits demonstrates that the regulatory approach is superior by a clear margin to alternative self-regulatory or non-regulatory approaches; and where the regulation and the enforcement framework can be implemented in a fashion which is demonstrably proportionate; accountable; consistent; transparent and targeted.”
If one applied those principles to my hon. Friend’s argument, one would find, I assert, that his Bill is not necessary. Furthermore, I assert that his Bill, rather than applying those broad principles—I say “broad”, but they are clear in intent—would put in place a series of mechanisms that, as I argued earlier, might lengthen and make more complex the process.
The Bill sets up a mechanism by which Parliament must scrutinise those matters, and my strong assertion and, indeed, recommendation to my hon. Friend is that the adoption of the regime I have just described, already articulated by the Government, is a more effective means of achieving his ambition than the Bill, which might have perverse consequences, albeit unintended, in making the system rather more costly and difficult than it need be.
May I invite my hon. Friend to move away from the rhetoric to the reality, in the context in particular of the Care Quality Commission’s decision to start regulating dentists, who are already adequately regulated, and then to impose on them charges of £800 a year each to fund the regulation? The provisions of the Bill will catch that activity.
I am going to come on to dentists and the rationale for dentistry regulation, because there has been some debate about it already this morning in consideration of this Bill, but before I do so perhaps I may be very specific, as you have invited me to be, Madam Deputy Speaker, about fees, charges and levies, which lie at the heart of the Bill.
The fundamental policy of government is to charge for public-provided goods and services, where that approach helps to allocate the use of goods and services in a rational way, because it prevents waste through excessive or badly targeted consumption. The Government argue that that makes for easier comparisons with the private sector, promotes competition and helps to develop markets. When a fee is charged for access to public goods or services, there are specific rules on how the charge should be determined, and it is important to protect Parliament’s rights to decide which services should be charged for and how public resources are allocated.
That is much like what my hon. Friend wants to achieve, but my argument is that there are mechanisms already in place to do what we wants. I accept that it is necessary for those mechanisms—how can I put it?—to be enlivened and accelerated by a commitment by Government to be absolutely scrupulous about where regulation applies, what is charged for and how those charges, those fees, should be gauged. I am giving my hon. Friend an assurance—not gold-plated but copper-bottomed, one might say—that the Government will indeed be determined, as he asks us to be, that the extent and character of that regulation, and the fees and charges associated with it, should be legitimised, should be moderate and should not increase in an unjustifiable way.
A word about the specifics. My hon. Friend asks me to be less rhetorical. Most people enjoy—I will not put it more extravagantly than that—the rhetoric with which I embellish what I do, but I am prepared to take the slings and arrows as well as the praise, so I will for a moment or so move from rhetoric to detail.
The rationale for dentistry regulations, which my hon. Friend draws attention to as an illustration of the purpose of this Bill, is clear. The Care Quality Commission is the responsible regulator, and the registration of dentists is a new requirement, as he says, reflecting the commission’s new regulatory responsibilities. The purpose of registration is to bring a single, consistent approach to monitoring dental practice, including private dental care practice, for the first time. This is regarded as an essential basis for encouraging swift action to protect the public, and it will give the public an accessible single source of information on quality. Fees are variable, according to practice, size and type.
That is a perfect example, if I may say so, of two points that I have made: first, the regulation that is put in place should be coherent, clear and as simple as possible; and secondly, the fees and charging regime associated with that regulation should be established against a set of criteria that can be justified and supported by the profession concerned.
I do not want to delay the House unduly, so I shall move swiftly on to the matter of the principles that underpin charging regimes. As we know, Madam Deputy Speaker—your advice has guided me accordingly—this Bill is principally about charges and pricing. The principles that apply to pricing and charging by regulators are those that apply to publicly provided goods and services in general, and they have at their core the central doctrine of setting charges to allow full cost recovery. We need to remember that in many cases regulators give consumers and others confidence that regulated sectors are meeting their legal responsibility. Regulators can also create the conditions that provide businesses with a level competitive playing field by taking effective action against criminals operating in their respective markets. We need to remember that in many cases it is appropriate for those whose activities need to be regulated to bear the cost of regulation, not the taxpayer.
Perhaps my hon. Friend would apply the principle that he has enunciated to the regulator on access to higher education. Most people would think that that is a totally unnecessary additional burden. Is he saying that the cost will have to be borne by the universities?
My hon. Friend is displaying the mischievous quality for which he is known and which the House enjoys, but I will not be tempted, Madam Deputy Speaker, for fear of your benevolent but strict rule, to get into a debate about higher education access or anything related to it, except where it is absolutely pertinent to the Bill before us. I rather suspect that you might come to the same conclusion that I have, which is that it is not completely pertinent to the Bill, so I will continue on the very strict and controlled theme that I was developing.
We will consult shortly on the extent to which some of the functions currently carried out by the statutory regulators might be performed either by businesses themselves, through better recognition of internal quality controls, or by other agencies through services such as the use of accreditation and certification, which can provide some of the safeguards traditionally put in place by state regulators. This would have a direct impact on costs, fees and charges, because in those circumstances the decisions about those matters would be dealt with within the sectors or businesses themselves.
There will be cases where we can lighten the burden of regulation and the character of some of the costs that my hon. Friend has highlighted by taking a more radical approach to where regulation should apply, who should regulate, how decisions should be made about its extent, and, most saliently, what should be charged for what service. My hon. Friend is absolutely right that that decision is better taken at the sharp end, if I might put it in those terms, rather than distantly in Westminster and Whitehall. However, there will inevitably be cases where the intervention of a state regulator is required, particularly to protect consumers or to provide a level playing field for businesses. I take the view that professional standards in these terms should be looked at more closely by Government. In some cases, as I suggested earlier, the adoption of professional standards may allow us to reduce the overall burden of regulation, and the costs associated with it, in the way that my hon. Friend recommends.
The Treasury’s publication, “Managing Public Money”, sets out the main principles for dealing with resources used by public sector organisations. It makes it clear that:
“Where a fee is charged for access to public goods or services, there are some specific rules about how the charge should be determined. It is important to protect Parliament’s right to decide which services should be charged for, and how public resources are to be allocated.”
This principle is as valid in the case of regulation as with any other public service. Setting a fee or charge for a public service usually requires powers in primary legislation, with the charge structure and each charge set out in secondary legislation. Therefore, a parliamentary approval procedure of the kind that my hon. Friend advocates in his Bill already exists, and, as I said earlier, it is one that is less likely to lead to delay and complexity than the albeit well-meaning provisions in his short Bill. The guidance on calculating fees is also clear, stating that the full cost of each category of service should be measured realistically and objectively.
As I mentioned earlier, local authorities are regulators, and they sometimes provide purely discretionary services. In this regard, they operate within an additional framework of control set by the Local Government Act 2003. I know that my hon. Friend will be familiar with section 93 of that Act, because he researches these matters with diligence and care before he comes to the House to speak about them. He will know that that section, which is headed,
“Power to charge for discretionary services”,
contains the power that I have described. This power is subject to a duty to secure that, taking one financial year with another, the income from charges under the section does not exceed the costs of provision—precisely the point that he made in an intervention a few moments ago.
The purpose of the Act that I mentioned is to ensure that organisations—in this case, local authorities—do not make a profit out of the service, so that the cost, as I said, is related to the fee. My hon. Friend is arguing, is he not, that even where the cost of provision—it may be a perfectly justifiable cost, by the way—grows or changes for some reason, the fee associated with that cost could not be raised. If taken to its logical conclusion, this would place local authorities—or, if we apply the principle more widely, Government—in the impossible circumstance of not being able to recover costs of provision from businesses or individuals even where those businesses or individuals were gaining from the application of that provision. That would be a perverse effect of his Bill.
Let my try another one on my hon. Friend. It relates not to local authorities but to the Forestry Commission, which is a regulator. The Forestry Commission is having its grant cut by central Government, but it still needs to carry on its regulatory functions. In the New Forest, it is thinking of funding quite a lot of those costs by raising car parking charges, which do not currently exist there. Where does any public accountability come into that?
Again, I am not going to speak about the specifics of that because it is a matter that I would want to look at in more detail before I said anything definitive. The principle remains that we should address the relationship between the scale of provision, the cost and the fees charged. That should, quite properly, be set out by this House in regulation, if not in legislation, and—I take my hon. Friend’s point—it should be proportionate.
Let me repeat, for the benefit of my hon. Friend and the House, that the Government share his determination to scrutinise these matters with new zeal and with diligence. He is right that we need to have a basis on which we consider and legitimise regulation of this kind and the costs and fees associated with it. I agree with him that it is important that agencies, whether in local government or elsewhere, can justify what they charge. I simply do not think that this Bill is the best way to do that. I welcome the fact that its introduction has given us an opportunity to consider these matters. I may say a little more about that in my final remarks.
The primary authority partnership scheme between businesses and regulators constitutes the kind of discretionary service that I was describing prior to my hon. Friend’s intervention. It was established under the Regulatory Enforcement and Sanctions Act 2008 to provide more consistent regulatory enforcement for businesses, charities and other organisations operating in more than one local authority area. It entails an advisory partnership between a specific business and a given local authority. Having assessed the resource requirements of the primary authority partnership scheme, the local authority and the business have to agree how the costs will be met.
The local authority is entitled to charge the business for services applied through the partnership. In deciding whether or to what extent to charge the business, the local authority should consider all relevant matters, including the local authority’s policy in respect of supporting local economic prosperity and the existing resources provided to the business by the regulatory service and other services of the local authority. When advice and guidance have been developed for use with more than one business, an individual business should pay no more than a reasonable proportion of the costs. Where a local authority decides to charge for some or all of the services provided to a business, it can recover only the costs reasonably incurred in providing those services. In calculating the costs, the local authority should, like a national regulator, have regard to the guidance issued by the Treasury in “Managing Public Money”, to which I referred earlier.
A further statutory provision that affects the way in which regulators charge is the Regulators’ Compliance Code. I am surprised that we have not heard more about the code in our considerations, because its existence mitigates some of the arguments of the advocates of the proposed legislation. It is a statutory code of practice to which regulators must have regard in their work. It puts forward the general principle that
“Advice services should generally be provided free of charge, but it may be appropriate for regulators to charge a reasonable fee for services beyond basic advice and guidance necessary to help ensure compliance. Regulators should, however, take account of the needs and circumstances of smaller regulated entities and others in need of help and support.”
I draw the House’s attention, in those terms, to the effect of regulation on small business. Smaller businesses often find it more difficult to deal with these matters, purely because of scale. Excessive regulation can have an extremely damaging effect on small business growth. As a Government, we will certainly look again at the effect of regulation on business as a direct result of the overtures of my hon. Friend the Member for Christchurch.
I am grateful to my hon. Friend for saying that he will look again at these issues. Will he address his remarks to the issue of small charities, such as Julia’s House, which are even more deserving of help? Despite the guidance to which he referred, the Care Quality Commission imposes the same standard charges on a children’s hospice with three or four beds as it imposes on much larger, and even commercial, organisations. How is that consistent with the guidance?
My hon. Friend is right that small organisations in the voluntary and charitable sector are also affected by the burden of regulation. I will, as a result of his overtures, look at that matter too. I know that the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who has responsibility for regulation, takes these matters very seriously. He has been a great champion of small organisations in this respect. However, it is important that the Government are informed by the House. It is clear that Members from both sides of the House understand that if we are to build the big society that we seek, small organisations, charities and community organisations will play a critical part. It is right that we should look specifically at how regulation affects those organisations, and we will do so as a result of the arguments of my hon. Friend the Member for Christchurch and other Members.
I will move on to explain why we feel that legislation is unnecessary in this case. This Bill, although it makes an immensely important point about the effects of regulation in practice, is not one that the Government can support. That is not just because there are existing controls that address the issues that the Bill seeks to address. It is also because regulators have a responsibility to ensure that they provide value for money and that the costs are as low as possible, while the quality of regulation remains appropriate. There needs to be flexibility in practice. Although we agree absolutely that we need to ensure that the burdens on business as a whole, and on the other organisations that we have just spoken about, are taken into account when we introduce or review regulations, the flexibility that I have described needs to reflect a wide range of regulatory circumstances. That would be inhibited, at least to some degree, by my hon. Friend’s Bill.
There are circumstances in which a modest uniform charge is appropriate. Many licensing regimes, where individuals must apply for a licence to trade, have that character. I spoke earlier about my view that the adoption of professional standards through licences to practise can be helpful in reducing regulation. It can provide a simpler series of mechanisms to guarantee quality, protect public health and ensure public safety.
I am sorry to go back to this point, but my hon. Friend keeps referring to the issue of professional standards and duplication. How does what has happened to dentists fit in with that philosophy? They were already regulated by their own professional standards body, and now have to pay a fee to be regulated by the Care Quality Commission.
We have spoken of dentists already. Perhaps I may take this opportunity to pay tribute to my own dentist, Lisa Jamieson of the Fen House dental practice in Spalding, who looks after my teeth and those of my wife and children. I will discuss this matter with her, because I believe that it is important as legislators that we are in touch with those whom legislation affects. Nevertheless, the case that I made on dentists is that the adoption of the new regulatory regime will simplify how we ensure that dentists are doing what they should. There are circumstances in which a new approach, framed by the desire to reduce regulation, can assist us not only in the matter of regulation, but in its cost.
There are circumstances in which a substantial charge is appropriate. Some regulatory regimes require the inspection of hazardous, highly technical processes, and would otherwise present a substantial cost to the public. There are also circumstances in which a tiered approach is appropriate, for instance to reflect the costs to the regulator of regulating different sizes of business.
The proposal that my hon. Friend articulated with such style and charm would limit regulators’ flexibility to innovate and incentivise in ways that work to the benefit of good, compliant businesses. The existing system, by contrast, supports that flexibility. Regulators might seek to reduce fees for some regulated organisations —we have spoken of small businesses, small charities, community organisations and so on—to reflect the intrinsically lower costs of the services provided to them. Yet they might simultaneously increase charges to organisations when the service in question is palpably more costly. That would surely be the case in respect of larger businesses, in the case of which checking compliance requires significantly more time and resources.
My hon. Friend’s ambition is to allow small organisations, be they businesses, community organisations or charitable organisations, to thrive because of the lighter hand of Government that both he and I wish to see applied. He will note that I take that ambition so seriously that I have said the Government will examine it once again with a critical eye. It is entirely possible to achieve it within the flexible regime that exists in respect of fees and charges, and it might, ironically, be inhibited by the proposals in his Bill.
Meanwhile, the Health and Safety Executive has recently announced a proposal that would impose charges on businesses that were found to be in material breach of health and safety laws. It would not seek to recover costs for purely technical breaches, of course, and compliant businesses would not pay a penny. That is another example of the flexibility that I am advertising as a virtue of the existing regime.
It is fair to say that a range of approaches are appropriate, including ones that create strong incentives for better practice in businesses. In practice, the relevant legislative framework allows for all those approaches, and it is not appropriate to impose a single framework on all regulators. It is for them to determine the relevant approach, within the powers confirmed by Parliament and the public spending rules overseen by the Public Accounts Committee and the Comptroller and Auditor General. The existing arrangements provide meaningful parliamentary oversight, combined with a pragmatic foundation for regulators and Government to adjust their approach according to dynamic circumstances. If we were to adopt an entirely different approach founded on the consumer prices index, as my hon. Friend suggests, rather than on a cost recovery basis, the incentives would be very different.
Finally, increases in fees limited to the CPI are unlikely to reflect changes in a given regulator’s costs. My hon. Friend argues that the cost to regulators is not the issue, and that the charge to organisations, whether they be businesses, individuals or otherwise, is always of paramount importance. However, it is equally important that there is some relationship between provision and fee, between cost and charge. It would be a very blunt instrument to apply the mechanism at the heart of the Bill in the way that he suggests.
If the increase in the full cost of a service exceeds CPI, capping fees would either leave the taxpayer to pick up the bill or leave the regulator to do the job within its official resources. It would not necessarily save taxpayers money, and it could arguably let businesses and individuals off the hook, because they would not have to pay the price necessary to cover the regulator’s costs. That might be my hon. Friend’s intention, but I have never heard him suggest before that the taxpayer’s burden should be increased in such a blunt way. Indeed, I know for a fact that he has long been an advocate of cutting taxes where we can.
I thought for a moment that my hon. Friend was going to traduce me. I made it quite clear at the beginning that the Bill would not add to the burden of taxation or public expenditure, and that is set out clearly in clause 1(3). I am surprised that he is not praising that subsection. Can he give some examples of where he thinks it is reasonable for regulators to increase their costs beyond the rate of inflation?
If the cost of provision to a regulator rises for technical reasons, and that regulator has a perfectly sensible set of regulations with the protection of public good or public safety at their heart, it would be entirely appropriate to relate the cost of that provision to its price. That should be legitimised and justified, and it is absolutely right that we put in place criteria that ensure that any such price increase is a true reflection of a change in cost, but to do the opposite and prohibit any change in charge regardless of a change in the cost or character of provision, as my hon. Friend suggests, would be a very blunt instrument. I am arguing for flexibility; he, rather untypically, is arguing for a rigidity in the application of public policy, insensitive to circumstances. With a bitter irony from his perspective, that might increase costs to the taxpayer, contrary to the part of the Bill that makes it clear that that is not his intention.
I do not wish in any way to be excessively critical of my hon. Friend, who is a distinguished Member, but I argue that the Bill has at its heart a contradiction. I know that that is unintended, but none the less, it would have potentially dire consequences for the Government and for him. His reputation as a tax saver, as a guardian of the public interest and as a man who stands in the way of excessive state interference in the affairs of individuals and in the freedom that he cherishes, is at stake. I stand here as his guardian, and as the protector of his interests.
I know that this will disappoint Members, but I wish to begin to move to my conclusion. It would be bad for both the public, whom we are seeking to protect, and conscientious businesses that are doing their best to comply with the law, if we left regulations unenforced because the Government did not have the capacity or power to supplement any shortfall. The Bill would limit the Government’s ability to intervene, which would create just such a circumstance.
Our view is that the existing flexible framework provides the best means of controlling and keeping an appropriate limit on the fees and charges imposed by regulators. However, for the avoidance of doubt and to reassure my hon. Friend, let me be crystal clear that there is a certain determination on the part of this Government to ensure not only that the quantity of regulation is reduced but that its quality is re-examined with a vehemence that has not been typical of recent Governments, and that the costs associated with any such regulation are tested empirically in a way that protects individual, business, consumer and taxpayer interests. The existing regime, which provides for charging at full-cost recovery, enables regulators to recover costs from those who are regulated.
It is right that regulators have a responsibility to ensure that regulation is efficient, effective and provides value for money in the way the Bill intends. My hon. Friend is in tune with C. S. Lewis, is he not? The latter said:
“Aim at Heaven and you will get Earth thrown in. Aim at Earth and you get neither.”
My hon. Friend aims at a heavenly circumstance in which regulation is only ever applied out of absolute necessity and at minimum cost. We are sympathetic with that spirit, but perhaps the more important point to take from this debate is the extent to which any regulation necessarily brings with it some expense. We need to get to grips with that problem at source. I have spoken repeatedly in this speech about the measures the Government have put in place to constrain the flow of regulation. I believe that that is the right way forward. We have listened to his overtures, however. This debate has given us the opportunity to reconsider these matters, and has been an additional spur, a goad or perhaps just an encouragement to be still more determined to reduce the regulation on individuals, businesses, charitable organisations and others that might inhibit growth and, worst of all, inhibit virtue.
I would like to reply briefly to this debate. I am grateful to the Minister for setting out, in just over an hour, all the reasons why his Department does not think that this Bill is the right solution, although at least he acknowledges that there is a problem. In the absence of any other possible solutions, however, I am not sure that one can say this Bill is not worthwhile. Although the Minister talks a lot about sympathy and says he wants to reduce the quantity and increase the quality of regulation, it is apparent from the figures that he gave, as well as the quotes from the CBI and the Institute of Directors, that things are probably getting worse rather than better. The shadow Minister made that point in relation to the number of regulations being introduced and removed from the statute book. I sympathise with my hon. Friend the Minister: he is not the Minister responsible for deregulation; that is not his main brief and he is here today as the departmental Friday duty Minister. However, I was disappointed that he did not respond to what the hon. Lady had to say.
In essence, this is whether we are going to try to control the stealth taxes reflected in the increased charges that regulators impose on consumers, individuals, businesses and charities. Nothing I have heard from the Minister gives me any encouragement in that regard. He was unable to explain—to my satisfaction anyway—why the Care Quality Commission is now trying to regulate dentists. He was unable, or did not wish, to engage in an argument about how we were going to pay for OFFA, the higher education access regulator, and whether it was justified or whether it was going to be a new financial burden on the universities. He was unable to answer my question about the Forestry Commission now seeking, because of a cut in Government grants, to fund its regulatory activities by imposing new charges that will force people to pay for their car parking in the New forest and elsewhere.
Treasury guidance states that regulators must increase their charges to reflect their costs, but there is no guidance saying that those costs must not increase by more than the rate of inflation. That is the key to it. If the regulators were not allowed to increase their charges beyond the rate of inflation, they would have to keep their costs to within the rate of inflation. They would have to reduce their costs and become more efficient. I cited Ofcom as an example of a regulator that has reduced its costs by 20% in the past year. The BBC, too, is now having to concentrate its mind on reducing its costs significantly because of the pressure put on it.
I plead guilty to two things—to not being the Minister for regulation, and to what my hon. Friend described earlier as elegant and flowing rhetoric. However, I will not plead guilty to not dealing with dentists. We did dentists to death! My argument was that the new regime would simplify the regulatory system and its associated costs and fees. That is in contrast to the current regime, which is more costly and confusing. Surely that is in the spirit of his Bill.
I forgive my hon. Friend because I do not think he is an expert on dentistry. However, I do not think that he or his officials have addressed the fact that dentists are already properly controlled by the professional dentistry bodies. The CQC is now adding to that regulatory burden, rather than substituting for or simplifying it. However, we can have a separate debate about that on another occasion perhaps. That example alone shows that all the lofty rhetoric about the Government’s intentions —even those in the coalition agreement—to reduce the burden of regulation is not being reflected in practice.
I am grateful to my hon. Friend the Member for Bury North (Mr Nuttall) for his support for the Bill, to the shadow Minister for her observations and to the Minister for what he has said. In essence, he has criticised the two parts of clause 1 designed to introduce flexibility. I could have just said that no regulatory authority should introduce a charge in respect of a service currently provided free of charge. Perhaps on reflection that might have been better because it would have been clear. I thought that we needed some flexibility, which is why I used the wording I did, yet now I have been criticised by the Minister for doing so.
The Minister said—this is the most worrying aspect of today’s debate—that the panoply of the legislative framework covering regulation is so complex and impenetrable that it is impossible to simplify and cut across it in the way I am trying to do with the Bill. I hope that his Department, instead of producing these long, wordy briefs, will start getting to grips with rationalising the legislative framework around regulation and regulatory burdens. I hope then that we will be able to deal with the issues in a simpler way.
I will give this guarantee to my hon. Friend for the benefit of the whole House. In the matters for which I have responsibility within the Department for Business, Innovation and Skills, I will stand tested by the criteria that he in broad terms has established. We will create a system that is freer, less burdensome and less regulatory and that allows those associated with further education, skills and lifelong learning to go about their business properly, in the way they see fit and in response to need, rather than be dictated to by the micro-management that typified the last Government.
I am grateful to my hon. Friend for that commitment. In due course perhaps I will table a parliamentary question so that he can explain what has happened under his leadership over the past year on those matters. It is important that the Government do not just talk about what they are going to do in future; they must show that they are reducing the burden of regulation. I am very depressed that they are not prepared to support the Bill, although I wish to test the will of the House on the matter.
Question put, That the Bill be now read a Second time.
Criminal Records (Public Access) Bill
I beg to move, That the Bill be read a Second Time.
This Bill is similar to my previous Bill in that it comprises just one substantive clause, but it also has a financial provision and it would need to have a money resolution. The Bill arises from what has been accepted for a long time as a big anomaly in public access to court records, particularly magistrates court records. It is most effectively summarised in the Information Tribunal decision EA/2009/0037 in the case of John Carleton and the Information Commissioner on 24 August 2009.
The tribunal looked at the issue of somebody who wished to get access to the record of a conviction in a magistrates court. Because that person was not present at the court hearing, and because the press did not cover the matter and report it, it was not possible for that person to get information from the magistrates court without getting specific permission from the court. In order to do that, they needed to write to the court manager detailing the request and asking for an appointment at court to make a formal request to a justice of the peace. They were able to get that application granted only if they could show that it was in the public interest for them to be able to access that information. The court decided that, although the conviction was on the public record, it was not publicly accessible because of data protection legislation. The relevant paragraphs of the decision read as follows:
“34. The Tribunal notes that there are apparently anomalies created by the current Freedom of Information and Data Protection legislation in this area and which are mentioned briefly below.
35. If the Appellant, as a member of the public, had attended the court on the relevant date there is no reason to suppose that he would not have been able to hear all the information that he was requesting because it would have been part of the normal, public court proceedings.
36. If the Appellant had found out that the press or the media had covered the case and was able to get a copy of the newspaper report or media broadcast then – although the personal data in question would have been processed by becoming part of those reports – the Appellant would have had legitimate access to the information and the personal data he was seeking.
37. If the local newspaper or media outlet put the court report within a webpage on the internet or as a ‘podcast’ to be downloaded by the Appellant – whether there was a ‘search’ facility on the site allowing specific names or topics to be highlighted and retrieved or not - and then viewed, printed out, played or stored, then all of that is legitimate processing of personal data within the current statutory legislation.
38. However he did not attend the Magistrates Court on the day in question and he was seeking the personal data in relation to the individual – from the court itself - after the event.
39. That situation is not permitted in the Magistrates’ Court by the current Statutory regimes save through the filtering situation incorporating permission to inspect the Court Register made in person on application to a Justice of the Peace.
40. It may well be that the Ministry of Justice wish to draw this appeal, the Good Practice highlighted by the Information Commissioner – and these remarks – to the attention of HMCS’s Justices’ Clerks and Legal Managers because it is unlikely that this Appellant’s request is the only one of its kind received by the Magistrates’ Courts throughout England and Wales.”
Only yesterday, Keir Starmer, the Director of Public Prosecutions, was reported in the newspapers as saying:
“I believe that transparency and visibility help the public understand how the criminal justice system works, and shining a light on the workings of the courtroom can only serve to boost its efficiency and effectiveness.”
He was actually speaking in support of a proposal to allow cameras into courts across the country, which is far beyond what I am talking about in this Bill.
This Bill would mean that if somebody was convicted in a magistrates court and that conviction was recorded by that court, as it has to be under a statutory duty, it should be possible for anybody to get access to that information because it is public information and it should be publicly available. At the moment, the only way somebody can get access to that information is by carrying out a criminal records office check. They can do that only if they know a police officer who is prepared to carry out the check, unofficially, on their behalf, with or without a fee, or if they belong to an organisation that can get access to the criminal records office’s information.
The trouble is that the criminal records office’s information goes far beyond just the details of convictions. It includes a lot of prejudicial information, such as details of who has been arrested and not charged, who has been charged and then acquitted in court, and even who has been the subject of suspicion. Such information is all included in the records of the criminal records office. I am not suggesting that people should be able to get easy access to that information, but I am suggesting that they should be able to find out much more easily whether somebody has been convicted in a magistrates court of drinking and driving.
I give that example because if the Government insist on reversing the House of Lords amendment to the Police Reform and Social Responsibility Bill, it will not be long before this House is enabling people to be elected as police and crime commissioners and that Bill says that it will not be possible for anyone to stand for election to that post if they have a previous conviction, which could include a conviction for a drink-drive offence. Why, therefore, should this information in the magistrates courts not be available? It is already available, but it is not available to everyone and it is not available easily. That is why this Bill is described as a means to facilitate public access to court registers.
Yes, it would. Of course there are far fewer Crown court convictions and far fewer Crown courts, so it is much easier to get access to that information. As my hon. Friend will have noticed, the Bill states that
“‘a criminal records office’ means the Criminal Records Bureau or any successor body with similar statutory functions to the Criminal Records Bureau”.
It also states:
“A criminal records office must keep, in electronic form, copies of all Magistrates’ Courts Registers, and any other registers produced by a court listing convictions”.
Obviously, that could include Crown court registers.
In drafting this Bill, I have tried to make the regulation and the demands placed on the criminal records office as light as possible. I have done so by, among other things, saying that none of this would have to be retrospective, and so only after the Bill was enacted would the magistrates courts’ registers have to be communicated in electronic form to the criminal records office. There would be no burden on the criminal records office to collate the information on all those records. All that would happen would be that the records would be available in electronic form and could be investigated on the internet by members of the public.
I expect what would happen—this has already been happening in the US—is that people who were interested in providing a public service would start to collate the records themselves, thereby producing a combined database that would be accessible, perhaps for a fee, by members of the public. It would set up almost a private sector alternative to the Criminal Records Bureau.
Many people will be quite astonished that records of convictions are not as publicly available as they should be, I would argue, in a free society such as ours. Does my hon. Friend think that this provision would make the Criminal Records Bureau a little more efficient? If people had direct information about those who have been convicted, it might free up some of the bureaucratic burden for which that organisation is, unfortunately, somewhat infamous.
I hear what my hon. Friend says. I have not recently had any constituency cases relating to the Criminal Records Bureau, but there is a real problem with the time it takes to get information out of it, particularly if one wants to check records for potential volunteers or members of staff.
A moment ago, my hon. Friend suggested that the electronic record the Bill seeks to create would be capable of being investigated by the public on the internet. Can he direct the House to the clause that mandates that to be the case?
Clause 1(1) of the Bill states
“and must make them accessible to the public”.
As they are going to be in electronic form, I had assumed that that would be the means by which they would be made accessible to the public. If my hon. and learned Friend is suggesting that he does not think that that is spelt out clearly enough, I would obviously be happy to consider those representations. The idea behind the Bill is that such information would be accessible without someone having physically to go along to the criminal records office. Ultimately, it would be for the criminal records office to decide under the terms of the Bill in what way it would make the records accessible to the public.
The point is quite short and simple. It comes down to the basic principle that if somebody is convicted in a court, that knowledge should be publicly available and easily accessed by the public. At the moment, much to the surprise of many of us, unless one is actually in the court and hears what is happening or reads about it in the newspapers, it might go undetected and might be hard to detect in the future.
To pick up on the point made by my hon. Friend the Member for Crawley (Henry Smith), a number of employers might in due course want to see whether somebody who is applying for a job has a conviction from the local magistrates court. The Bill would facilitate their being able to do that without their having to engineer a situation in which they could get a CRB check on that individual.
The significance of the Bill will become greater as we find that fewer and fewer proceedings in the magistrates courts are covered by local newspapers. I am fortunate to have the New Milton Advertiser and Lymington Times, which take delight in printing at length reports from the magistrates courts. That is relatively unusual in local newspapers these days, so if people cannot find out what is happening through their local newspapers there must be an alternative way of enabling them to get that knowledge. That is what the Bill is all about.
I shall be as brief as the Bill, which contains only a few clauses. The hon. Member for Christchurch (Mr Chope) has pointed out the anomaly that if someone is present in a court or reads a court report, its decisions are a matter of public record but that as time passes the case becomes subject to freedom of information provisions. He made it clear that the intention of the Bill is that such information should be available online. I was wondering about that, because it occurred to me that if we wanted to find out about an individual, we would have to happen across the particular magistrates court that held their record. However, he suggests that he would amend the Bill to clarify that point.
I am not sure that the Bill is consistent with our debates in Committee on the Protection of Freedoms Bill. The hon. Gentleman may not be aware that there was considerable debate about returning information supplied for Criminal Records Bureau checks to the individual so that they could check its accuracy before it was passed to a potential employer or a voluntary organisation. The hon. Gentleman’s Bill does not seem consistent with the Government’s direction of travel in that regard.
I accept that point, and I shall speak briefly about accuracy of information in a moment.
Before the debate I checked the internet, as I was concerned about some of the fee-charging organisations that purport to provide information about criminal record checks. There seemed to be no way to check the background of such organisations to find out whether they were sound and operated reliable processes. A job applicant might find that an employer uses such services and that the information is inaccurate. That is a matter of concern, and is something that the hon. Gentleman has highlighted—yet, the Bill would not deal with it.
There have been cases when information from magistrates courts has been called into question. Between 1980 and 2006, there was a substantial incident in Leeds when more than 2,000 cases were not recorded accurately at a magistrates court and a number of people avoided sentences and fines. It was thus not possible to check their records at a later date. One of the reasons given for that failure was the amount of bureaucracy and the burden it placed on magistrates courts, so we should want to consider the implications of the Bill for magistrates courts before we might support it.
We have no objection in principle to the hon. Gentleman’s desire to share information that is already in the public domain. The force of the logic in his argument is on record, but at this stage he has failed to convince us that the Bill would solve the problems and that it would not have unintended consequences. We will be interested to hear the Government’s response to his contribution.
I thank the hon. Member for Eltham (Clive Efford). It is always a pleasure to follow him in debate. His principal objection seemed to be the possibility that the register might be inaccurate. It seems to me that the first thing that any hon. Member or member of the public would do is to check the accuracy of their record, and anyone should be able to do so. In the vast majority of cases, the information would be accurate. It is difficult to understand how a mistake could be made, although they are always possible.
As someone who sits routinely in the Crown court as a recorder, I can assure my hon. Friend that there are often mistakes in the antecedents sheets that are forthcoming from magistrates courts, that that causes an enormous problem for those who sit in the Crown court, and that that is perhaps one of the flaws of the Bill. Given that potential inaccuracy and the potential for blackening people’s names, does he not therefore think that the Bill needs looking at again before receiving its Second Reading?
I hear what my hon. and learned Friend says, but I am not convinced that he gives a reason for looking again at the Bill. It might be a good reason to look again at how magistrates courts record and deal with information that they give out. The problem seems to lie with magistrates courts, not with the Bill. We ought to ensure that magistrates courts accurately record their convictions. It is not rocket science. Good grief, all they have to do is write down what sentence has been given against someone’s name. It is difficult to understand how so many mistakes can occur.
I accept what my hon. and learned Friend says from his personal experience: mistakes have occurred, which is highly regrettable, but the problem does not lie in the Bill. In fact, the Bill is a major step forward in providing openness and transparency in the field of justice. Justice must not only be done; it must be seen to be done. My hon. Friend the Member for Christchurch (Mr Chope) referred in his opening remarks to a case where someone was not in court when the judgment was read out. I dare say that often nowadays, especially since the reduction in the number of local newspaper court reporters, a judgment is read out but no one else is in court. Whoever gets to hear about it?
I am pleased to be named as a sponsor of the Bill, along with my right hon. Friend the Member for East Yorkshire (Mr Knight) and my hon. Friends the Members for Wellingborough (Mr Bone), for Shipley (Philip Davies), for Kettering (Mr Hollobone) and for Witham (Priti Patel), because it has many benefits that will enable members of the public easily to ascertain whether another person has been convicted of a criminal offence. There are many reasons why someone might wish to do so.
Of course, in some professions, CRB checks are required by law. In many cases, enhanced CRB checks are required. A lot of employers, particularly small ones, might want to check whether prospective employees who say that they have no criminal convictions are telling the truth. The Bill is a simple, straightforward way to enable that to take place. It is necessary to check the criminal background not just of those who work with children, teachers, social workers and those who deal with vulnerable adults, but of those who deal with money in the financial—
I will come to the contents of the register later, but briefly, with modern technology it would be easy for records that are spent under the Rehabilitation of Offenders Act to be so marked on the register. That could be done quite easily. I do not see why that could not take place.
Material that is secret would not suddenly be put in the public domain. The Bill would make available information that is already in the public domain. I see no argument why it should not be more widely available in an easily accessible format. I can see many benefits to a register on which members of the public could see not just the date and nature of the offence and the sentence that was handed down, but whether, for example, an offender had been ordered to wear an electronic tag. If a fine had been imposed, the public would be keen to see whether it had been paid, or whether only some of it had been paid. If an order had been made for someone to serve a certain number of hours of community work—a community sentence order—had they worked those hours? Had the whole of the sentence been completed? Had a criminal who had been sentenced to a term of imprisonment served the entire length of the term or, more likely, been released early? The public would want to see how much of the sentence the criminal had served. That would enable them to determine for themselves whether sentences were lenient or not.
Is the hon. Gentleman aware that the things that he is raising which the public might want to see on the register would not be recorded on the register? They are not matters for the register. A sentence would be registered as imposed, but not as served.
I agree with the Minister. I made the point at the outset that in due course I would like to see the legislation go further. It would be widely welcomed by the public if further information could be made available in the future. It would add to the transparency agenda, which I know the Government are keen on pursuing.
One side effect of such a Bill, which is not intended to be a crime reduction measure, is that if people knew that their neighbours could easily turn on their computer and check whether someone had been convicted of a criminal offence, that might have the effect of reducing crime in this country.
That information is already public. We are all aware from our own communities that people will often know whether someone living in their area is constantly visited by the police or has had spells in prison. I hear what my right hon. Friend says, but the provisions would be no more likely to cause an increase in attacks on individuals than is the case at present as a result of the information being in the public domain.
I was only pontificating that it might lead in some circumstances to an incident or incidents, but it is clear from the Bill that public knowledge of those who have convictions is likely to increase. Indeed, it is not beyond the realms of possibility that if the Bill became law, someone might develop an iPhone app, for example, that would show how many people in the neighbourhood had convictions.
My right hon. Friend raises an interesting point, which fits neatly with my point about available technology and the sort of database that could be created. It is quite likely that a private sector organisation could put such information into a searchable database on the internet, which, as my right hon. Friend rightly says, could easily be accessed on a mobile phone. That is the way in which the internet is going. It is more and more likely that people will carry their own personal computers around with them—tablets are already available —and if a search can be made on a desktop computer in an office, it can be made as one walks down the street. I see no reason why that should not be the case. I cannot see the problems with that.
The main point is that the information must be accurate. We already have the technology to make that happen; of that there can be no doubt. We have already seen the excellent Home Office website that enables individual householders to search right down to street level to find the number and category of crimes committed in their area. Having seen how complicated that website is, covering every road and street in the entire country, I think that the proposed database would be much easier to construct. Provided that measures were in place to ensure that the information on the register was accurate, which could be done easily by ensuring that people could check their own record free of charge, I see no reason why—
Does the Bill not merely extend information that is increasingly becoming publicly available, as my hon. Friend is setting out? In the Sussex police force area, the recently passed Sarah’s law allows people to check whether anyone in their neighbourhood has been convicted of a child sex offence. That has empowered people, and certainly has not led to any vigilantism.
My hon. Friend makes an excellent point. Generally speaking, people can be relied on to treat this information, which is publicly available, with common sense and reasonableness.
One area where problems are likely to occur is when people change their name. I know that what we can do to prevent people from giving false names is of particular concern to the Home Office, because there is no law that prevents someone from changing their name. A name can be changed simply by statutory declaration, rather than by going through the complexity of doing so by deed poll. No one has to give a reason for wanting to change their name. In fact, many people do so for the slightest of reasons, perhaps because they do not like their name. I am not normally the first to suggest further regulation, but I wonder whether the need to monitor sex offenders, in particular, might result in some further control, to ensure that those convicted of sex offences are not free simply to change their name and walk away from their past.
This short Bill would be warmly and widely welcomed outside this House. I wish it well on Second Reading and look forward to seeing it on the statute book before too long.
Having heard the debate on Second Reading, I intend to make only some brief remarks.
I congratulate my hon. Friend the Member for Christchurch (Mr Chope) and the Bill’s supporters. The Bill seeks to deal with an anomaly: that there is no mechanism by which a member of the public can secure access to information on the previous convictions of individuals in the magistrates court, which, as other hon. Members have said, is in the public domain. I will not lend the Bill my support on Second Reading for a number of reasons, which I shall briefly identify.
The first reason, already adverted to by the Minister in her intervention on my hon. Friend, is that the Bill, as drafted, is inconsistent with legislation on the rehabilitation of offenders and with the way in which this House and the other place have dealt with the rehabilitation of offenders. I am sure all Members agree that the rehabilitation of offenders is greatly to be desired so that the criminal justice system does not again have to deal with those who, particularly in their youth, have felt its tentacles reach out to them.
Young men, and no doubt some young women, can make mistakes early in life and find themselves in the magistrates courts, quite properly, for criminal offences they have committed. For those who subsequently amend their ways, as the vast majority do, and participate fully in society, it would be a great shame if their early misdemeanours were to follow them for ever. We have legislation on the rehabilitation of offenders to ensure that early offences do not follow them around. One of the great problems with the Bill, notwithstanding the mischief that I accept exists, with which it seeks to deal, is that is does not grapple with that dichotomy.
My hon. Friend is right, but access to a spent conviction can be gained only where Parliament believes that there should continue to be access to spent convictions to prevent harm that might arise were the convictions not to be apparent to those making criminal records checks. The Bill would go much further and make generally available to the public the entire criminal record of those who might well have mended their ways many years before. That is the first problem with the Bill.
The hon. Gentleman might be right, but his difficulty is that the Bill does not propound the technological solution that, he advises the House, might be applied. He is therefore saying that the Bill, which he supports, is defective and should not receive a Second Reading.
The Bill’s second problem, to which I have already adverted, is the scope for inaccuracy in antecedent conviction records from magistrates courts. My hon. Friend the Member for Christchurch was kind enough to say that this is a matter on which I know something, and I flatter myself that that is indeed the case. The simple position is that not all magistrates court records are of the quality that one would wish, either because they lack information or because they refer to the wrong individual.
The keeping of magistrates court records is an undoubted problem. The Minister might need to look at properly funding courts to ensure that records are accurate, but until the problem is properly grappled with, the Bill will continue to suffer from the defect that records that were inaccurate in part or in whole could follow individuals around for their entire life. Nothing would be worse than a member of the public, unbeknown to them, having associated with them a criminal conviction for an offence they had not committed.
The third major problem with the Bill is that, as my hon. Friend the Member for Christchurch said in moving its Second Reading, it is intended to be only prospective; if enacted, it would apply only to offences committed in the future. His principal aim is to ensure that the burden on magistrates courts does not become too great, but the difficulty is that if the Bill was enacted those already convicted of offences in magistrates courts would form one class of person whose criminal records were not following them around—notwithstanding the mischief that my hon. Friend seeks to address, because the information or data were at one stage in the public domain —whereas the criminal convictions of those who committed offences in future could follow them around.
For all those reasons, although my hon. Friend and the sponsors of the Bill have a very fair point and have quite properly alluded to an anomaly—the public’s inability to secure access to the records—it seems that the Bill is defective in any number of respects.
My hon. Friend asks an interesting question. The short answer—I will be completely honest with him—is that I do not know, because I have not thought about it. I am seeking to point out the Bill’s defects and why it will therefore not secure my support on Second Reading. The solution can no doubt be taken up by Ministers in due course. I none the less consider the points I have made to be valid, so I urge the House not to give the Bill a Second Reading.
I am grateful to my hon. Friend the Member for Christchurch (Mr Chope) for giving me this opportunity to talk about his private Member’s Bill. I will, if I may, set out how the current system works and our concerns about the Bill as drafted.
The Bill seeks to set up a system under which details of all court convictions will be held by the Criminal Records Bureau, and access to those records will then be available to the general public. This involves several issues, which I will tackle one at a time. First, the Bill would require court conviction details to by held by the CRB. The CRB was established in 2002 and acts as a one-stop shop for organisations checking police records and, in relevant cases, information held by the Independent Safeguarding Authority. It is important to understand the purpose of the criminal records checking system and why there are so many careful considerations about what information the CRB may hold and issue compared with the proposed system, which would be open and accessible in every detail to everyone in this country.
At the moment, two levels of CRB check are available: standard and enhanced disclosures. Both contain conviction information taken from the police national computer, with enhanced disclosure also involving a check of local police records for relevant and proportionate information —local police intelligence is sometimes termed “soft” information. A standard certificate can be obtained if two criteria are fulfilled: first, that the position under consideration falls within the exceptions order to the Rehabilitation of Offenders Act 1974; and, secondly, that it has been prescribed under Police Act 1997 regulations as a “prescribed purpose”. That is why I intervened on my hon. Friend to question whether there was an inconsistency between the Rehabilitation of Offenders Act and the laudable desires expressed in his Bill, which perhaps cannot be translated into reality by these means.
An enhanced certificate with barred list information can be obtained if three criteria are fulfilled: that the application falls within the exceptions order; that it is for a prescribed purpose; and that it relates to a position for which suitability information, including barred list information, can be obtained, as also set out in Police Act regulations. At the moment, there are several positions for which barred list information can be given on an enhanced CRB disclosure, including, for children’s barred list information, positions relating to regulated activity in relation to children, other care and supervision for children, fostering and child minding; and, for adults’ barred list information, positions relating to regulated activity in relation to vulnerable adults, registered social care agencies and the Commissioner for Older People in Wales. I am sure my hon. Friend is aware that the Protection of Freedoms Bill is in Committee, where changes to these arrangements are being discussed. There is a further level of check—basic—that has yet to be introduced in England and Wales.
My hon. Friend the Member for Christchurch mentioned the timeliness of CRB checks. In April 2011, consequent on changes to the recording and holding of information by the police, the CRB issued 95.1% of enhanced certificates within 28 days; the figure for March was 95.4%. That is a vast improvement on which it is to be congratulated. Demand for CRB checks has increased year on year and they are now in the millions each year. That improvement is an impressive result.
CRB checks are mainly used for those working with children or vulnerable adults, but they are undertaken for a wide range of other purposes, such as licensing and in respect of people in positions of trust. In addition to the certificates, individuals can make a subject access request if they wish to find out what information is held about them by individual police forces.
The CRB operates under the provisions of part V of the Police Act. To achieve what my hon. Friend suggests in the Bill would require amendments to the legislation. The Bill therefore would not work as it stands.
The Bill would allow anyone to access court records from any court in England or Wales. We rightly have open justice whereby anyone can go into any court to observe what is happening, with a few exceptions involving families and children. The Bill proposes a fundamental change to that access.
I think that there is differential access; information can be obtained by someone who is present on the day of proceedings or if they read about it in the newspapers. The anomaly, as I see it, is about how much information is available to whom, when and in what fashion. What monitor is available to protect those on whom information is held from people who are not acting in the public interest? That is the test at the moment. Anyone can seek information from a court: the test is whether it is in the public interest. That is a matter for a further debate.
What is being suggested would add to the functions of the CRB by requiring it to keep a central database of all court outcomes, or results as they are known in the trade. We have never had such a database. Under the current system, people can visit their local court or any other court and read the results of court hearings in the local and national press. Newspapers and other media outlets can obtain free of charge copies of court registers containing the outcomes of criminal cases and the details of upcoming cases. As I have said, we do have an open system of justice.
If we went down the road proposed in the Bill, where would it lead? First, there is the question of cost. I need hardly explain to my hon. Friend the Member for Christchurch that the Government are reducing the deficit. All Departments are working hard to reduce their costs, and introducing a new system such as this would incur substantial costs.
Further, what real mischief is the Bill designed to remedy? What benefit would be achieved from setting up such a system? How would it benefit our communities? It appears to us that the aim is to make the justice process more transparent, by allowing anyone, anywhere in England and Wales, to find out about convictions in any court, but why would we need to do that when we already have an open justice system? The Criminal Procedure Rules 2010 state, in paragraph (15) of rule 5.4, that every court register
“shall be open to inspection during reasonable hours by any justice of the peace, or any person authorised in that behalf by a justice of the peace or the Lord Chancellor.”
As court registers contain personal information that would not be made available in court or elsewhere, the change that my hon. Friend suggests would not simply be a matter of transferring the information to the Criminal Records Bureau. Magistrates courts registers are held not by the CRB but by Her Majesty’s Courts and Tribunals Service. Recordable offences—not all offences—are passed electronically from HMCTS to the police national computer, from which the CRB accesses them. Making magistrates courts’ registers available to the CRB would therefore require a process to transfer and store them, with the associated costs.
There is considerable information kept on magistrates courts registers that is not in the public domain. It includes, among many other things, details of individuals’ driving licence numbers, personal details of the recipients of compensation and details of vulnerable victims and witnesses, including those in sexual and domestic violence cases. Court registers also contain much information on people found not guilty or acquitted. Does my hon. Friend think that should be in the public domain, too? If not, as I assume, we would need to find a way of removing that information—again, at considerable cost and contrary to the provisions of the Bill.
Magistrates courts registers also include cases on which there are reporting restrictions in place to stop the naming of individuals—offenders, witnesses, victims or others. Those cases would need to be identified—another costly process, as they are recorded only at first hearing so a linking process would have be identified—and removed from the public register. The Bill does not allow for that, either.
Magistrates courts also hear some civil and family cases, details of which are recorded in the register. Those cases would need to be filtered out before publication, but the Bill does not allow for that. Proceedings on more serious crimes are concluded in the Crown court, and from reading the Bill it seems that they, too, are to be included in its provisions. Clause 1(1) refers to
“any other registers produced by a court listing convictions”,
not just those from magistrates courts. Crown court registers are not currently held electronically. The official record is on paper, and making it available would require extra investment.
It is difficult to see what access to court records would provide for the public unless there were some search facility. My hon. Friend said that there would be, but that is not specified in the Bill. Such a facility would be very costly to develop, as literally millions of records a year would need to be sorted through. Someone could find the result they were looking for only if they knew the exact person, court or hearing involved. Effectively, the public would have access to endless data but get very little useful information—a costly exercise for very little public value.
We are also concerned that the Bill could work against rehabilitating those convicted by the courts. Let me explain why I say that. The Rehabilitation of Offenders Act 1974 sets out various times after which a conviction becomes spent—when it does not have to be disclosed. My hon. Friend said that it would be done in real time, or within relatively real time, and that an electronic system could be devised incorporating a natural lapse of spent convictions. The aim of current legislation is to allow individuals to move on with their lives, particularly those whose offence was at the lower end of the scale. In order to safeguard the more vulnerable elements of our society, such as children and the old or infirm, certain professions are exempted from the Act, and all convictions, whether spent or not, have to be disclosed.
That is where the Criminal Records Bureau comes in. That is why we have an expert body doing the criminal records work. It does the necessary checks, and passes the information on to a prospective employer when relevant. I think that most people would consider that to be perfectly reasonable. It strikes a balance between open access to the criminal records system and the rights of those who have transgressed to move on with their lives. My hon. Friend the Member for Bury North (Mr Nuttall) made a point about people who change their names in order to get away from a criminal record. The Bill does not address that point. However, the CRB has in place a thorough system of identity checking. The registered body, which must countersign any application to the CRB, is under a statutory duty to carry out thorough identity checks. The proposed online system would not put in place anything to cover that loophole.
Hon. Members on both sides of the House will know that we are changing how the system operates through the provisions in the Protection of Freedoms Bill that is before the House, as I mentioned briefly before. Furthermore, the Rehabilitation of Offenders Act was itself the subject of a recent Green Paper, and the results of that consultation process are still under review by the Ministry of Justice. We would not want to take any action that could prejudge or impact in any way upon that review. However, if we put in place the system proposed in the Bill promoted by my hon. Friend the Member for Christchurch, there would be considerable potential for anyone to circumvent the provisions of the 1974 Act and find out about matters that have become spent.
To avoid that we would need to put in place a series of checks to weed out such spent offences, which would add to the cost overall. However, if court registers were made available online or in some other electronic form by the CRB, there would be no guarantee that removing the spent conviction from the records would achieve much.
I thank my hon. and learned Friend for that helpful intervention. He raises an important point.
As we have seen, all sorts of information travels around freely on the internet, irrespective of whether it was intended that the information should get out. I was talking about the suggestion that the information be available online or in some other electronic form. In that case, it could not be guaranteed that if a spent conviction was removed, it would stay removed. The information would have been extracted into other forms of database long before then. It could also allow unscrupulous individuals to go on what are politely called “fishing trips” to see what they could find out about an individual. [Interruption.] I hear “neighbours” from a sedentary position. That is just one possible unintended use of the information available.
People could also use the information to get round the CRB system, however. They could deny individuals education or employment. They could even obtain information leading to more unpleasant actions such as revenge attacks, including in the context that my right hon. Friend the Member for East Yorkshire (Mr Knight) mentioned about neighbours checking who is in the vicinity. People could obtain information to see where and how revenge might be visited upon those whose records came to light so easily.
With any system, there must be a balance between the needs of all those who are affected. In our view, what we currently have succeeds, more or less, in achieving that. Those who could be a threat to children or vulnerable people are kept out of certain roles by the protection offered by CRB checks. In the case of offenders, they can put their past behind them, as allowed for by the Rehabilitation of Offenders Act 1974, and I hope become productive and useful members of society again. In the Government's view that process could be significantly undermined if the Bill were to proceed.
The Bill also contains a reference to the Freedom of Information Act 2000 and says:
“Information held by a criminal records office…shall not be ‘personal information’ for the purposes of the…Act”.
The Freedom of Information Act does not define personal information. Instead it provides that certain types of personal data as defined in the Data Protection Act 1998 are exempt from disclosure. Personal data are defined in the 1998 Act as data that relate to a living individual who can be identified from those data, or from those data and other information that is in the possession of, or is likely to come into the possession of, the data controller, which is, in the case we are discussing, the CRB. It includes any expression of opinion about the individual and any indication of the intentions of the data controller or any other person in respect of that individual.
It is important to note that “data” are also defined in the 1998 Act as information that is being processed by means of equipment operating automatically in response to instructions given for that purpose; is recorded with the intention that it should be processed by means of such equipment; is recorded as part of a relevant filing system or with the intention that it should form part of a relevant filing system; does not fall within the categories above but forms part of an accessible record as defined elsewhere in the Act, and refers to, among other things, health and education records; or is recorded information held in any form by a public authority and does not fall within any of the categories I have listed. We can be fairly confident that, in whatever form it is provided, the information we are discussing today would be considered "personal data" for the purposes of the 1998 Act, given the definitions I have just set out.
In addition, section 2 of the 1998 Act makes it clear that sensitive personal data include information about an individual's racial or ethnic origin, his political opinions, his religious beliefs, his sexual life and information of any proceedings for any offence committed or alleged to have been committed, the disposal of such proceedings or the sentence of any court in such proceedings. Sensitive personal data are given special protection under the 1998 Act. In order for the processing of that data to be lawful, it must comply with the eight data protection principles that are set out in schedule 1. Those principles are as follows: that the data are processed lawfully and fairly, meeting conditions in both schedules and, in the case of sensitive personal data, the conditions in schedule 3 as well; that data are obtained for specified and lawful purposes and will not be processed in any manner incompatible with those purposes; that data are adequate, relevant and not excessive; that data shall be accurate and up to date; that data shall not be kept for longer than is necessary; that data shall be processed in accordance with the rights of the data subject; that technical and organisational measures shall be taken to prevent unauthorised or unlawful processing; and that data being transferred outside the EEA must be sent only to countries that ensure an adequate level of protection for the rights and freedoms of data subjects in relation to processing data.
For sensitive personal data to be processed lawfully, one condition in both schedules 2 and 3 must be met. The conditions in schedule 2 are as follows: that the data subject consents to the processing; that the processing is necessary for the performance of a contract; that the processing is necessary for compliance with a legal obligation; that the processing is necessary to protect the vital interests of the data subject; that the processing is necessary for the administration of justice or for the exercise of a function of a public nature exercised in the public interest; and that the processing is necessary for legitimate interested purposes by the data controller or third parties, except where this is unwarranted due to the prejudice to the rights and freedoms of the data subject.
The conditions in schedule 3 are as follows: that the data subject explicitly consents to the processing; that the processing is necessary because of an employment obligation; that the processing is necessary to protect the vital interests of the data subject in respect of other people where consent cannot be obtained; that the processing is carried out in relation to trade union, political, philosophical or religious purposes with appropriate safeguards, and as long as this does not result in the disclosure of data to a third party without the consent of the data subject; that the information has been made public by the data subject; that the processing is necessary for the purposes of legal proceedings; that the processing is necessary in the interests of justice; that the processing is necessary for medical purposes; that the processing is necessary for identifying equal opportunities, and other specified reasons, including the police exercising their common law powers.
The objective of the part of the Bill relating to the Freedom of Information Act 2000 would appear to be to prevent details of convictions from being released.
Section 40 of the Freedom of Information Act provides an exemption from disclosure for some personal data. Where the applicant is seeking information on himself, the information is completely exempt under section 40(1) and the applicant should instead make a request under section 7 of the Data Protection Act. That is known as a subject access request.
Where the applicant seeks information that includes the personal data of a third party, it may be released only to the requesting member of the public if to do so would not contravene any of the data protection principles set out in the Data Protection Act. Those principles ensure that an individual’s personal data are, among other things, only processed—in this context released—when it is fair and lawful to do so. It cannot be right that the protection of an individual’s personal data against unfair processing should automatically be overridden in the way envisioned in the Bill. Not only is it not right but there would be real concerns about whether this part of the Bill would be compatible with article 8 of the European convention on human rights. I will say a little more about that shortly.
The issues are not only freedom of information, but the Data Protection Act. Court registers contain considerable personal information—names, addresses, dates of birth, driving licences—on individuals, and not just offenders but victims and the not guilty. Such records are all subject to the Data Protection Act, and we would need to consider how publishing them, especially in the sort of volume that we are talking about, would impact on people’s personal rights.
Clause 1(3) requires that the criminal records office must ensure that
“the registers it holds are no more than one month out of date at any time”.
Courts already have a target to result all cases within six working days. So this would be eminently achievable, although there would be issues about the filtering that would need to take place to remove records not in the public domain, which may slow the process up a little. However, records are not updated after they have been published, so if someone successfully appeals against a conviction, the original conviction would remain in the magistrates court register. Someone searching the register would have no idea whether the individual had appealed, nor what the outcome was. If Crown court registers were not published, people would never be able to find out about an appeal hearing. Creating links between systems and updating information in real time would be extremely complex, not to mention costly. At the moment, the Criminal Records Bureau does this work by examining all the records and giving out the information on only the most current position.
I have already alluded to article 8 of the European convention on human rights, which states:
“Everyone has the right to respect for his private and family life, his home and his correspondence.
There shall be no interference by a public authority with the exercise of this right except such as in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”
Clearly, as we have heard, a balancing exercise needs to be carried out, and although there may well be a public interest in having an open justice system—which we do have—that still needs to be weighed against the rights of the individual.
As was said in the Supreme Court case of R (on the application of L) v. Commissioner of Police of the Metropolis, which concerned the disclosure on an enhanced CRB certificate of information that had not resulted in a conviction in relation to an individual seeking to work with children, the correct approach when looking at two competing convention rights, or when looking at whether interference with article 8 is proportionate, is that neither right takes precedence over the other.
I am afraid that at this point in the Minister’s argument we may be parting company. The mischief with which the Bill seeks to deal is the fact that this information is already in the public domain. Is she suggesting that our courts should close their doors because article 8 means that there is some interference with people’s human rights as a result of their being subject to open criminal proceedings?
That is not what I was suggesting. We do have an open justice system, but I am saying that the balance is between having an open justice system and the rights of an individual.
Before I conclude, I wish briefly to deal with one issue that I have not yet mentioned, which is the mistakes made by magistrates courts. It is sad to hear of such poor record keeping and I hope that magistrates courts will seek to address it. I am sure that those in the Ministry of Justice will read the report of this debate and may wish to take the matter further.
We need to take all the considerations I have mentioned into account. I accept that my hon. Friend the Member for Christchurch had the laudable intention of opening up criminal records and making them more accessible, but I have set out the great difficulties and challenges in doing that, and the mischiefs to which it may lead. It is the Government’s view that, at this time, there is no need to add give the CRB the additional work load that this Bill would impose, nor is there a sufficient public need for this sort of system to be set up. I must therefore inform the House that the Government do not support the implementation of this Bill.
That comes as a great surprise to me. I thank the Minister, however, for her response. All the mischiefs she said would arise were my Bill to be enacted are the very mischiefs that can arise at the moment when information is gleaned at the time of the court case by the media. That takes me back to the point I made at the outset, which was that if
“the press or the media had covered the case and was able to get a copy of the newspaper report or media broadcast then”—
at that time—
“although the personal data in question would have been processed by becoming part of those reports—the Appellant would have had legitimate access to the information and the personal data he was seeking…If the local newspaper or media outlet put the court report within a webpage on the internet or as a ‘podcast’ to be downloaded by the Appellant—whether there was a ‘search’ facility on the site allowing specific names or topics to be highlighted and retrieved or not—and then viewed, printed out, played or stored, then all of that is legitimate processing of personal data within the current statutory legislation.”
I am grateful to those who participated in the debate. I think that everybody, except the Minister perhaps, recognises that there is an anomaly. It is inconsistent that court cases can be dealt with differently as regards public access to information about those cases depending on whether they are covered by the media, whether an individual is present in court and so on.
If the Minister reconsiders the issue, I hope that she will recognise that there is an anomaly. If she accepts that there is one, I hope that she will feel that it is incumbent on her Department to try to find a solution. Although my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) poured quite a lot of cold water on my Bill, he accepted that there was an anomaly and that this was an attempt to address it. When the Director of Public Prosecutions talks about the possibility of introducing cameras into courts and reasserting the importance of public access to the criminal justice system, it seems anomalous that we have this problem. One thing that has come out of the debate is that I have accepted that my Bill is probably not the right solution to the problem at this time, but I hope that the pressure of the debate on the Minister will be such that she will try to get her officials to work on coming up with a proper solution—perhaps one that could be brought forward as an amendment to the Protection of Freedoms Bill on Report, as all the issues relating to the criminal records office are being dealt with in that Bill.
Finally, I am very concerned about the inaccuracies on the registers, which must cause everybody great concern. The Criminal Records Bureau is producing inaccurate material. I had a constituent who was a wing commander who wanted to do some voluntary work somewhere. He found that somebody had stolen his identity and that his records had been linked with the criminal records of another person. That caused enormous embarrassment and, in the end, it was only after we went to see the then Minister in the Home Office that things were put right. My constituent was the victim of fraud, but there seem to be a lot of victims of mistake.
On the point that the Criminal Records Bureau might be holding incorrect information, I am sure my hon. Friend will be glad to know that one of the new provisions in the Freedom of Information (Amendment) Bill means that the certificate will now go only to the individual applicant and not to the employer, giving them the chance to dispute the information before it causes any harm to their employment.
That is helpful, but my hon. and learned Friend the Member for Sleaford and North Hykeham was making the point that inaccurate information is being recorded in courts. We must have a system to put that right. My Bill relates only to prospective court registers, not historical ones. Even so, I hope we can have a system whereby from now on magistrates court records of convictions are 100% accurate, rather than containing anomalies and inaccuracies. That is my hope—perhaps it is an aspiration—but having said that, I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.
St George’s Day and St David’s Day Bill
I beg to move, That the Bill be now read a Second time.
We often hear from parliamentarians in this and the other place that radical and controversial ideas and legislation should be piloted before being introduced, so I am delighted to tell the House that 50% of my Bill was piloted this year. A quirk of the calendar meant that the nearest working day to St George’s day—23 April—was a bank holiday. Furthermore, thanks to the royal wedding and the Prime Minister’s generosity to the nation, we shall have nine, not eight, bank holidays this year.
Why should we make St George’s day an extra, permanent bank holiday? St George became the patron saint of England 661 years ago; his chivalry, values and story were seen by King Edward III as a better fit to the England he wanted to rule than the previous patron saint, Edward the Confessor. St George lived more than 1,000 years before that date. He was an immigrant, a Roman soldier born in Turkey, or possibly Kurdistan, perhaps with colouring a little closer to mine than most would imagine. We know him most famously as the dragon slayer, a man whose bravery freed a town from the tyranny of a vicious dragon. He was a man whose Christianity led him to be persecuted and eventually executed on the day we now celebrate in his name. He was adopted and taken into the hearts of the English people for the values he represented, not for who he was or where he was from.
Although celebrated before 1350, it was only after St George’s adoption as patron saint that he became ingrained in England’s national psyche. It is said that his popularity and the celebration of his name day increased substantially after Henry V rallied his troops by invoking St George before victory at the battle of Agincourt: “Cry God for England, Harry and St George” wrote the great bard William Shakespeare, in commemoration. It is perhaps fitting that the great bard himself was born on St George’s day in 1564, in my constituency of Stratford-on-Avon; he died on the same date 52 years later.
Today, St George represents part of our often under-celebrated national identity.
When I first saw that my hon. Friend intended to present the Bill, I rejoiced, and I agree with everything he has said so far, but when I saw the contents of the Bill I became alarmed. Does he not agree that the Bill is actually quite divisive? In clause 1, he tells us that the Welsh, but not the English, can celebrate St David’s day and that the English, but not the Welsh, can celebrate St George’s day. Is it not a nationalist measure that is likely to increase friction between England and Wales, rather than a Unionist policy, as I want, because I support the Union? Is the Bill not likely to be very divisive if passed in its present form?
I thank my right hon. Friend for his intervention, although I remind him that Scotland celebrates St Andrew’s day and Ireland celebrates St Patrick’s day. I do not believe that it is divisive in any way for England or Wales to uphold their saints. In fact, the more we can deal with such things positively, recognising their importance, the closer and stronger the Union becomes. When things are forced down people’s throats, they begin to become rejectionists. I am afraid that I therefore disagree with my right hon. Friend.
Something concerns me about the Bill. I am all in favour of celebrating St George’s day or St David’s day, but why does the Bill suggest that it is necessary to have a bank holiday to celebrate them on another day? Surely, if those days fall on a weekend, the celebrations can take place then, without the need the for anyone to give up work on the previous Friday or the subsequent Monday.
I thank my hon. Friend for his intervention. If I understand him correctly, he suggests avoiding bank holidays and celebrating at the weekends, but that is precisely my point: if we had a bank holiday, we could celebrate on whichever date the saint’s day falls, not necessarily on a Saturday or Sunday.
My hon. Friend misunderstand my point. If St George’s day was to fall on a weekday, I could understand the case that he makes for having a bank holiday. If St George’s day falls on a weekend, I cannot understand the case for having a bank holiday on the previous Friday or the subsequent Monday.
I hear what my hon. Friend says, but it is important to have a bank holiday, because what a bank holiday would do to the nation’s psyche is to deliver a permanent reminder of St George’s day, rather than people casually saying, “Well, if it falls on the weekend, it’s fine.” Otherwise we cannot do the thing that we most want to do, which is to recognise it permanently and specifically.
I saw an example just last month—as my hon. Friend says, St George’s day coincided with a bank holiday this year—in my constituency, where the scouts and guides paraded to Queens square in the centre of the town and sonnets were read to celebrate the bard’s birthday on St George’s day. There was an extra sense of community spirit in celebrating St George, precisely because of the coincidence with the bank holiday. Certainly, enshrining such a bank holiday in law would aid that sense of community in both England and Wales.
I support the proposal and have supported such campaigns in the past. I am keen that we do everything we can to celebrate St George’s day and what it means to be English and British, as well as to celebrate the Union. I can assure the hon. Gentleman that there is nothing casual about how we celebrate St George’s day already, despite the fact that there is no bank holiday. Just a couple of weeks ago, I proudly took part in the celebrations of St George’s day in Dudley—we have them every year—and there is a nothing casual about them, but the point about the date is an interesting one. There is already a series of bank holidays— Whit and Easter, and so on—at this time of the year. Of course, the Welsh celebrate St David’s day with an Eisteddfod festival. I am not an expert on the Welsh, but I think that that takes place during the summer—
Thank you, Mr Deputy Speaker. The hon. Gentleman makes a valid point. I would just remind him that because of a quirk this year, we have had a number of bank holidays, and the nation found them positive. There were some economic benefits too. It may be preferable to have a bank holiday at a different time of the year, but for me the importance of St George’s day overrides that consideration.
I entirely agree that we should have a bank holiday on St George’s day. Could not the problem be solved by moving the existing bank holiday on May day to 23 April? If we need to create an extra bank holiday, one could be created on, say, Trafalgar day.
I thank my hon. Friend for his intervention. My Bill calls for an additional bank holiday, not the movement of an existing bank holiday. I hope those on the Treasury Bench are listening and taking note of such suggestions. I am pleased that my Bill is provoking debate and such good ideas.
To many, St George’s day is a celebration of all that is great about our nation. At the last election, every major party vowed to promote national integration and social cohesion. A national day celebrated by all, regardless of their background or heritage, would only help that process. As my right hon. Friend the Secretary of State for Education has said, we must all encourage our children to learn about our nation’s past, the bad and the good, and we must celebrate our shared history. What better way to do that than a national day, officially recognised by the Government?
There are those who say that St George’s day is a Christian holiday and not representative of our multicultural nation, and those who say it plays to the fringe right of this country. I disagree. St George, after all, is the only Christian saint to appear in the Koran and the only saint to have a mosque bearing his name. Even in the world of faith, he is not uniquely Christian. Yes, the fringe right may well have hijacked our symbol of patriotism, which should sadden all of us in the Chamber, but today in the House we can go a long way towards reclaiming it.
Let us remember what our Prime Minister said on St George’s day last year:
“Today we are celebrating St George’s Day, and we are reclaiming St George’s Day as an important day . . . for good reasons.
And one of the most important reasons is that we should be reclaiming the flag from the BNP and saying the flag belongs to the English people, all of them.”
He went on to say:
“People come to our country and want to feel part of our country.
They want to feel part of something and celebrating St George’s Day will help them feel that sense of belonging.”
As the son of immigrants to this country, a son of parents who fled persecution to find safe haven here, I could not have put it better myself.
It is important to lay another myth to rest—that an extra bank holiday would affect our productivity and be economically damaging. As a businessman and an entrepreneur, I have built up a strong and enduring business and I totally reject the idea that one extra bank holiday would have that effect. The working people of this country will get done the work that they need to get done, regardless of an extra day away from the office. The concept of work has changed. It is no longer about turning up at a particular time and leaving at another time. It is, instead, about outputs and what is done, not how long it is done for.
On the point that the hon. Gentleman made about reclaiming the flag from the far right, this is a campaign that I have run ever since I became a Member of Parliament in 2005, calling on Dudley council and all other public bodies to fly the Union Jack, our national flag, which contains the flag of St George, on all public buildings all year round. Will he endorse that call? Does he agree that we should fly the Union Jack proudly, as a symbol of the values that make this the greatest country on earth, all year round and not just on the so-called special days of the year?
I commend my hon. Friend’s patriotic zeal, but if he wants a truly national public holiday, why do we not choose 21 October, Trafalgar day, as my hon. Friend the Member for Bury North (Mr Nuttall) suggested, given that it celebrates an event in which 4,000 Irishmen, 6,000 Scotsmen and 600 Welshmen, and even the odd American and French volunteers, fought on the British side, and a true-born Briton gave his life? Why do we not celebrate that day rather than the day of a mythical Greek who went around slaying mythical beasts?
I do not, but I am happy to source more data for Wales. However, I would not be surprised if something similar happened throughout the country, as when people have an additional day off, they use it to visit retail outlets.
The other beneficiaries would be our local pubs and great British breweries, especially the micro-breweries, which would undoubtedly attract many who wish to toast St George, and in Wales, St David, just as many already toast St Patrick and St Andrew. With the creation of special events building on those that already occur throughout the country, our leisure and tourism industries would also do very well.
There has already been some discussion about whether we want an extra day. I entirely support the Bill, but is my hon. Friend aware that the Government are already considering another bank holiday later in the summer to extend the British tourist season? That would not be as welcome as my Daylight Saving Bill in achieving that end, but perhaps we could consider both options.
My hon. Friend is quite right; the Government are considering that. As I cast my eye towards the Treasury Bench, I see no better champion of this country’s patriotism than my hon. Friend the Minister for Further Education, Skills and Lifelong Learning, who is a great patriot himself.
I apologise for missing the start of the hon. Gentleman’s excellent speech; I was mid-way through my lunch, but I am delighted to be here strongly to support the Bill. Is not the crux of the matter that it would address a grave injustice? The Scots can celebrate St Andrew, the Irish in the north of Ireland can celebrate St Patrick, but the English cannot celebrate St George, and, of course, in Wales we cannot celebrate St David. I want to put it on the record that the entire Welsh nation strongly supports the Bill.
I thank the hon. Gentleman for his intervention. He was a champion in helping me to draft the Bill and putting his name to it right at the outset. I am sure that his constituents and the people of Wales in general will recognise his commitment to putting this Bill on the statute book.
I spoke about the special events that could be developed by the leisure and tourism industries. In Stratford we already celebrate Shakespeare’s birthday on the weekend nearest the 23rd April. I am sure that the turnout would be all the larger and that local businesses would do all the better if the date were set in stone—the same every year—rather than having to be moved around.
We must also put the proposal in context. With only eight a year, the UK ranks 16th in Europe when it comes to bank holidays; France and Sweden have 11 a year and Germany has 12. Even the notoriously hard-working Americans have 13, although I accept that they take shorter summer holidays than we do in Europe. Are critics really saying that these extra bank holidays are pulling down those countries’ economies? Figures today from Germany and France demonstrate the growth in their economies, yet they have more bank holidays.
Finally, this policy has true cross-party support and, more important, huge public support. On St George’s day this year, I teamed up with Facebook’s Democracy UK page to ask users whether they supported the Bill. I am told that the response rate was 800% higher than usual, and I am delighted to say that an incredible 89% of respondents supported the Bill. My hon. Friend the Member for Erewash (Jessica Lee) has been presented with a petition, to be presented to the House, with the signatures of 3,674 constituents asking for a St George’s day bank holiday. Other Members have received e-mails from constituents asking that they support the Bill. In the world of research, where I hail from, YouGov found that 68% of people thought it appropriate for the country to have an extra bank holiday, with St George’s day being the most popular option.
Today we have an opportunity to do something great for this nation. It is an opportunity to tell the public that we are listening to what they want, and it is an opportunity to deliver real social and economic benefits. I hope that colleagues will join me in supporting the Bill in order to turn those opportunities into reality. I commend the Bill to the House.
I rise to make a short contribution to the debate. I commend my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) for bringing the debate to the House. I am sure that the campaign he is spearheading is very popular, if not populist. However, I have some slight concerns about the international comparisons that have been made. The reality is that across most of continental Europe, bank holidays, which are normally associated with particular feast days or national events, are not transferred to the following Monday or previous Friday when they fall on the weekend. For example, if Christmas day falls on a Saturday, in Germany that is it and they do not get the following Monday off. That happens in most continental European countries, if not all. My hon. Friend alluded to America, and I appreciate that they tend to take shorter holidays in the summer, with 10 days' statutory entitlement being quite normal.
I applaud my hon. Friend’s patriotic stand in seeking to ensure that we have holidays that celebrate our country, but I would like him to consider the point made by the hon. Member for Dudley North (Ian Austin), which I agree with, that people do not require a holiday to be able to celebrate our wonderful country, as happens in our civic parade in Saxmundham and in similar events elsewhere in Suffolk Coastal.
In reference to the point my hon. Friend the Member for Castle Point (Rebecca Harris) has just made on how the Government are considering other bank holidays, I see that as a really important contribution to establishing why we need 1 May to be a bank holiday—I know that that may be controversial on the Opposition Benches. Why not choose a day of national celebration? It could be the Queen’s birthday or, as my hon. Friend the Member for Tamworth (Christopher Pincher) suggested, Trafalgar day.
That is a fair point, and there is no more popular day than a day celebrating one’s country, although, with reference to what was aid by my hon. Friend the Member for Christchurch (Mr Chope), who is no longer in his place, I am conscious that we have always to support the United Kingdom. We have had the royal wedding day, and with the diamond jubilee next year I think that such moments of unity may be more appropriate dates on which to build.
My hon. Friend mentioned public holidays in the United States earlier, and until not that long ago some states celebrated some public holidays and other states did not; Martin Luther King day is the most relevant example. We could have national and sub-national holidays in this country. They could work quite well, and I see no problem with having a Trafalgar day, a St George’s day, a St David’s day, a St Andrew’s day, a St Patrick’s day and so on. That works in other countries with subdivisions.
My hon. Friend makes a valid point. In Scotland they have not only new year’s day off, but 2 January. Perhaps they have such a good time at Hogmanay that they need two days to recover; I do not know the convention around that. Of course, it was not until fairly recently—perhaps within our lifetime, my hon. Friend may note—that Christmas day became a day off in Scotland, so I fully accept that different countries within the United Kingdom might have different traditions that they wish to modify.
In Scotland, apart from the obvious public holidays such as Christmas day that appear on fixed dates, many public holidays are local holidays. Different local authorities will choose different days for their spring or autumn holidays, so the system works perfectly well not just within a whole nation, but locally. Will the hon. Lady be clear about May day, however? I was concerned that she was suggesting that the May holiday should not continue, and I hope she was not, because if that approach were to be associated with introducing St George’s day and St David’s day, it would destroy the otherwise bipartisan approach to the debate. I am sure that the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who has introduced the Bill, would not want that either.
I am not trying in any way to associate that idea with the Bill; I am trying to suggest that the Government should take some time to think about the public holidays that affect each individual nation and the United Kingdom as a whole, and to decide whether they are well spaced out, whether there is a concentration around a particular time of year and whether we could do with moving some—be they 1 May, 30 May, the one in August or similar—to different points of the year. It is a long stretch from 31 August right through to Christmas day, especially when we have so many holidays granted to us earlier in the year.
My hon. Friend the Member for Stratford-on-Avon commented on economic activity, and I should like to see more understanding of that issue. I will not oppose the Bill, because it merits further debate, but I look forward to the Government’s comments, particularly given that some of my local business people have said, “Another bank holiday means another day that I have to pay someone who may not be generating value for my business.” That might seem a bit miserly, but it is not intended to be. That is the reality, and we need to ensure that we are as productive as we can be. We should fly our flags with pride on St George’s day, 1 March, 30 November and 17 March, but we must ensure that we do not put ourselves at a disadvantage compared with our international competitors, and not just those within the European Union.
I rise to make a short contribution to the debate. I want to make two preliminary points. First, I extend my sincere congratulations to my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) on moving the Second Reading and on being such an advocate of a full debate about whether St George’s day in England and St David’s day in Wales should form bank holidays, as St Patrick’s day in Northern Ireland and St Andrew’s day in Scotland do.
Secondly, I stress—not least because, for perfectly understandable reasons given the constituency that he represents, my hon. Friend focused his comments on St George’s day—that, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, and as I know given my surname and with grandparents and relatives in Troedyrhiw in south Wales, there is great support in Wales for the Bill and for ensuring that there is also a public holiday on St David’s day.
With those preliminary remarks behind me, the only point that I want to address is one that has troubled some hon. Members: whether the Bill, as formulated, is in any way a divisive measure in preventing citizens in the various constituent parts of the United Kingdom from celebrating saints' days that are not public holidays in the constituent part of the UK from which they come. As I understand it, that is not the principle that lies behind the Bill. It would be perfectly acceptable for Englishmen and Englishwomen living in Wales to celebrate St George’s day, or for Welsh people who have the misfortune to live in England to celebrate St David’s day, in just the same way that I am sure many Scots living in other parts of the United Kingdom celebrate St Andrew’s day—and we all know that the Irish celebrate St Patrick’s day wherever they happen to be in the world, and do it very well indeed. That mischief does not exist in the Bill, and hon. Members who have sought to suggest that it does are wrong.
Much more importantly, this is a Bill whose day has come. The time has come for this sort of measure to be properly debated and for the Government to consult on it, because for too long the symbols associated, in particular with St George, have been purloined by the wrong people in this country. It is about time, as any decent and proper Englishman such as the Minister can tell us, that we took those symbols back and began to celebrate what it is to be English, Welsh, Scots or Irish. There is no problem with that. This is a Union of four strong nations, and the Bill would not in any way undermine it.
I look forward to hearing the Minister’s comments and, I hope, to receiving assurances that the Government, even if they will not lend their support to the Second Reading of the Bill, will give it serious consideration in the context of whether there should be further bank holidays in this country. I, for one, look forward to the day when, even if I can celebrate Trafalgar day—although I am not sure what I would do with that day in October—I and all my constituents will have the opportunity to mark the day on which the patron saint of this country is celebrated. For those reasons, I will support my hon. Friend’s Bill, and I hope that others will do the same.
I join other Members in congratulating the hon. Member for Stratford-on-Avon (Nadhim Zahawi) on introducing the Bill. I also congratulate you, Mr Deputy Speaker, because before you became an occupant of the Chair you led the way in previous Parliaments in promoting a series of patriotic measures. I strongly support this proposal. I strongly believe that we should celebrate St George’s day and that we should, as the hon. and learned Member for Sleaford and North Hykeham (Stephen Phillips) said, reclaim these symbols from those on the far right, who have traduced them.
We heard several other proposals in the debate. For example, the hon. Member for Tamworth (Christopher Pincher) suggested a day of national celebration not on St George’s day but on Trafalgar day. I think we should look for a day that enables us to celebrate much more what we are as a people and a nation, and the unique contribution we have made to the rest of the world. People sometimes ask me what it means to be British. I believe that it is not about where you were born, what you look like, where your parents were from, the religion you practise or any other such factors, but the contribution you make, what you believe, and your adherence to the great British values of democracy, equality, freedom, fairness and tolerance, to which I believe our country has a particular and unique attachment.
People say that every other country can claim those values just as much as Britain can, but I do not believe that to be true. For example, when other European countries rounded up Jews in the second world war, put them on trains and sent them to concentration camps—we were reminded of that only yesterday with the trial of Demjanjuk—Britain, uniquely, provided a safe haven for Jewish children such as my father, who came here at the age of 10, unable even to speak English. I therefore think we can say that this country has a unique commitment to the values of democracy, equality, freedom, fairness and tolerance, and that we should stand up for that. We should pick a day to celebrate that reminds us, children in Britain and everyone who wants to live in this country that it is those values that make us British and that make our country so special.
When the Minister responds, I would like to hear what thought he and his colleagues have given to picking a date that can be set aside for an annual moment of reflection and celebration to remind the whole country of the unique contribution that British people have laid down their lives to give to the rest of the world.
I, too, congratulate the hon. Member for Stratford-on-Avon (Nadhim Zahawi) on moving the Second Reading of his Bill, and on making so many pertinent points.
Many great and some not so great men and women have attempted to define the English identity. I will not compete with them by trying to weave tea, Shakespeare, queuing and tabloids into a national narrative. I am even less well qualified to pontificate on the essence of Welshness.
The Labour party strongly supports the celebration of the English and Welsh national identities. We are proud that we helped to reclaim the cross of St George from the British National party. I think it is true to say that when we now see it flying on our streets, all English hearts can swell with pride, rather than fear racist insults. The Welsh have been ahead of the English in maintaining a strong focus on and pride in their national symbols: the flag of St David, the daffodil and their national dress.
Many St George’s day celebrations are held in my constituency of Newcastle upon Tyne Central. Kids of all ethnic backgrounds delight in recreating St George’s feats of heroism, to which the hon. Member for Stratford-on-Avon referred. I tried to emulate St George’s courage and skill by competing in the egg and pan race at the Villa Victoria’s St George’s fun day in the Westgate area of Newcastle. I am afraid that I was not worthy of his memory, but I will have another opportunity next year to carry off the golden frying pan.
I thank the hon. Lady for that intervention. I will consider that in the run-up to next year’s event.
The royal wedding in April was a huge celebration of national identity. A million people came to London to celebrate with good humour and great pride, and all over the country people gathered in pubs, parks, streets and halls to watch. Even republicans managed to enjoy it in their own way and with good grace. We hope that the Government are already putting in place measures to ensure that the Queen’s diamond jubilee next year is as “amazing” as the wedding, as Her Majesty is reported to have characterised it.
The Opposition do not oppose Second Reading and look forward to seeing the Bill in Committee, but a number of important issues have to be considered before we will support it. The hon. Member for Stratford-on-Avon considered the economic impact, and we are aware of the Government estimate that an additional national bank holiday would cost £2.9 billion. That would have clear implications for business, trade unions and other stakeholders.
There are issues besides costs for the Committee to examine. For example, we must make fair international comparisons. As the hon. Member for Suffolk Coastal (Dr Coffey) said, I am not sure it is fair to claim that we have significantly fewer holidays than others, because in France, for example, if May day falls on a Saturday or Sunday there is no day off in lieu. With our strong sense of fairness, we ensure that a bank holiday is always a working day. Taking that into account, I believe that, on average, other European countries have only a slightly larger number of bank holidays. The French Government are reportedly considering reducing the number of public holidays. The hon. Lady pointed out that the US has more, but the trade-off is that far less holiday time is provided for businesses and workers.
There is a further concern that is the subject of daily and hourly discussion throughout these isles—the weather. As my hon. Friend the Member for Dudley North (Ian Austin) said, an April bank holiday has little chance of coinciding with an English heat wave—nor, I am told, is March the best time to showcase Welsh sunshine. As a nation, we are working harder over longer hours, in more stressful conditions, so should we not have a decent chance of decent weather on a day off?
Furthermore, some might question the principle of telling hard-working men and women what they should do with their time off. It does not sound very English, does it? Unlike the French, the English have no need of an académie to celebrate the language of Shakespeare. Some might question whether a bank holiday is necessary to strengthen the homeland of Churchill, Brunel, Boadicea and St Cuthbert, to name but a few, or for that matter the home of Owain Glyndwr and the Eisteddfod.
As has been mentioned, however, a poll conducted for St David’s day 2006 found that 87% of people in Wales wanted it to be a bank holiday, with 65% being prepared to sacrifice a different bank holiday. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to the strong support in Wales for a St David’s day bank holiday. We therefore believe that there is strong evidence of popular interest in making St David’s day and St George’s day bank holidays, and that it is worth while examining in more detail how the matter can be taken forward. The Department for Culture, Media and Sport is in pre-consultation on the May day bank holiday, and as a result we hope to learn more about British attitudes to bank holidays. We hope, though, that we will not lose our May day bank holiday.
We believe that we should celebrate our national identity, and unlike the Government we believe in promoting strong local, regional—we have not yet banned the R-word—and national identities. We look forward to discussions in Committee to see whether the Bill is the best way of doing so.
Would that you, Mr Deputy Speaker, had been in Long Sutton in my constituency when St George’s day was celebrated. You would have been able to enjoy, as I did, adorned by the rose of England, the people and personalities of that splendid town. Many people, like me, enjoyed vanilla ice cream made and served by Laddies of Holbeach at an event organised by Jack Tyrrell, whose triumphant election to Long Sutton parish council I know the whole House will wish to celebrate. I can think of no one better than you, Mr Deputy Speaker—I am not in the habit of flattering the Chair, as you know—to have added their celebrity to that occasion. Perhaps I can take this opportunity to invite you to join me in my constituency when the event is next held.
Last Sunday, I marched, as I do every year, at the head of scouts and guides, cubs and brownies, and beavers and rainbows from Spalding marketplace to the church of St Mary and St Nicholas to celebrate St George’s day —rather late, the House will note, because of the royal wedding and all the events we enjoyed as a nation that obliged those organisations to delay their usual celebrations. It is an annual joy to be part of that and to see young people experiencing the benefits described by so many Members today of national identity, including the purposeful pride instilled in our hearts by our understanding of what we are and where we have come from.
It has been the habit of those in the bourgeois liberal class—by that, of course, I do not mean the Liberal Democrats; I am using “liberal” with a small L—who are doubt-filled and guilt-ridden to understate the significance of that sense of identity. Let that passing phase in our history be now put to one side. Let us all, as a nation, understand that this sense of belonging feeds our sense of worth and value.
To that end, I warmly welcome my hon. Friend’s Bill and the chance it has given us to debate these matters. At its heart, it is a celebration not only of St George’s day and St David’s day, but of St George and St David themselves. In anticipation of this day, preparing with the diligence that I hope I usually display, I took the trouble to wander into Central Lobby and look at the fine mosaics of St George and St David—and also of St Andrew and St Patrick—that adorn that place. You will be familiar with them, Mr Deputy Speaker. I have purchased two small postcards for you, which I will give you at the end of today’s proceedings. The mosaics, which were added to Central Lobby a considerable time after the Houses’ rebuilding after 1834, are a wonderful display of the very symbols of identity to which the Bill draws the House’s attention.
St George, you will remember, Mr Deputy Speaker, stands between virtue and purity—other elements in the national identity, described by many Members, and exemplified in the speech of my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), that make England what it is. Virtue is holding a lion’s skin, illustrating the triumph over brute force, whereas purity holds a bunch of white lilies. I do not want to disappoint my hon. Friend, but St George is clearly a rather pale-skinned youth in the illustration, by the way, but of course that might be poetic licence. The figure of St George says so much about what we are as Englishmen.
It is appropriate to take this opportunity to celebrate St George and St David. Lest I be accused of any prejudice, I will say a word about St David too, for there is a fine mosaic of him, too. He stands between two angels. I cannot help but notice my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) at the end of the Treasury Bench, and I want to point out for his benefit alone that St David was originally the saint of Pembrokeshire, and only later became the saint of the whole of Wales. The two angelic figures standing either side of St David in that mosaic, which we pass every day, represent the harp of harmony and the lamp of light. May harmony and light be brought to all our proceedings today and every day.
I would like to put a couple of other things on the record before I move to the specifics of the Bill—mindful, of course, of your indulgence, Mr Deputy Speaker. No party in this House has a monopoly on patriotism. It would ill serve us to pretend so. Patriotism, the belief in something greater than that which divides us, is an essential component in building a society that works. The things that drive and unite us must be greater than the differences that we enjoy. Indeed, the fact that we can tolerantly enjoy differences is emblematic of what is best about being British.
In those terms, the Bill is topical. I am sure that everyone enjoyed the recent celebrations of national identity, best shown by the royal wedding, to which the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) referred. It was a truly happy day for those directly involved, and it is marvellous how that happiness reverberated across the whole nation. Indeed, my young son Edward played the part of the groom in a royal wedding celebration at John Harrox primary school in my village. He was proud to do so, borrowing my top hat for the occasion.
We would all love another holiday—I would love many more holidays—but there are costs to be paid. I hope that you, Mr Deputy Speaker, and my hon. Friend the Member for Stratford-on-Avon will not think I am a killjoy for pointing that out. I do so with some reluctance, because I think we are often excessively utilitarian in public policy. I do go with Wilde:
“A cynic is the man who knows the price of everything and the value of nothing.”
We weigh and measure public policy solely by utility at great cost. None the less, we must be mindful of cost, in particular because of the times in which we live. It would be less than responsible not to take into account the points made by the hon. Member for Newcastle upon Tyne Central about the possible cost of an additional public holiday, to which I will return in a few moments.
I will now read from the script that was prepared for me, although I will do so fleetingly and will not let that constrain my rhetoric unduly.
The Government regularly receive requests for additional bank holidays to celebrate a variety of occasions. The current pattern of permanent bank holidays is well established, and in recent years leave entitlements for many workers have increased. It might therefore seem, in the eyes of some, unnecessary to announce a further bank holiday, but there will be a holiday next year to celebrate the Queen’s diamond jubilee, as there was to celebrate her golden jubilee. We should celebrate that with exuberance: no understatement and lots of celebration in Westminster and across the country, for my disdain of the bourgeois liberal class extends to its claim that to be exuberant is to be vulgar.
No one has ever suggested that I am a member of any sort of bourgeois liberal group. Thirty years ago next year, British forces liberated the Falkland Islands. They did not just free the Falklands, but fought for democracy and freedom more broadly. Would it not be right for the nation to celebrate that anniversary next year, and every year, on 14 June, as an example of Britain’s commitment to democracy, equality, freedom, fairness and tolerance?
In response to that, I should say that a nation that forgets its past is likely to neglect its future. As a conservative—with every kind of “C”—I fully understand that we are part of a continuum, and unless we learn from what we have done, we are unlikely to do well now or as we move forward, so it is right that we mark the occasion that the hon. Gentleman describes. It is important that we celebrate that victory and also pay proper respect to those who were part of it. I do not know what the official plans are, but given the hon. Gentleman’s intervention, the least I can do is ask the Ministers responsible to drop him a line. I think it would be wrong if that passed without any comment or note. Such occasions are worth marking in an appropriate and measured way.
I stand in awe of my hon. Friend’s powers of oratory and sound and clear thinking. On the cost and the point that he has just made about a similar event next year—an extra bank holiday to celebrate, quite rightly, the Queen’s diamond jubilee—could we not in the intervening time assess the cost of an additional bank holiday? We would therefore be able to make a sound decision about whether my Bill’s proposal for a permanent bank holiday could be supported in future.
My hon. Friend is certainly right. Although we cost such proposals in a clear and empirical way—and notwithstanding my comments about utility—it is right that we should consider the matter in the round. We should assess the effects, both good and bad, on business, because clearly many businesses will benefit from an additional holiday. The tourist business, many of our resorts and parts of our leisure industry would benefit. However, there would be other costs to business, and it is right to listen to what business organisations say. Indeed, I will describe what they have said as we progress through this short but important debate.
The history of bank holidays will help us to draw some conclusions. Bank holidays are a relatively new phenomenon, of course. Before 1834, the Bank observed about 33 saints’ days and religious festivals as holidays, but in 1834 the number was reduced to just four: 1 May, 1 November or All Saints day, Good Friday and Christmas day. Frankly, in my view, that was rather a meagre ration. In 1871, the first legislation relating to bank holidays was passed when the banker and politician, Sir John Lubbock, introduced the Bank Holidays Act 1871, which specified the days as holidays.
I understand that Sir John Lubbock was an enthusiastic supporter of national and local cricket, and was firmly of the belief that bank employees should have the opportunity to participate in and attend matches when they were scheduled. Dates of bank holidays are therefore dates when cricket games were traditionally played between villages in the area where Sir John was raised. It is that rather partisan approach to bank holidays, built around Sir John’s personal tastes, which forms the basis, or at least the origins, of the matters we are speaking of today. Nevertheless, people were so glad to be given time off, whether it was to watch cricket or not, they called the first bank holidays St Lubbock’s days for a while. That did not perpetuate, but I hope that politicians of note might consider that, at least in popular if not official terms, special days could be named after them; one never knows, but if my hon. Friend’s Bill were to be successful, his name might, at least colloquially, be attached to the day’s holiday that people enjoyed. However, that rather self-interested motive of course has nothing to do with his bringing the Bill to our attention.
As is often the case, Scotland was treated separately because of its separate traditions, and so, for example, new year’s day was a holiday there whereas Boxing day was not. The 1871 Act did not specify Good Friday and Christmas day as bank holidays in England, Wales and Ireland because they were already recognised as common law holidays, and common observance had meant that they had become customary holidays since before records began.
Exactly a century after the 1871 Act, the Banking and Financial Dealings Act 1971, which currently regulates bank holidays in the UK, was passed. The majority of the current bank holidays were specified in the 1971 Act, but holidays for new year’s day in England, Wales and Northern Ireland and for May day were introduced later. From 1965, the date of the August bank holiday was changed to the end of the month. Curiously, there were a few years—for example, 1968—when the holiday fell in September, but this no longer occurs, presumably reflecting a change in the way of defining the relevant date. The Whitsun bank holiday, Whit Monday, was replaced by the late spring bank holiday, which was fixed as the last Monday in May in 1971.
Under the 1971 Act, certain holidays are written into legislation. Those which are not are proclaimed each year by the legal device of a royal proclamation. A royal proclamation is also used to move bank holidays that would otherwise fall on a weekend, so adding an additional one-off holiday, as was the case this year. In that way, holidays are not lost in years when they coincide with weekends. These deferred bank holidays are termed bank holidays in lieu of the typical anniversary date and in the legislation are known as “substitute days”. Although we have fewer public or bank holidays than many other European Union member states, they do not always have substitute days and so, in some sense, the comparison is misleading. That point has been made by a variety of speakers today, including the hon. Member for Newcastle upon Tyne Central.
To give those north of border a chance to have a longer celebration at new year, 2 January was made an additional bank holiday in Scotland by the 1971 Act—the rest of the country was given the chance to celebrate, less enthusiastically perhaps, by having new year’s day off instead. May day is the most recent of the eight bank holidays and is thought by some to be a controversial choice. It was introduced by the then Employment Secretary, Michael Foot, in 1978, just before he went on to lead the Labour party. At the time many opposed the move, saying that the May day holiday was essentially a communist idea because most countries behind the iron curtain enjoyed it, but it is now in the calendar and a fixture in bastions of communism such as the United States. I think we can assume that those charges did not bear as much weight as their advocates suggested.
The first bank holiday Act was a welcome innovation—
On the point of the May day bank holiday. Does the Minister agree that one solution to the problem of finding an extra bank holiday for St George’s day would be simply to move the May day bank holiday to 23 April? That would resolve the problem of a loss to the economy, which has been discussed, and it would create a day around which we could all unite for St George’s day.
I wondered whether a bright Member of this House rather like my hon. Friend—who certainly is that—might make just such an intervention. It is arguable that one might transpose those dates. It is not the spirit of the Bill, which suggests an extra day, but none the less it is an argument that could be made and that has been made very succinctly by my hon. Friend in his brief intervention.
In conclusion, let me say two things. I want to tell my hon. Friend the Member for Stratford-on-Avon—I know how pleased he will be that I am able to make this announcement today—that the Department for Culture, Media and Sport tourism strategy allows for a consultation on moving the May day bank holiday and one suggestion is that it might be moved to St George’s day or St David’s day. That consultation will give everyone an opportunity to have a proper debate about such arguments to the satisfaction of my hon. Friend the Members for Stratford-on-Avon and for Bury North (Mr Nuttall). Of course, that is not to prejudge the outcome of the DCMS process.
One can do no better on such occasions than to quote our great poet, who was born on St George’s day and died on St George’s day. Anyone in this place who has doubts about the existence of the divine and would attribute that to coincidence is surely rather less wise than that great man himself. He said:
“I see you stand like greyhounds in the slips,
Straining upon the start. The game’s afoot:
Follow your spirit; and, upon this charge
Cry ‘God for Harry! England and Saint George!’”
I thank my hon. Friend the Minister for his response and the positive news that a consultation on a St George’s day bank holiday will definitely be forthcoming. I shall obviously push hard to ensure that the option of an entirely new bank holiday, rather than just moving May day, is included as an option in that consultation and I hope that my hon. Friend will meet me and supportive colleagues to discuss the matter in the near future.
In the light of that fact and of my hon. Friend’s response, I think it would be quite right to withdraw the Bill in order to give the Department time for consultation and an opportunity properly to collect public opinion as well as to give the Government time to respond to that opinion. I am quite sure that the English, Welsh and indeed entire British public will continue to show their strong support and that, in the near future, we will be able to deliver a St George’s day bank holiday for our nation. I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.
Consumer Protection (Private Car Parks) Bill
I beg to move, That the Bill be now read a Second time.
I am acutely conscious that we have very little time left before the Adjournment debate, so I shall try to give the abridged version of a Second Reading speech. I am also conscious, while I am talking about time, that it was only just over a year ago that I was elected to this place and I would not have imagined that I would be presenting a private Member’s Bill on the provision of consumer protection and private car parks. Whenever I contribute in the Chamber, I try to bear reference to my experience as a constituency Member of Parliament and, in my time as a Member of Parliament, I have unfortunately come across a rogue car park operator in my constituency that, for the most minor infractions or for no offence at all, regularly issues motorists with apparent fines or at least demands for payment for very dubious reasons.
The operator often claims payment from motorists, saying that they did not purchase a ticket, but when a motorist produces evidence that they did indeed buy a pay-and-display ticket the operator says that it was not properly displayed and demands payment. Many people are, in essence, intimidated into parting with their money; demands are often made for £70 rising to £140 if the amount is not paid within two weeks. Many elderly and vulnerable people have been tricked into making a payment that is not a criminal fine but merely a demand from a private car park operator. Many fear for their credit rating, because they receive threatening letters, often with the claim that the company will send in the bailiffs.
When I raised the issue with the planning and licensing sections of my local authority, I was told that planning legislation does not allow local authorities properly to control the actions of such rogue private car park operators. Their operations are not covered by the licensing regime either.
Is it not the case that car park operators are required to identify through visible signs the status of the land on which they encourage people to park? The signs must show the terms that apply and any penalties for contravening them. If an individual falls foul of those obligations, in essence, they have only themselves to blame.
I agree. If somebody contravenes the conditions for parking on private land, it is perfectly reasonable for the private operator to seek restitution. However, as I said earlier, operators often claim that people have not purchased a ticket when, in fact, they have, and demand payment. There are many responsible private car park operators, but I regret that a minority let down the industry.
I welcome the Bill, irrespective of the outcome today. In Windsor, we have a car park such as my hon. Friend describes, so I encourage him to make his case as forcefully as possible. It is important that people have a sensible form of redress when they are incorrectly or unfairly treated by private car park operators.
I am grateful to my hon. Friend for his support.
My instincts are not to reach for the statute book and additional regulation, but there is a gap in the legislation and it needs addressing. The provisions of my Bill would do that straightforwardly, at no additional cost to the taxpayer. The Bill would give local authorities a licensing function over the operation of publicly available paid-for car parking. Just as taxi companies or public houses are licensed, so too, through an application fee, could private car parks be licensed, to ensure that rogue operators behave responsibly.
People might say that surely the industry can regulate itself, and there is indeed a body—the British Parking Association—but it supports the Bill, because it recognises that self-regulation has not worked. Other organisations, such as Consumer Focus, the AA and the RAC, also support the Bill.
The Bill offers relief to the motorist, who can fall foul of the somewhat questionable practices of a minority of operators. Liverpool Victoria estimates that motorists are paying apparent fines or penalties of about £60 million a year. They should not be paying those penalties and they should have the right to appeal. With that brief conclusion, I commend the Bill to the House.
I congratulate my hon. Friend the Member for Crawley (Henry Smith) on securing a Second Reading debate on his Bill. I fully understand many people’s concerns about a minority of car park operators and the activities that have given rise to the Bill.
The debate stood adjourned (Standing Order No. 11(2)).
Ordered, That the debate be resumed on Friday 21 October.
Business without Debate
Sale of Tickets (Sporting and Cultural Events) Bill
Resumption of adjourned debate on Question (21 January), That the Bill be now read a Second Time.
Debate to be resumed on Friday 21 October.
Re-export Controls Bill [Lords]
Motion made, That the Bill be now read a Second time.
Bill to be read a Second time on Friday 21 October.
Local Government Ombudsman (Amendment) Bill
Resumption of adjourned debate on Question (18 March), That the Bill be now read a Second Time.
Debate to be resumed on Friday 10 June.
Medical Insurance (Pensioner Tax Relief) Bill
Motion made, That the Bill be now read a Second time.
Building Regulations (Review) Bill [Lords]
Motion made, That the Bill be now read a Second time.
Credit Rating Agencies
Motion made, and Question proposed, That this House do now adjourn.—(Angela Watkinson.)
I thank you, Mr Deputy Speaker, and the House for giving me the opportunity to debate this very important issue today, but before I do so, I should like to say to my constituents that I have been a Member for a year this week, and I have loved every week. It has been a great pleasure to serve the people of my constituency, and I will continue to work my socks off for them so long as I have the privilege of sitting in the House.
This debate comes at a crucial moment. The world is seeking to address the failings of the financial system in the wake of the 2008 crash. Much of that work is being driven by the G20 and the Basel Committee on Banking Supervision. Of course, credit ratings are hardwired into the new rules that are being implemented now. The sovereign debt crisis that is occurring in the eurozone reminds us of the sheer power of credit rating agencies. Of course, a number of recent studies have posed serious questions about the operation of the credit rating agency market in the wake of the 2008 crash, and I wish to explore some of those issues in the short time available this afternoon.
I should add that the European Commission will shortly publish its proposals to improve the regulation of the agencies. I hope that this debate will perhaps not only inform the national debate on the issue but give us more clarity on the Government’s position. Just three firms—Moody’s, Standard & Poor’s, and Fitch—control some 95% of the credit rating market. They rate a range of debt instruments, and their ratings are embedded in investment plans, price triggers and the new capital requirements that are being implemented.
A downgrade by one of the big three agencies can make or break an entire economy, as recent events in the eurozone have shown. Just last month, Greece’s Prime Minister accused them of
“seeking to shape our destiny and determine the future of our children.”
Some people might say that that is unsurprising, given Greece’s position at the moment and the difficulties that it has faced, but Greece is not the only country that has complained. The US Assistant Treasury Secretary, Mary Miller, also weighed in last month following the downgrade by Standard & Poor’s of its outlook for US sovereign debt.
The credit rating agencies thus exercise huge power, despite the deep failings exposed during and after the financial crash. Investigations into the financial and economic crisis that have been conducted since then have shown that the agencies played a large part in causing and then exacerbating the financial crisis. The US Senate sub-committee on investigations last month reported that
“perhaps more than any other single event, the sudden mass downgrades of residential mortgage-backed securities and collateralized debt obligations were the trigger for the financial crisis.”
The report of the US Government’s financial crisis inquiry committee stated that
“the failures of credit rating agencies were essential cogs in the wheel of financial destruction. The three credit rating agencies were key enablers of the financial meltdown.”
Here, the Financial Services Authority in Lord Turner’s review of 2009 said much the same when it concluded that
“the credit ratings-based system played an important part in the origins of the crisis”.
These are not isolated claims. Studies published by the Financial Stability Board, the Bank of England and the European Commission’s de Larosière group reach a similar conclusion. The key points are these. In the years preceding the financial crisis, the credit rating agencies fuelled a dangerous liquidity boom by underestimating the credit default risks of sub-prime mortgages and complex structured products. When the bubble burst, sudden downgrades to the ratings embedded in the investment plans, mandates and capital reserve requirements automatically triggered a liquidity crisis which, in effect, made a bad situation much worse.
Multiple major studies have concluded that the big credit rating agencies were key contributors to a financial crash that cost this country well over £1 trillion. It is therefore incumbent on us to ensure that the flaws in the credit ratings business are dealt with as a matter of urgency. One such flaw, which must be addressed, is the fundamental conflict of interest that arises through the so-called issuer-pays model. Under this model the issuer of a security can shop around for a rating, creating a race to the bottom in the integrity of ratings. Competition for this lucrative business puts pressure on rating agency staff to downplay risk and to collude with issuers, particularly when rating elaborate packages of structured debt. The result, seen in the sudden mass downgrades at the start of the financial crisis, is a dangerous ratings inflation.
This process was a common observation of all the investigations that I mentioned. The de Larosière report, for example, said
“the conflicts of interest in CRAs made matters worse. The issuer-pays model, as it has developed, has had particularly damaging effects in the area of structured finance.”
The US Senate report concurred, saying:
“The conflict of interest inherent in an issuer-pay setup is clear: rating agencies are incentivized to offer the highest ratings, as opposed to offering the most accurate ratings, in order to attract business.”
These findings are supported by evidence from within the rating agencies themselves. In internal correspondence published by US congressional investigations, staff joked that a deal
“could be structured by cows and we would rate it”,
and discussed “adjusting”, “spinning” and “massaging” ratings methodologies in order to preserve market share. I have read many of the documents and e-mails myself.
A 2008 survey of finance professionals by the CFA—chartered financial analyst—Institute found that 11% of respondents had witnessed agencies altering ratings under pressure or influence from outside parties, so any serious regulation of the system needs to target the inherent conflict of interest in the issuer-pays system.
This brings me to the recent moves by the European Commission. Recent EU legislation has taken some important steps in the right direction. It makes it mandatory for all credit rating agencies operating in the EU to register with the new European Securities and Markets Authority, which will monitor their methods and potential conflicts of interest. It also gives that authority powers to investigate agencies and, in the event of infractions, suspend agencies’ licences. For me, the question is: does this do enough? I am not sure that it does, because it does not fundamentally challenge the issuer-pays model that has been shown to incentivise ratings inflation.
I mentioned earlier that the European Commission is due to publish a series of new proposals, and the options that it floated in its consultation in November, which finished in January, included the creation of a European credit rating agency, support for investor-owned agencies, an independent clearing board to allocate ratings business, a network of small and medium agencies, and an obligation on institutional investors to obtain their own rating before purchasing a product. The Commission has said that it is about to table new legislation in this area. Does that accord with the Treasury’s understanding? I would be grateful if the Minister could tell me when that legislation is expected to be published.
The UK’s tripartite authorities produced a response to the Commission’s options in January 2011, which largely rejected the suggestions that had been placed on the table, placing great confidence in the pre-existing EU regime. Their response also called for a “more narrowly focused” approach to further reform. Most contentiously, their response said that there was
“no hard evidence that conflicts of interest in the ‘issuer-pays’ model lead to ratings inflation”.
It has to be said that that is very difficult to reconcile with the findings of the various investigations into the role of the issuer-pays model in the causes of the financial crisis, which I have just mentioned. I ask those interested in this to read the reports that I have mentioned and decide whether the tripartite response is appropriate.
It is clear to me that tackling the conflicts of interest is central to reforming the system. I know that Treasury Ministers, perhaps the Chief Secretary to the Treasury excepted, have not historically been the biggest fans of the EU, but I urge the Government to be bold and adopt an open-minded approach to the Commission’s proposals when they come out.
As the Financial Times has pointed out, a publicly owned but independent credit rating agency
“would go some way to mitigate”
the risks of the issuer-pays system. A variation on that idea, a European credit rating foundation funded by the financial industry, recently received the backing of the European Parliament’s Economic and Monetary Affairs Committee, which has called on the Commission to conduct a
“detailed impact and viability assessment”.
In the US, the Senate has already approved an amendment establishing a clearing body for credit ratings.
Finally, I draw the attention of the House to the Bank of England’s financial stability paper of March 2011, which explored the feasibility of moving from an issuer-pays to an investor-pays model. That concluded that, despite the obstacles, the challenges to such a radical change
“may…not be insurmountable”.
Ministers, particularly from the Treasury, with whom I tend to have much discussion on the Treasury Committee, of which I am a member, enjoy reminding me that much of what I have just mentioned happened on the watch of the last Labour Government, and I have admitted and said many times in the House that we did not get the regulation of banks completely right on our watch, although I do not remember there being a huge clamour for a massive clampdown from the Opposition at the time. What people out in the real world want to know from the Minister this afternoon is not how awful he thinks my lot were, but what the Government will do.
The 1997 Asian crash and the 2001 Enron collapse both exposed flaws in the way the agencies operate, yet their power remained unchecked and their failings went unaddressed then. We are all well aware of what followed in 2008, and we cannot afford a repeat of that mistake in 2011 and beyond. The status quo is not an option. Ultimately, the pensions, savings, jobs, homes and livelihoods of our constituents depend on a credit rating system built on integrity and accuracy. We owe it to them to ensure that that is precisely what the system is.
May I first congratulate the hon. Member for Streatham (Mr Umunna) on securing the debate in this, the anniversary week of his election to Parliament? I am pleased to have the opportunity to explain and discuss the Government’s policy on credit rating agencies—an issue that has generated a fair amount of interest, including outside the United Kingdom. It might be helpful if I start by outlining the Government’s current position and set out the steps that have been taken here and in Europe to address the shortcomings in this area, but before doing so I would like to make two observations.
First, the financial crisis has clearly highlighted the fact that reform of CRAs is essential, as the hon. Gentleman has argued, both in the way they are supervised and regulated and in the way they conduct themselves and explain their decisions to the market. That has already led to significant regulatory changes. CRAs must now register to be recognised in the EU and comply with rigorous procedures and controls in using their ratings. The European Commission has identified further measures to address over-reliance on CRA ratings and to improve competition and CRA accountability.
However, although reform is necessary, CRAs play an essential role in international markets. They provide the market with a neutral assessment of credit worthiness, a service that is valued by investors and crucial to the functioning of the international financial system. Reform should therefore aim to improve ratings quality and the way ratings information is used by investors, but it should not unduly undermine what is an essential service to international capital markets.
Recent market events have highlighted concerns about the role of CRAs, which is why we fully support international efforts to improve their regulation, to introduce greater transparency and competition and to reduce reliance on credit ratings, while acknowledging the complexity of the issues and the important role played by CRAs. The UK authorities have been, and will continue to be, active in both the EU and the G20 processes, including discussions on possible further measures that the Commission is considering in this area.
With regard to what has been achieved to date, the hon. Gentleman is obviously aware that the first European credit rating agency regulation—CRA1—came into force in December 2009. It ensures that CRAs demonstrate that they manage potential conflicts of interest adequately and improve processes relating to the issuing and monitoring of ratings. It requires more robust internal control functions, greater transparency of methodologies and processes, due diligence procedures and the disclosure of performance. It provides a minimum standard of CRAs' systems and controls, ensuring that ratings in the EU are of a high quality.
As the hon. Gentleman will also be aware, that regulation has recently been amended to place rating agencies under European supervision. To be recognised for regulatory purposes, CRAs must go through a registration process, ensuring that they meet the standards of the new CRA regulation. From June, the newly established European Securities and Markets Authority will have the power to ensure that CRAs comply with the regulation. Other jurisdictions, including the US, are adopting similar regimes to ensure a consistent international standard. Those requirements of the European legislation apply to all asset classes and are aimed, in particular, at addressing the problems associated with structured products, an area where, as demonstrated during the crisis, CRAs have evidently failed to provide reliable ratings in some countries. CRAs are also banned from providing advisory services and are required to demonstrate that they have sufficiently analysed the underlying data in producing ratings for structured products. Overall, we consider that those measures will help to improve the quality and reliability of ratings.
I have a further point and a question about what the Minister has just said. I should have mentioned that I have met the senior management of the rating agencies, both here and in New York, and it is fair to say that they do not necessarily welcome such massive reliance being placed on them; they did not necessarily ask for responsibility on such a scale. What have the Government been doing at G20 level about these issues?
On a subsidiary point, the Financial Stability Board will obviously take an interest in this issue. Will the Minister tell me, or write to me to let me know, the members of the Financial Stability Board’s council? I understand that Lord Turner is a member, but it is a bit of a shadowy organisation and there have been some questions, not necessarily about its integrity, but about who is involved, because obviously it has a role to play in this area, too.
I will certainly write to the hon. Gentleman in response to that query.
The UK Government have been very much engaged at G20 level and at a European level on the issue. In the context of European engagement, the next stage, which the hon. Gentleman mentioned in his speech, is the further work that remains to be done. The European Commission released a consultation document in November 2010 on additional measures that might be adopted on credit ratings. The main proposals related to reducing over-reliance on ratings and the additional measures related to increasing regulation on sovereign ratings; enhancing competition, such as establishing a public CRA, as the hon. Gentleman suggested; potentially increasing CRAs’ exposure to civil liability; and addressing the conflicts embedded in the “issuer pays” business model.
The Government, together with the Bank of England and the FSA, have published a joint response to that consultation, setting out in detail our view of the Commission’s proposals, and I am very happy to provide the hon. Gentleman with a copy. In summary, we support measures to reduce reliance on CRA ratings—a point that he made in his intervention when he said that many of the problems relate to the level of reliance on such ratings. We also support measures to increase transparency and disclosure, and to stimulate competition by lowering barriers to entry. We believe, however, that measures to impose civil liability or to establish a public CRA to issue ratings, particularly sovereign ratings, would be counter-productive and lead to unintended consequences.
The hon. Gentleman raised the issue of a public CRA, but the potential conflicts of interests in any such arrangement—particularly in the context of sovereign debt—would undermine credibility. Alternatively, although I am not sure whether the two arguments are mutually exclusive, there is the danger that a public body would crowd out other credit rating agencies and reduce competition, and neither of us would be keen to welcome that. To answer the hon. Gentleman’s question, however, the Commission will publish its legislative proposals in September.
The recent sovereign debt crises have raised concerns about the role of CRAs in sovereign borrowing. The Government believe that, above all, it is crucial to ensure the impartiality of all ratings, including sovereign ratings, and that means improving transparency by CRAs to facilitate investor understanding, rather than regulating sovereign ratings in a way that compromises their credibility.
Internationally, there has also been a welcome initiative with the Financial Stability Board, considering measures to reduce the over-reliance on CRA ratings. That initiative is investigating what alternatives to CRA ratings can be used in regulatory requirements, in investor mandates and contracts and in central bank operations. Ways to encourage due diligence by market participants themselves are also being explored.
As I said earlier, the Government fully recognise the concern about CRAs. The coalition Government saw from the financial crisis that greater regulation was required to ensure high-quality ratings and a more judgment-based use of ratings by the market. The current sovereign debt crisis further highlights the need for CRAs to communicate consistently and effectively their analysis to the market, and for investors to understand what ratings represent.
That is why the coalition Government are supporting a reform package in Europe which focuses on the root cause of the problems associated with CRAs, while being cognisant of and safeguarding the essential role that CRAs play in the international financial system. We believe that, in addition to the substantial progress already made by CRA1 and CRA2, further reducing mechanistic reliance on CRAs, increasing transparency and reducing barriers to entrant CRAs would be effective ways of achieving that goal.
Question put and agreed to.