House of Commons
Wednesday 7 May 2014
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Scottish Independence (Border Constituencies)
As a United Kingdom, we all have better job opportunities, employment and mobility. Every day, 30,000 people travel between Scotland and England for work. If Scotland were to leave the United Kingdom, our border constituencies would be the first to feel the effects of the creation of an international border.
Does the Secretary of State agree that one of the challenges of separation would be that our focus would be lost and our energy dissipated by looking at the details of administration and borders, rather than all the opportunities in the world, from Brazil to Indonesia?
That is one of the many downsides a vote for independence would bring. It would be an unnecessary distraction that would indeed remove our focus from the opportunities that being part of the United Kingdom give us to develop Scottish business by looking overseas.
On the question of separation, surely it is understood that divorce can be messy and that in this case it certainly would be messy? What I have been told by businessmen in my area is that they will move out of Scotland if separation takes place.
I think we all know that what matters to business is the bottom line: the profit and loss account and the balance sheet. If businesses felt that independence was going to be good for them, they would be lining up to support it. Since the turn of the new year, we have heard a steady chorus from the business community, who have all been coming out to underline the risks and uncertainty that would come from independence. [Interruption.] These are voices that the hon. Members on the nationalist Benches may wish to drown out with their incessant chatter, but they will not do it.
Anybody who pauses at the top of the hill on the Carter Bar on the A68 is able to reflect on one of the most beautiful views of Scotland and on one of the most beautiful views of England, and reflect on the fact that these two countries have so much in common and so much shared family experience. Does my right hon. Friend share my hope that that will always be the case, rather than it marking the border point between two separate states?
I very much agree with my right hon. Friend. I always think of the United Kingdom as being a family of nations. Of course, like all families, we do have those moments where we have disagreements, and we do occasionally want to do things in a slightly different way, but as a family the ties that bind us are so much greater than the differences that divide us. That is why I believe that Scotland, come 18 September, will choose to remain part of that family of UK nations.
But the people of the borders and the rest of Scotland are being subjected to the self-styled “project fear” campaign, which its own supporters describe as negative, nasty, and threatening, and who also say that the Prime Minister is toxic in Scotland. Why are even the Secretary of State’s own colleagues saying this?
I have to say that it is a bit rich to hear the right hon. Gentleman talking about “project fear” when the First Minister went to Carlisle on St George’s day to deliver a lecture that I can only describe as project ridiculous. The fact of the matter—there is no escaping this for the nationalists—is that for people living in the constituencies on either side of the border, there are real benefits to being part of the United Kingdom. The nationalists want us to walk away from those benefits.
Leading members of the right hon. Gentleman’s own campaign have told people in the borders and the rest of Scotland that they will have to show a passport at the border; drive on the right-hand side of the road; worry about their pensions, when in this place people are being told that they are safe; and that they will not be able to use their own currency, when the media in London are being briefed that that will be safe. Why do his colleagues think that the people of the borders and the rest of Scotland will fall for this demeaning, insulting nonsense?
The question of the borders highlights perfectly how the Scottish nationalists want to have their cake and eat it. On the one hand, they tell us that we could have a common travel area, which works very well with the Republic of Ireland at present. At the same time, they tell us that we will have a widely divergent immigration policy, which the Republic of Ireland does not have. They can have one thing or the other: they cannot have both. That is why their prospectus is flawed.
In places such as Carlisle, many businesses have branches and offices on both sides of the border. Does the Secretary of State agree that if Scotland votes yes there is a real danger that there will be such an additional burden on those businesses that it will have an effect on jobs and economic prosperity on both sides of the border?
Inevitably, an independent Scotland would have a different taxation system, different national insurance provisions and different economic regulations, and that would impose an extra cost on business. The financial services sector, which supports 200,000 jobs in Scotland, has already issued serious warnings about what would happen to its business and how it would organise itself if Scotland became independent.
I have had regular discussions with ministerial colleagues about the effect of housing benefit changes in Scotland, and in particular about the application of discretionary housing payments to those affected by the removal of the spare-room subsidy. Those discussions led to the announcement on Friday 2 May that the setting of the limit for such payments could become the responsibility of the Scottish Government.
In February the Scottish Parliament voted in favour of full mitigation of the bedroom tax, but much of that money has not yet reached tenants. Given that there has been a discussion about the discretionary cap, does the Minister agree that the Scottish Government could have acted earlier, and, given that an announcement has now been made, will he do everything in his power to ensure that there is co-operation between Westminster and the Scottish Government so that the money reaches the people who need it?
I entirely agree with the hon. Lady. The Scottish Government already had powers that they could have used to take other steps for the purpose of the mitigation that they said was necessary, but they chose not to do so. The Scottish Parliament forced additional funds to be provided, and we will not stand in the way of the spending of those funds. I shall be meeting the Deputy First Minister of Scotland tomorrow morning, and I shall convey the hon. Lady’s comments to her.
Does the Minister agree with the far-reaching proposals of Scottish Labour’s devolution commission, including the proposal for the devolution of housing benefit? Does he agree that that would be a progressive, logical and practical step that would enhance devolution and the ability to meet Scottish housing needs?
I think that the proposal to devolve the setting of the cap for discretionary housing payments is a positive step, and I welcome the fact that the Labour party has presented proposals. At the end of May, the Scottish Conservative party will present its proposals following the outcome of the work of our own devolution commission.
An important part of dealing with housing benefit is ensuring that there is enough affordable housing. Does my right hon. Friend agree that the lack of suitable affordable housing in Scotland is the result and the responsibility of successive Scottish Governments?
I do agree with my hon. Friend. She will be aware that since 2010 the Scottish Government have had an additional £1.3 billion in funding that they could have used to provide affordable housing in Scotland. We used to hear constantly in the Chamber about the number of shovel-ready projects in Scotland, but we have not seen much shovelling.
The bedroom tax has been a costly fiasco in Scotland. It should never have happened, but I am glad that the Government have at long last agreed to allow the Scottish Government to mitigate its worst impacts. However, the Secretary of State recently boasted that we have a “fantastic” benefits system. Does the Minister think that he was talking about the bedroom tax, or is he also living in a parallel universe?
I certainly do not live in the universe that the SNP inhabits. It has not given us a single detail of how a welfare system would operate in Scotland. Indeed, in the 670 pages of the Scottish Government’s White Paper, there is just one reference to the establishment of such a system. The SNP set up a commission, but we have heard nothing from it, so I am afraid that I shall take no lessons from the hon. Lady.
Does the Minister accept that, now that the Scottish Government have been given the powers for which they asked in relation to discretionary housing payments, there is no reason why they should not first cancel all the bedroom tax for this year, and then write off all the debts that were incurred last year? In order to ensure that no moral hazard is involved, should they not do as the Scottish Affairs Committee has asked, and refund the money that Scottish people paid last year in bedroom tax?
Rising energy bills are a serious concern for consumers in Scotland and across the rest of the UK. We are increasing competition, sustaining vital financial support for vulnerable consumers, and working to ensure suppliers put customers on the cheapest tariff.
I certainly agree with the hon. Gentleman about the serious loss to the Scottish economy of closing the door on the nuclear industry, which has brought so much benefit to Scotland, and I pay tribute to him for being such a champion of that cause. He is right that energy costs will go up in an independent Scotland, as set out in the Government’s analysis on energy.
Both in Northumberland and in Scotland people are setting up oil-buying clubs to deal with the problem of off-grid energy. Does the Minister agree that the best way to combat energy problems and price rises in off-grid circumstances is to copy this good measure and spread it out across the country?
11. If the Minister is genuinely concerned about rising costs of energy in Scotland, why is it that Ofgem has yet again delayed the implementation of Project TransmiT, which would finally begin to tackle the discriminatory and expensive transmission charges? Will he press his colleagues to implement it immediately? (903833)
Project TransmiT is one matter on which I am probably in agreement with the hon. Gentleman. The important thing for Scotland is to get the right answer. Yes, it is disappointing that it has taken some time, but the Scotland Office is determined to work towards getting the right answer, and I urge him and his colleagues to continue to press Ofgem on this as well.
Will the Secretary of State explain why, when the Prime Minister said that consumers in Scotland would be £50 better off after cuts to the green levies, hundreds of thousands of Scottish consumers have seen their bills decrease by only £12?
That is the definition of an inadequate answer, and perhaps goes some way towards explaining why Labour’s policy has gained widespread support across Scotland. In opposing Labour’s energy freeze, the Tory-led Government have had the full support of a surprise friend in the form of the Scottish National party, and it does not stop there: standing up for energy companies, failing to take action on the living wage, proposing tax cuts for those at the top. Does the Minister not agree that Scotland deserves better than this?
What I believe is that we do not take any lectures from Labour on energy issues. Gas bills more than doubled under Labour, electricity bills went up by 50%, the leader of the Labour party was responsible for £179 of additional levies on gas bills and fuel duty went up 12 times. I am proud of this Government’s record on energy and Scotland is doing well under it.
Bank of England
I have not had any discussions with Ministers in the Scottish Government on the potential role of the Bank of England. If people in Scotland vote to leave the UK, they are voting to leave the UK institutions that support it, such as the Bank of England, which will continue to operate on behalf of the continuing UK.
I thank the Secretary of State for that answer. The majority of my constituents hope very much that Scotland will stay in the Union, but for the avoidance of doubt, will he confirm that in the event of a yes vote, there are no circumstances under which my constituents will underwrite the borrowing and spending plans of an independent Scotland, whichever currency it uses?
I thank my hon. Friend for his support for the continuation of Scotland within the United Kingdom. The position on any currency union or central banking arrangements if Scotland were to vote for independence has been made very clear recently by the Chancellor and the Chief Secretary and also by the shadow Chancellor: there will be no such arrangements.
The Bank of England has already sensibly engaged in technical discussions with the Scottish Government. As each day passes and a yes vote on independence becomes more likely, is it not about time this Government abandoned their bellicose scaremongering and also engaged in sensible discussions with the Scottish Government on how these institutions can continue to work, in the best interests of both countries?
Does the Secretary of State agree that the Bank of England is not an asset to be shared but an institution that belongs to the United Kingdom which Scotland chooses to leave? Does he also agree that it is an extraordinary kind of independence where one wants to hand over control of one’s fiscal and monetary policy to a foreign bank?
5. What discussions he has had with Ministers in the Scottish Government on a potential currency union with an independent Scotland. (903827)
I have not had any discussions with the Scottish Government about the prospect of a currency union. The Chancellor, Chief Secretary and shadow Chancellor have all said there will not be a currency union. The only way to keep the UK pound is to stay in the UK.
I thank the Secretary of State for that reply. Having read the fiscal commission’s report, it is clear that it took the advice that I have been giving Scottish National party colleagues here that they would be destroyed if they went into the eurozone, where the stability and growth pact would destroy their economy. If they have no currency union with the UK, exactly what prospects are there for the 8% deficit that Scotland is running at the moment?
The position is very clearly laid out: the difficulties that would be created by the currency union would be difficulties for the whole of the United Kingdom, but particularly for the people of Scotland. If we are to be independent, we need to be independent with all that that means. It is not possible to be half independent.
The comments and report by Moody’s last week have to be taken very seriously and read with some care. Moody’s makes it clear that on its estimation an independent Scotland would be rated two levels below the rating the UK currently enjoys. For the people of Scotland that would mean more expensive store cards, more expensive overdrafts and more expensive mortgages. We are cheaper as part of the United Kingdom.
12. Does the Secretary of State agree that all the currency options that have been put forward for an independent Scotland by the nationalists would actually involve constraints on decision making on fiscal policy? (903834)
Every option that is put forward by the Scottish nationalists is inferior to what we currently have as part of the United Kingdom. That is the unpalatable truth that they do not want to hear, but from which there is no escaping. The people of Scotland know that truth.
The success of the Government’s economic policy is proven by the fact that the number of people claiming unemployment benefit in my constituency reduced by 419 in the past year. Does my right hon. Friend agree that the best way to keep this sustained economic growth is to stay within the UK and with the common currency that we have at the moment?
10. The people of Scotland want facts, so will the Secretary of State tell us on what date, if Scotland chooses to separate, will it either have to begin printing its own money or, failing that, start using the pound as a foreign currency? (903832)
The hon. Gentleman invites me to look into the future and make a prediction, which is never an easy prospect—it is an unwise prospect for anyone in politics. The truth of the matter is that all these things are uncertain, and they bring enormous risks in areas where we do very well as a result of being part of the United Kingdom.
To echo the hon. Member for Moray (Angus Robertson), what could be more demeaning and insulting than to lead the Scottish people to believe that there are no risks in independence, and that a currency union is a foregone conclusion?
The only foregone conclusion about a currency union is that it will not happen. It will not happen because that is the advice that has been given by the permanent secretary to the Chancellor of the Exchequer. That advice is not going to change, and the outcome of that advice is not going to change.
The Chancellor’s sermon on the pound was supposed to bring the Scottish people back into fearful line, but as the opinion polls have shown, the Scottish people will not be discouraged by this; instead, they are emboldened and angered. The Scottish people will no longer be told by Westminster. Will the Secretary of State tell us what has happened to the search for the Minister who told the truth? Have they made any progress, or do they perhaps need our help?
Mr Speaker, I am delighted that you were able to fit the hon. Gentleman in; otherwise, we would all have missed his monthly comedy turn. It is quite remarkable that he chooses to ignore the advice given by the permanent secretary to the Chancellor of the Exchequer, setting out why a currency union would be bad for the rest of the United Kingdom and bad for an independent Scotland. Why does the hon. Gentleman want something that would be bad for Scotland?
Last week, 18% of members of Scottish Chambers of Commerce confirmed that they are making plans to move out of Scotland in the event of a yes vote, and 63% believe that an independent currency or the euro would be bad for business. Today we have heard from the British Chambers of Commerce that 85% of their businesses are against independence, and nearly half identified currency concerns as the most important issue for them. What reassurances can the Secretary of State give the House about currency for businesses on both sides of the border?
Cross-border Trade and Employment
Scotland’s place in the United Kingdom means we have a truly single domestic market, with no barriers to trade and employment across the United Kingdom. Independence would fundamentally change that. The resulting “border effect” would disrupt trade and free movement of workers, reducing real incomes by, it is estimated, around £2,000 per Scottish household per year.
My constituency is home to a large number of national logistics and distribution companies. Is my right hon. Friend aware of the growing concern in that sector that separation could make some cross-border routes less attractive, as they would become international rather than domestic ones?
Indeed, and I hear the same message from a range of business interests. The financial services industry, for example, says that independence would bring extra costs with different taxation and different regulation. The supermarkets have made it very clear that extra costs would fall to Scottish consumers if Scotland were independent.
According to the House of Commons Library, 200,000 UK jobs depend on trade with the Republic of Ireland—double that of Canada and Norway. Ireland used to be part of the UK, but trade between the two has never been higher. The UK is Ireland’s No. 1 trading partner, and among the recently independent nations of the European Union, foreign direct investment rose by 215% in the first four years of independence. For those realities, what scare stories will the Secretary of State use?
It is not a scare story to point out that the White Paper presents a prospectus and a future where there would be barriers and where the mere existence of a border would be an extra cost. If the hon. Gentleman wants to know the truth of the matter, he need look no further than at the situation that exists between Canada and the United States. The hon. Gentleman might not like it, but that is the truth.
What discussions has the Secretary of State had with the Scottish Government regarding the possibility of border controls between an independent Scotland and the rest of the UK, if an independent Scotland had a separate immigration policy?
It is an inescapable fact that if, as the nationalists tell us in the White Paper, Scotland were to have a widely divergent immigration policy, which would be necessary for such of their economic plans as they have been prepared to tell us about, the operation of a common travel area of the sort that currently works well with the Republic of Ireland simply would not operate. You cannot have your cake and eat it on this occasion.
Given the First Minister’s threat to blockade Scottish fishing grounds if he does not get his own way on EU membership and given that licences are held across the United Kingdom, what analysis has the Secretary of State done on the impact on employment in the Scottish fishing industry?
The impact on employment would be serious in some of the most economically fragile communities in Scotland in our coastal and island communities. I have to say that the First Minister’s comment about blockading Scottish waters went beyond the ridiculous, but it makes me wonder whether that is why he seems so desperate to cosy up to Vladimir Putin.
The Prime Minister was asked—
As the proud father of three daughters, I am sure that the entire House will share my deep concern for the more than 270 Nigerian schoolgirls held captive in that country. Their only so-called crime is that they aspired to receive an education. Will my right hon. Friend set out for the House the steps that the Government are taking to ensure that we help to secure their release as soon as possible?
I know that my hon. Friend speaks for the whole House—and, indeed, the whole country. I am the father of two young daughters, and my reaction is exactly the same as my hon. Friend’s and of every father and mother in this land and in the world: this is an act of pure evil, which has united people across the planet to stand with Nigeria to help find these children and return them to their parents.
The Foreign Secretary and the British Government have made repeated offers of help to the Nigerian Government since the girls were seized. I shall be speaking to the Nigerian President this afternoon and will say again that Britain stands ready to provide any assistance, working closely with the US, as immediately as we can. We already have a British military training team in Nigeria, and the Foreign Office has counter-terrorism experts. We should be proud of the role we play in that country where British aid helps to educate 800,000 Nigerian children, including 600,000 girls. We should be clear that this is not just a Nigerian issue: it is a global issue. There are extreme Islamists around the world who are against education, against progress and against equality—and we must fight them and take them on wherever they are.
Let me begin by fully associating myself and the Opposition with the Prime Minister’s remarks on the terrible situation in Nigeria.
On our proposal for three-year tenancies in the private sector, will the Prime Minister tell us when he expects to make the inevitable journey from saying that they represent dangerous Venezuelan-style thinking to saying that they are actually quite a good idea?
I have not had the time to study the rent control proposals, but I am sure the right hon. Gentleman will be able to lay them out for the House. Let me be clear about my view. If there is an opportunity to find longer-term tenancy agreements to give greater stability—a proposal made at last year’s Conservative conference—I am sure we can work together. If, however, the proposal is for rent controls that have been tried all over the world, including in Britain, and have been shown to fail, I think it would be a very bad idea.
Even by the right hon. Gentleman’s standards, this is a pretty quick U-turn. Last week, the chairman of the Conservative party—I know the right hon. Gentleman does not have a briefing on this, but perhaps he can listen to the question—was saying this was all back to Venezuela and that it is completely wrong, but the Community Secretary has supported these proposals. The question is how are we going to make it happen?
Actually, I have got some very good briefing on these proposals—from Labour MPs. Here they are. Let us start with Labour’s Housing Minister. You would think she would support Labour’s policy. She says:
“I do not think it will work in practice”.
The shadow Secretary of State for Communities and Local Government says this:
“We don’t want to return to rent controls because the rental sector is meeting a demand for housing.”
There we are—the authentic voice of Bennism.
Then we come to the Chairman of the Communities and Local Government Committee, a Labour MP, the hon. Member for Sheffield South East (Mr Betts). He said this:
“We concluded that rent control was not feasible.”
So there we have a Labour policy, completely unclear about what it is; but the one thing that is clear is that Labour MPs do not back it.
All the right hon. Gentleman shows is that he has no idea about this incredibly important issue facing our country. Let me explain it to him. There are 9 million people renting in this country. Our proposal is that there should be fixed three-year tenancies as the norm for those people with predictable rent changes. Right? That is the proposal. Many people across this country think that for the first time this is a party addressing the issue they face, so will he explain what is wrong with going from one-year tenancies with unpredictable rent rises to three-year tenancies with predictable rents? Why has the Conservative party given up on millions of people who are Generation Rent.
We want to build more houses so we have a better rental sector with more affordable rents. But as I said in my very first answer, if this is about finding new tenancies that give long-term security on a voluntary basis, yes. If it is about mandating rent controls from the centre and destroying the housing market, no. The problem I have with so many of the right hon. Gentleman’s policies is that they all come from the same place—
Thank you very much. Len—they come from the Unite union. Unite said, “Renationalise the railways.” The right hon. Gentleman wants to renationalise the railways. Unite says, “Let’s have old-style rent controls.” He wants old-style rent controls. The problem with rent controls is their policies are for rent, their candidates are for rent and their leader is for rent. That is the problem.
The Prime Minister will be as encouraged as I am that unemployment in my constituency is down by almost a third since the last election. However, the future for almost 1,000 workers related to Eggborough power station in my constituency is less certain. Will he meet me to ensure that we have a future for this very important asset in my constituency?
I am very happy to meet my hon. Friend to discuss this. What he says about the fall in unemployment, which we are now seeing right across our country, is welcome. In fact, employment is growing fastest not in the south-east but in Wales, which shows that the recovery is increasingly more broadly based. I know about the problems at Eggborough power station, and the demand there for further action, as has been agreed at Drax. I am very happy to discuss that with him and see what can be done.
Q2. I have two world-class hospitals in my constituency. The Secretary of State for Health has decided that Hammersmith will lose its A and E this year and Charing Cross will be demolished, losing all consultant emergency services, including A and E, and the country’s best stroke unit. Will the Prime Minister stop his Health Secretary putting my constituents’ lives at risk? (903874)
What we are doing in north-west London is ensuring that the NHS gets more money. It will be getting £2.4 billion this year—£74 million more than the year before. Let us remember that his own party’s policy was to cut the NHS, as is happening now in Wales. The changes that are being made in north-west London are backed by clinicians and local people. We want to see our NHS improve, as it is under this Government.
Does my right hon. Friend agree that the policies of the UK Independence party are based on fear—fear of the world and fear of foreigners? As a great trading nation, we should embrace the world. If anyone comes to my constituency and goes to the hospital, the nursing homes, the farms or the building sites, they will see the great contribution that is being made to our communities and to the growth of our economy by fellow EU citizens.
My right hon. Friend is absolutely right that Britain has benefited from being an economy that is open to investment and open to people coming who want to contribute and work hard here. I agree with what he says about UKIP: so much of its view seems to be that we do not have a bright future in this country. I absolutely believe that we do. If we get our deficit down and our economy growing and we invest in apprenticeships, we will show that we can be one of the success stories of the 21st century. We are making progress and that is the way to challenge its world view.
There is deep concern in the British business and scientific communities about the proposed takeover of AstraZeneca by Pfizer. The deal would have an impact for decades to come on British jobs, British investment, British exports and British science. The Business Secretary said yesterday that he is “not ruling out intervention”. What type of intervention is under consideration by Government?
I absolutely agree with what the Business Secretary said yesterday, but let me be clear that the most important intervention we can make is to back British jobs, British science, British research and development, British medicines and British technology. That is why I asked the Cabinet Secretary and my Ministers to engage with both companies right from the start of this process, and I make no apology for that, because we know what happens when you do not engage. If you stand back and just say you are opposed to everything, you get abject surrender and no guarantees for Britain. We are fighting for British science, and it is a pity that the right hon. Gentleman is trying to play politics rather than backing the national interest.
It is good to hear that the right hon. Gentleman agrees with the Business Secretary. The Business Secretary said this:
“One of the Government’s options would be to consider using our public interest test powers.”—[Official Report, 6 May 2014; Vol. 580, c. 23.]
There needs to be a proper assessment of this bid, and yesterday the Business Secretary said that he was open to doing that. It could be done straight away, through this House, and we on the Labour Benches would support making that happen. Will the Prime Minister agree to do it?
The assessment that I want is from the Business Department on this deal or indeed, because there is not now an actual offer on the table, any subsequent offer. I will judge all these things on whether they expand British jobs, British investment and British science. Let me just make this point, because I worry that it may be lost in this debate. We all know that the right hon. Gentleman thinks he is extremely clever—we all know that—but he may have missed this point. Britain benefits massively from being open to investment. Nissan is now producing more cars than the whole of Italy. Jaguar Land Rover, under Indian ownership, has created 9,000 jobs in the west midlands since I became Prime Minister. Vodafone and indeed AstraZeneca have benefited from that backing of an open country to go out and build and buy businesses around the world. There is more inward investment in Britain today than the rest of the EU combined. Let us not put that at risk.
The right hon. Gentleman does not understand. This is simply about something very straightforward—having an independent assessment of this bid and whether it is in the national interest. I will ask him the question again as it matters to people right across this country. Is he ruling out, or ruling in, using the public interest test on this takeover? We could make it happen. His Business Secretary could make it happen, and we would support it. If he does not take action now, and the bid goes through without a proper assessment, everyone will know that he was cheerleading for this bid, not championing British science and British industry.
I think it is deeply sad that the Leader of the Opposition makes accusations about cheerleading when the Government were getting stuck in to help British science, British investment and British jobs. Does it not tell us everything that, given the choice of doing the right thing for the national interest and working with the Government or making short-term political points, that is what he chooses to do? We might ask why the public interest test was changed in the first place. It happened when they were sitting in the Treasury. Yes, they wrote the rules, they sold the gold and they saw manufacturing in our country decline by one half. We will never take lectures from the people who wrecked our economy.
We are spending in excess of 2% and we are one of the only countries in Europe to do that. The Greeks, I believe, are spending more than 2% but, if I can put it this way, not all on things that are useful for all of NATO. We should continue to make sure we fulfil all our commitments on defence spending.
The hon. Lady has asked me this question in the past. I was keen to ensure that despite all the difficulties at the Mid-Staffordshire hospital there was an opportunity to see whether it might be possible for the long term to have consultant-led maternity services. People who live in our major towns, such as Stafford, want to be able to have their babies locally. It is vital that we do that and I am regularly updated by my hon. Friend the Member for Stafford (Jeremy Lefroy). I would be happy to meet him and a delegation of Staffordshire MPs if it is necessary to talk further about this point.
Q4. Last week, Boston Consulting Group published research that found that Britain is the No. 1 competitive manufacturing country in the whole of western Europe and number four globally behind China, the United States and South Korea. Does my right hon. Friend agree that that is just the sort of company we should be keeping and further evidence that our strategy to rebalance the UK economy towards manufacturing and the west midlands and other regions is working? (903876)
I am grateful to my hon. Friend for what she says, because for the first time in almost a decade all three main sectors of the economy—manufacturing, services and construction—have grown by at least 3% over the past year. That is further evidence that the economic plan is working. Manufacturing is important in itself and it is also important because so much of it is tradeable. We want to see Britain export more, make more and invest more. The moves made by my right hon. Friend the Chancellor in the Budget in terms of investment allowances and backing UK Trade & Investment are dedicated to that angle. As I said earlier, we must also remain an open economy, which will encourage people to invest in our manufacturing base.
Later this week, the opening stages of the Giro d’Italia will take place in Northern Ireland. The Tour de France is also coming to Yorkshire. Such world-class sporting events allow us to showcase our region, boost tourism and grow the local economy. Does the Prime Minister agree that as we seek to build a more prosperous and better future for all our people in Northern Ireland it is vital that the suffering and hurt of the victims is never forgotten and that whether it happened one year ago, 10 years ago or 42 years ago, justice must be pursued and the police must be allowed to follow the evidence wherever it may lead?
First, I agree with the right hon. Gentleman about the importance of these great sporting events—both the one he mentioned in Northern Ireland and, of course, the Tour de France, which will be starting in Leeds. That will be a great moment for Yorkshire and for the whole United Kingdom. We should do all we can to promote these events, although we should perhaps draw the line at appearing in lycra at either of them.
The right hon. Gentleman raises a very important issue about terrorist victims. We discussed recently the important issue of trying to ensure greater assistance from Libya over Semtex that is still being found in Northern Ireland as we speak today. As for his other remarks, we should be proud of the fact that a free country has an independent judiciary, an independent legal system and an independent police service and that they decide who to arrest, who to question and who to charge. That is how it must remain.
Q5. Dementia is one of the biggest challenges facing our country. Will the Prime Minister join me in congratulating the Alzheimer’s Society and Public Health England on launching a major new campaign through Dementia Friends to raise awareness and to challenge stigma? Given that 50,000 people quit their jobs to care for people with dementia, will he ensure that there is a new dementia strategy at the end of this year—the current one ends this year—so that we can ensure that people with dementia receive the support they need? (903877)
I pay tribute to my right hon. Friend for raising this issue. We have turned the zero on No. 10 into the dementia flower today to help to boost the importance of raising awareness of this issue and of encouraging more people to train as Dementia Friends. I will look at what he says about the strategy. As he knows, it is about investing in research and science, where we have doubled the budget for dementia. It is about dementia-friendly communities and also making sure that our hospitals and care homes treat people with dementia better. We will carry forward all those, and I will perhaps write to him about the update to the strategy.
The right hon. Lady is right to raise this. The answer to what are we doing about it is that Britain is the second largest bilateral aid donor in terms of humanitarian aid going into Syria, so we are helping to feed, clothe and house people in Turkey, in Lebanon, in Jordan and elsewhere. She raises the important point about getting aid into Syria. More is being done on that, but it is extremely difficult because of the security situation. We will continue to do what we can.
Q6. As we mark the centenary of the first world war, it is a national disgrace that the graves of Victoria Cross winners lie crumbling and derelict. As a patron of the Victoria Cross Trust, may I congratulate the Prime Minister and the Secretary of State for Communities and Local Government on pledging £100,000 to help to restore some of those graves, and The Sun on highlighting this campaign? As the Government have pledged to match-fund every penny raised by the Victoria Cross Trust, will the Prime Minister join me in urging people to go online, to donate and to ensure that we have fitting memorials for the bravest of the brave. (903878)
I certainly join my hon. Friend, who is a patron of the Victoria Cross Trust, for the hard work that is being done. The Sun did a good job in highlighting the importance of this issue. As my hon. Friend mentioned, my right hon. Friend the Secretary of State for Communities and Local Government has announced £100,000 of funding for the Victoria Cross Trust. This should go to restoring the graves of Victoria Cross recipients.
We also have a programme for letting local authorities put down paving stones for people who won Victoria Crosses in their area, and we are looking at many other ways to commemorate this absolutely vital anniversary. The most important thing we are doing is the huge multimillion pound investment going to the Imperial War museum, which is opening this summer and to which I take my children. It brings the first world war to life in an extraordinary way, and that is at the heart of our important commemorations.
Q15. My constituent Darren Lugg’s disability means that he needs a specially adapted bed. He therefore cannot share a room with his wife, but still they are hit by the bedroom tax. Can the Prime Minister explain why this Government are punishing him for his disability? (903887)
Q7. AstraZeneca is Macclesfield’s largest employer with 2,000 employees, so I share constituents’ concerns about Pfizer’s proposed bid. I welcome the steps taken by the Government to secure initial commitments from the company if it succeeds. Can the Prime Minister tell the House what further steps are being taken to strengthen those commitments and to safeguard highly skilled manufacturing jobs in Macclesfield? (903879)
I am grateful for my hon. Friend’s remarks. There are 2,000 people employed by AstraZeneca in his constituency, and he is quite right to speak up for them. Our entire approach is based on trying to secure the best possible deal in terms of jobs, investment and science, and that is why I believe it was absolutely right to ask the Cabinet Secretary to engage with Pfizer, just as we are engaging with AstraZeneca. I find it extraordinary that we have been criticised for this. Of course, there is no offer on the table, but the commitments that have been made so far are encouraging in terms of completing the Cambridge campus and making sure that 20% of the combined companies’ total research and development work force is in the UK going forward—and they specifically mention substantial commercial manufacturing facilities in Macclesfield. The company also goes on to say that because of the patent box that we have introduced, it would look at manufacturing more in the UK. But let me absolutely clear: I am not satisfied; I want more, but the way to get more is to engage, not to stand up and play party politics.
On a number of occasions the Prime Minister has raised the important issue of awareness of mental health, and I thank him for that, but can he explain why, since 2011, there has been a 30% drop in the number of mental health beds in the NHS, and is it really right that mental health patients are having to travel up to 200 miles to access a bed?
What matters in our NHS is the quality of provision and parity of esteem between physical health and mental health. This Government have not solved every problem, but we have put proper parity of esteem into the NHS constitution and the NHS mandate. We have also put in proper targets for some of the talking therapies that are absolutely vital in mental health. Measuring the output of our NHS purely by the number of beds is not a sensible approach.
Q8. The Government are making a substantial investment in renewing and expanding the nation’s infrastructure. There is, however, a real need to get more young people into engineering so that we will have the long-term skills base for these projects. Will my right hon. Friend assure me that this Government will do all they can to inspire the next generation of engineers? (903880)
I absolutely back what my hon. Friend says. I know he has been campaigning very hard to get the HS2 academy to go to Milton Keynes, because there is a vital bit of skills work that needs to be done. [Interruption.] I am sure there will be a lot of competition. The key thing about these investments, whether it is Crossrail, the Olympics or HS2, is to plan in advance for the skills that we are going to need so that we can fill the jobs with British people leaving school and college wanting to take on those skills. Today the Chancellor and the Minister for Schools have launched the “Your Life, Your Choice” campaign, which is all about encouraging young people to get into STEM subjects—science, technology, engineering and maths—and to stay in STEM subjects, because there is a massive fall-off from GCSE to A-level, particularly in physics among young women, and we need to encourage them to go on studying.
I am delighted to see that the Prime Minister is wearing his Dementia Friends badge today. He will congratulate the Alzheimer’s Society on its commitment to get 1 million dementia friends over the next year, but will he also today commit personally to putting an end to the scandal of 15-minute visits, low wages and zero-hours contracts for the dedicated home carers who look after people with dementia in our country?
First, let me praise the right hon. Lady for her work on dementia and the amount of work she has done to spread awareness about this. The 15-minute working times is an issue for local councils. My local council has just decided to stop these 15-minute visits because it does not believe people can really get any meaningful work done, but this is a matter for councils. We are the first Government to have a proper review on zero-hours contracts. We are very unhappy about those with exclusivity clauses that do not allow people to work elsewhere. As important as those things are, it is as important to make sure that our care system has got people inside it who are really caring and understanding about the problems of dementia. The right hon. Lady and I have both been through the very short Dementia Friends training course, and I do not know about her, but I think I am ready for a refresher.
Q9. With 1.3% growth in manufacturing in the last quarter and some strong performances from my local firms such as Renishaw, Dairy Crest, Lister Communications, Lister Shearing and others, largely through innovation, does the Prime Minister agree that one key element of the long-term economic plan is the need further to strengthen our skills base so that those firms can continue to grow, work hard for Britain, and generate exports? (903881)
My hon. Friend is absolutely right. A key part of the long-term plan is to rebalance our economy away from purely the south-east and also towards manufacturing exports and investment. I know that he has been playing his part by running a festival for manufacturing and engineering in Stroud. This is really important, because one of the things we have to do is inspire a new generation to think of these careers and think of the subjects they should be studying in school and at university to open up these careers for them.
Last Thursday, the European Union ban on the import of Indian mangos took effect. As a result, hundreds of businesses in Leicester and throughout the UK will suffer millions of pounds of losses. There was no consultation with this House and no vote by British Ministers. Next week, the Prime Minister will have his first conversation with the new Indian Prime Minister. Will he do his best to reverse this ban so that we can keep our special relationship with India, which his predecessors and he have worked so hard to maintain, and have our delicious mangos once again?
I know how much the right hon. Gentleman cares about this issue, so much so that he delivered a tray of mangos to No. 10 Downing street—missing the deadline, I might add, so that they could safely be consumed by the people inside. I am very grateful for that.
This is a very serious issue. The European Commission has to consider it on the basis of the science and the evidence. There are concerns about cross-contamination of British crops and interests, so we have to make sure that that is got right. I understand how strongly the right hon. Gentleman and the Indian community in this country feel. Indeed, I look forward to discussing the issue with the new Indian Prime Minister.
Q10. Will the Prime Minister join me in congratulating Vitsoe, the world-class furniture manufacturer, on its decision to locate its manufacturing facility in Leamington and on the jobs that will create? I am proud the decision was based in part on our community’s rich industrial heritage. Will the Prime Minister also pay tribute to local businesses that have created jobs and reduced the number of jobseeker’s allowance claimants in Warwick and Leamington by a remarkable 54% since May 2010? (903882)
I congratulate my hon. Friend on the decline in unemployment in his constituency, which is incredibly marked at 54%. I note what he says about furniture factories, because those are the sorts of businesses that were going offshore. What we are seeing in our country is a slow trend—but I want to encourage it—of reshoring and getting businesses to come back to, and invest and expand in, Britain. We must do everything we can to encourage that by keeping their taxes down, keeping national insurance down, cutting national insurance for young people, training more apprentices and investing in infrastructure. That is what we will do so that there are many more success stories like that mentioned by my hon. Friend.
Q12. My constituent Lorraine Seath’s son has recently returned from serving our country in Afghanistan. Does the Prime Minister think it is right that she has to pay the bedroom tax to keep a room available for her son to stay in when he is at home? (903884)
Let me look at this individual case, because we made a specific exemption from the spare room subsidy for people who were serving overseas. If the spare room subsidy exemption does not apply in this case, there is of course the provision of the discretionary housing payment, which is another way of dealing with this, and I would hope that Scunthorpe borough council would take up that offer.
Q11. The Prime Minister will be aware that last week the service sector grew at its fastest level this year, with the ensuing creation of jobs. Does he agree that that demonstrates that we must stick with the long-term economic plan, because it is working? I trust my right hon. Friend has enough time to answer the question in full. (903883)
The Prime Minister will know that recently it has gone into the public domain that more than 365 people in Northern Ireland were given the royal prerogative of mercy, despite 10 years of files being lost. Will he give a commitment that those names will be made public? After all, if the Queen takes the time to sign 365 names, surely the public and particularly the victims have the right to know.
I would say to the hon. Lady, who I know takes a very close interest in these issues in Northern Ireland, that difficult decisions were taken, principally by the previous Government at the time of the various agreements, which involved very difficult choices—hard choices—that had to be made in order to try to build the platform for peace and reconciliation. I am very happy to look at her specific point and see whether there is anything I can do to reassure her in a letter, but I do not want to unpick decisions taken at a difficult time to try to give us the peace that we enjoy today.
Q13. The chief medical officer warned last month that we are misusing antibiotics to such an extent that we risk returning, in just a matter of years, to a 19th-century environment where routine operations carry a grave risk of death. A couple of days ago, the World Health Organisation issued a similar warning, saying that we are hurtling towards the post-antibiotic age. On that basis, it is surely madness to continue to allow so many antibiotics to be used on our factory farms—about half the total use in this country—when we know that that contributes to resistance. (903885)
My hon. Friend raises an extremely serious problem, which is global in its nature and could have unbelievably bad consequences in terms of anti-microbial resistance leading to quite minor ailments not being properly treatable. One of the problems is that the way research is done currently by pharmaceutical companies is not necessarily bringing forward new antibiotics in the way that we need or solving this problem. I have met the chief medical officer to discuss this. There are a number of steps that we can take here in the UK and working with other countries, and I hope to say something about it soon.
Yesterday, the Secretary of State for Business, Innovation and Skills said that he was working with civil servants to ensure that any assurances given by Pfizer during the proposed takeover of AstraZeneca could be made legally binding. Does the Prime Minister back that?
As I said, the more we can do to strengthen the assurances we are given, the better. But the only way to get assurances is by engaging and getting stuck in with those companies, which is what we have been doing, and I find it extraordinary that the Labour party chooses to criticise us for that.
Q14. The Pfizer bid for AstraZeneca is driven by tax advantages. Has the Prime Minister spoken to the US Government about whether they propose any changes to their tax law, and has Pfizer asked for any changes to our tax system, particularly to the patent box? (903886)
In its letter to me, Pfizer mentions the patent box as a positive reason for wanting to invest in Britain and for examining whether it could increase manufacturing in Britain. Of course, because of the way the patent box works, you only get the low-tax benefit if you make your investments and do research in the UK, and then exploit that research by manufacturing in the UK. I agree with the hon. Gentleman that we should be incredibly hard-headed about this. It is an advantage that Britain is a low-tax country. We used to stand in this House of Commons and bemoan the fact that companies were leaving because of our high taxes. They now want to come here because of our tax system. I agree with the Business Secretary that that is not enough; we want the investment, the jobs and the research that comes with that competitive tax system.
Smoke Alarms (Private Rented Sector)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to make provision for the mandatory installation of smoke alarms in privately rented accommodation; and for connected purposes.
At the outset, I draw attention to my interests as declared in the Register of Members’ Financial Interests, including my role as a non-executive director of the Fire Protection Association—a not-for-profit organisation that works to improve fire safety.
Smoke alarms save lives. The latest Government statement on the subject, issued by the Department for Communities and Local Government in February, states that
“analysis suggests a person is…4 times more likely to die in a fire in the home if they do not have a working smoke alarm”.
In recent years, as our fire and rescue services have focused increasingly on fire prevention, we have seen a substantial increase in the number of homes that are protected by smoke alarms. Building regulations require smoke alarms to be installed in all new dwellings. The impact of that regulatory requirement, together with national and local promotional campaigns to get alarms fitted in existing properties, has been to ensure that almost nine out of 10 homes across the country are equipped with at least one working smoke alarm.
That still leaves about 2.5 million homes unprotected. By a margin, the largest proportion of unprotected homes are privately rented. The latest available data from the English housing survey suggest that only 82% of privately rented homes were equipped with a working smoke alarm in 2011. The purpose of the Bill is to remedy that by making the installation of a working smoke alarm mandatory in all privately rented housing. I would have no objection to extending the provision to all rented homes, including those rented from councils and housing associations. However, as those sectors have already gone significantly further, with 89% of council properties and 93% of housing association homes having working smoke alarms, it seems sensible to start with the sector where the need is greatest.
Very few people appear to disagree with the proposal. The National Landlords Association says:
“we already advise that it is best practice to install smoke alarms and carbon monoxide detectors in rental properties and are comfortable with this being made a regulatory requirement”.
The British Property Federation says that it
“supports the compulsory roll-out of smoke alarms and CO alarms across the rented sector”.
The Chief Fire Officers Association, which has provided me with very helpful information and guidance in preparing the Bill, is adamant that this proposal is one of the simplest and most effective ways to save lives.
The Government appear to agree. Section 150 of the Energy Act 2013 empowers the Secretary of State to make provision, by statutory instrument, to require residential landlords to ensure that tenanted properties are
“equipped with a required alarm”.
A required alarm is defined as covering smoke alarms and carbon monoxide alarms.
The public appear to support the proposal overwhelmingly. Research by YouGov, which was commissioned by Cheshire fire and rescue service but conducted nationwide, found that 93% of the more than 2,000 respondents agreed with the statement:
“Private landlords should be required by law to ensure that working smoke alarms are fitted in rented residential properties.”
A parallel YouGov survey of businesses found a very similar level of support, with 91% of the 690 respondents agreeing with the statement. Interestingly, when that was broken down by category of business, YouGov found 100% support among real estate respondents. That does not imply that there is opposition to the principle of regulation in the industry.
What can possibly be the objection to taking action? Why has the necessary statutory instrument not been introduced? The clue to answering that question appears in the DCLG consultation paper that was issued in February, to which I have referred. The paper, which is entitled “Review of Property Conditions in the Private Rented Sector”, sets out clearly the forceful arguments in favour of the mandatory installation of smoke alarms and carbon monoxide alarms as a lifesaver. However, the paper continues:
“requiring the installation of smoke alarms in all privately rented homes would impose additional costs on landlords.”
“Regulation is always a last resort and, as part of the review, we will also explore the scope for non-regulatory alternatives to promote further take-up.”
I find that regulatory burden argument wholly unconvincing. As I have pointed out, the National Landlords Association and the British Property Federation are in favour of the proposal. When the representative bodies for the businesses concerned are not complaining about the regulatory burden, why on earth do the Government see a problem?
The Government are sceptical about regulation, but that scepticism does not prevent them from imposing new regulatory burdens on landlords when they want to. For example, the Immigration Bill, which the House will debate this afternoon, will impose penalties of up to £3,000 on landlords who let premises to people who do not have leave to remain in the UK, even if they were unaware of their tenant’s immigration status. Landlord representatives have made it clear that they oppose that new regulatory burden, but the Government have insisted on keeping the provision in the Bill.
However, when landlord representatives are not opposed to a new regulation that would save lives, the Government appear less committed. That is, frankly, perverse. The cost would be tiny both in absolute terms and as a proportion of landlords’ income. A sealed smoke detector with a 10-year battery costs about £15, which is only £1.50 a year spread over the life of the battery. Even if three or four alarms needed to be installed, it would still be no more than £6 a year, compared with an average rental income from a private letting of more than £10,000 a year. The regulatory burden argument is wholly unpersuasive, and we simply cannot allow such a flimsy pretext to delay any further the necessary action to save lives.
Nor is it the case that, as the DCLG consultation paper implies, voluntary arrangements without a regulatory obligation will be an adequate alternative. We have certainly seen real progress in voluntary arrangements to date, with the number of existing homes protected by smoke alarms increasing dramatically over the past decades. However, a law of diminishing returns is at work. Landlords keen to do the right thing will almost all have installed alarms by now. Those who are negligent or indifferent to tenant safety may well not have done so. Without a legal obligation, it is unlikely that they will respond positively to further encouragement. That is one reason why landlord representatives are not opposed to making the installation of smoke alarms a regulatory obligation. It would ensure that there was a level playing field and help raise safety standards across the whole sector.
The failure of irresponsible or negligent landlords should no longer be allowed to damage the reputation of the whole private rented sector. The case for the mandatory installation of smoke alarms in all privately rented housing is overwhelmingly strong, which is why I am presenting the Bill as a call to action. I am delighted that it is supported by Members from throughout the House, and I am grateful to all right hon. and hon. Members who have agreed to add their names as sponsors. It is a simple, common-sense measure that would save lives, and I commend it to the House.
I rise to oppose the Bill. First, like the right hon. Member for Greenwich and Woolwich (Mr Raynsford), I should draw the House’s attention to an interest declared in the Register of Members’ Financial Interests. As I have made clear before, I am a landlord, although an accidental one, and a tenant as well, so perhaps I am in an unusual position in being able to see both sides of the argument from personal experience. I want to place on record my thanks to the Residential Landlords Association for its help on the issue. Although it does not oppose the right hon. Gentleman’s proposal outright, as I do, it has highlighted to me a number of potential problems with it.
Perhaps I should start with something that the right hon. Gentleman failed to mention: his former ministerial role. He was the Minister in charge of this area of policy, and he had the opportunity to introduce the law that he suggests, but he did absolutely nothing about it. We should start compiling a list of things that Opposition Members ask for that they failed to do in their 13 years in office. The right hon. Gentleman has gone one step further, because he was the Minister responsible and did absolutely nothing. In fact, when he was questioned about what measures he would take to require more smoke alarms in properties, he used to give answers that mentioned everything apart from a mandatory requirement for private landlords to install them. He asks how on earth anyone could oppose the Bill, but the question for him should be why on earth he did not introduce it when he was the Minister responsible if it is such a fantastic idea. I might add that at the time he failed to introduce it, there were far fewer private landlords with smoke alarms and far more fires. If there was ever a time to do it, it would have been when he was a Minister, rather than now.
There is no doubt that the desire exists to reduce and eliminate the number of incidents and fatalities that horrifically result from fire accidents, but I wish to record my concerns about the Bill because I do not believe that it provides the necessary solution. Surely, it is obviously in everyone’s interests to have a fire prevention device installed in their property. In a rented property, the tenant would want one to protect themselves and their family, and the landlord would be keen to protect their property from any chance of fire damage—the figures bear that out.
In answer to a parliamentary question on 27 March, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Keighley (Kris Hopkins), stated that 82% of privately rented properties already have a smoke alarm. As I find myself saying all the time, some people want to regulate everything in the name of a worthy cause. However, potentially criminalising law-abiding, decent landlords—the vast majority of whom, by anyone’s standards, have properties with smoke alarms already fitted—and adding to the burdens that could put them off renting their properties will have undoubted unintended consequences on the market and the very people this proposal seeks to protect.
The right hon. Gentleman spoke about the cost of this measure as though that were the only factor, but it is not. The risk of prosecution is a factor for landlords when making these decisions. The practicalities of implementing and enforcing a mandatory programme to install smoke alarms in private rented accommodation could make it incredibly inefficient and almost impossible to police. Although landlords would be legally obliged to install such devices in their properties, they would not be able to check the status of the alarm regularly. Shifting that responsibility to the landlord, who has irregular and unguaranteed access to the property, might result in testing becoming a less regular affair than would otherwise be the case.
We should also consider tenant responsibility. Given that time and again it appears that tenants interfere with fire protection devices in their property, how can the landlord be held responsible if those sensitive alarms are disconnected or tampered with? You do not have to take my word for it, Mr Speaker, because when the right hon. Gentleman was a Minister, he stated in a parliamentary answer that
“in approximately 9 per cent. of households containing fitted smoke alarms at least one alarm has either been disconnected or has had the battery removed.”—[Official Report, 13 January 2003; Vol. 397, c. 392W.]
How can a landlord be held responsible for that?
If a tenant were to remove the batteries, cover the sensor or disconnect the device completely without notifying the landlord, would it still be the landlord’s responsibility to ensure that those protection devices were engaged, and if so, how? [Interruption.] Opposition Members are chuntering, but they just like having noble ideas. They have absolutely no idea about the practicalities because they never think anything through. It is totally impractical, impossible and unrealistic to expect a landlord to check on the status of all smoke alarms in his or her properties on a daily basis to ensure that all devices are connected and operational. How on earth are they expected to do that? If smoke alarms are not working, they are pointless.
How many smoke alarms would be satisfactory? Guidelines seem to suggest that an alarm should be present on every floor of a property, but given the nature of private letting, where rooms are often let on an individual basis, will the landlord need to provide a separate alarm in all rooms of the property? Would one alarm in an eight-bedroom property be sufficient? Not only would excessive alarm installation amount to an increased financial burden on the landlord, but it would no doubt have a knock-on effect on tenants, who will pay extra to rent those properties.
A mandatory smoke alarm policy could reduce the use or consideration of alternative safety alarms and measures. I believe that heat alarms have been acknowledged as a suitable and in some cases more appropriate alternative to smoke alarms. They reduce the risk of accidentally triggering an alarm, which in turn lessens the chances of tenants actively disengaging them. The Residential Landlords Association recently pointed out that it is clear from relevant British standards and Local Authorities Co-ordinators of Regulatory Services guidance, that in certain situations the fitting of a heat alarm is more appropriate. Smoke detectors are not appropriate in kitchens because of the higher risk of accidentally setting off the alarm. [Interruption.] Labour Members do not like listening to this because they have not thought it through. Any mandatory policy on smoke alarms could create a climate where landlords might remove a more effective heat alarm system and replace it with a less effective smoke alarm system that would be less suitable for the type of property and tenant, just because of the right hon. Gentleman’s diktat.
I understand that private rented accommodation is already covered by an extensive amount of safety regulations, including on fire safety, which makes this proposed extra burden seem completely unnecessary. Local authorities already have powers to require the provision of smoke alarms where necessary through the housing, health and safety rating system. A British standard underpins various provisions for the installation of fire detection, along with LACORS guidance, as agreed by the Department for Communities and Local Government and the Chief Fire Officers Association, and that is the basis for fire protection in existing dwellings. A clear downward trend in fire deaths and injuries has been evident for many years in fire statistics. Although those statistics are encouraging, they bring into question the need to adopt compulsion for fitting smoke alarms when steps are already being taken in the right direction and with excellent results.
Finally, I have great concerns about discriminatory treatment in relation to private landlords. If the intention is to promote fire safety, surely the right hon. Gentleman’s motion should apply to the mandatory installation of smoke alarms in all types of accommodation and not single out private landlords. Given everything that I have said, I do not believe there should be any move towards the mandatory provision of smoke alarms in private rented accommodation. As mentioned, the Bill applies only to private landlords, not to social housing or owner-occupied homes, despite the threat of fire not respecting such boundaries.
The Labour party thinks that, whatever something is, it must be regulated, that there must be a law for it and that we must have more burdens and unnecessary regulations, but I think that this provision is completely unnecessary. The right hon. Gentleman needs to explain why he did absolutely nothing to introduce this measure when he was a Minister and in a position to do so. I oppose this Bill. I will allow the right hon. Gentleman his moment in the sunlight and his moment of glory, and I will not seek to divide the House. However, I hope that the Minister will register my points and not introduce this ridiculously unnecessary nanny-state proposal.
Question put (Standing Order No. 23).
That Mr Nick Raynsford, Jim Fitzpatrick, Alistair Burt, Mr Andrew Love, Mr Adrian Sanders, Mrs Mary Glindon, Peter Aldous, Mr Barry Sheerman, Mr David Amess, John Healey and Bob Blackman present the Bill.
Mr Nick Raynsford accordingly presented the Bill.
Bill read the First time; to be read a Second time on Thursday 15 May, and to be printed (Bill 207).
Water Bill (Programme) (No. 2)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Water Bill for the purpose of supplementing the Order of 25 November 2013 (Water Bill (Programme)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.
(2) The proceedings shall be taken in the following order: Lords Amendments Nos. 15 to 30, 32, 33, 43 to 64, 101 to 103, 107 to 147, 1 to 14, 31, 34 to 42, 65, 66, 104, 67 to 100, 105, 106.
(3) Any further Message from the Lords may be considered forthwith without any Question being put.
(4) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Harriett Baldwin.]
Question agreed to.
Consideration of Lords amendments
I must draw the attention of the House to the fact that financial privilege is involved in Lords amendment 142. If the House agrees to it, I will cause an appropriate entry to be made in the Journal.
Agreements by water undertakers to adopt infrastructure
I beg to move, That this House agrees with Lords amendment 15.
The Lords amendments relate to the subject of market reform, and in particular to retail exits. By that I mean allowing an incumbent water company to exit from the market for retail services to non-household customers.
Lords amendments 15 to 30, 43 to 48, 101 to 103 and 107 to 147 are minor technical or consequential amendments to the market reform provisions in the Bill—for example, changing wording from “a code” to “the code”. Some are minor and technical amendments relating to cross-border pipes. Lords amendments 32 and 33 ensure that the Consumer Council for Water is consulted on water company charges schemes. The Government are keen to ensure that customers are protected, and are grateful to Opposition Members for highlighting the important work done by the council on behalf of customers. We expect it to contribute to all discussions about the future of the industry, and we are pleased to have been able to enhance that in the Bill.
Lords amendments 49 to 52 would implement recommendations made by the Delegated Powers and Regulatory Reform Committee in another place. We are very grateful for the Committee’s scrutiny of the Bill. I do not propose to refer to the amendments in detail, but I shall be happy to respond to any specific queries.
Lords amendments 53 to 64 deal with the issue of retail exits, which we have discussed previously in the House. The Bill seeks to introduce a range of reforms that will enhance and extend competition in the water sector. The Government believe that the development of competition in the sector will bring real benefits to customers. They listened to, and acted on, well-argued contributions to the debate on market reform, especially the calls for incumbent water companies to be able to choose to exit from the non-household retail market.
I think it would be appropriate for me to expand on the retail exit amendments, as the House is not familiar with the clauses involved. The amendments differ in some crucial ways from amendments on the subject that Members have seen before. When drafting the amendments, we were particularly careful to ensure that customers were protected, both the non-household customers who will be transferred to a different retailer and the household customers who will remain with the incumbent. Non-Government amendments tabled by Members here and in another place have not reflected those safeguards fully.
The Lords amendments relating to retail exits contain three core principles. Exits must involve non-household customers only, they must be undertaken voluntarily, and they must ensure the ongoing protection of customers. Any exit will be possible only with the consent of the Secretary of State. Other amendments that the House has considered did not grapple with those key issues. These amendments create broad, permissive powers in what will be a very complex area. Further work will be required to consider the practical implications of exits, and to develop the detailed policies that will underpin the use of the powers. We will therefore be consulting widely with all interested parties as we develop our approach and produce exit regulations.
So what do the Lords amendments actually do? They give the Secretary of State powers to establish, through regulations, a framework that permits incumbent water or sewerage companies—with the consent of the Secretary of State—to stop supplying any retail services to current or future non-household customers in their areas of appointment. The services will then be provided by one or more retail licensees. Any incumbent water company whose area is wholly or mainly in England will be able to apply to the Secretary of State to exit from the non-household retail market for that area.
This approach reflects amendments tabled by parties in both Houses, but builds on them by increasing safeguards. These amendments ensure, for example, that in allowing retail exits we will not make forced separation possible, which an amendment tabled by the hon. Member for Dunfermline and West Fife (Thomas Docherty) would have done. We do not want to take risks with a successful model, given the challenges that we face in building the resilience of the sector, which is a crucial aim of the Bill and our programme of water reform. We cannot risk damaging investor confidence.
The amendments are enabling only, and we are committed to full public consultation on how best to implement the provision for retail exits. We will consult on the content of draft regulations by the end of the year. We will work closely with incumbent water companies, Ofwat, the Competition and Markets Authority, the Consumer Council for Water and others as we develop our approach and produce the regulations. We will also send a copy of the draft regulations to the Environment, Food and Rural Affairs Committee to give it an opportunity to comment. In addition, Ministers will make themselves available to Members of both Houses for further discussions as we develop the regulations, given the limited opportunities for parliamentary scrutiny of this part of the Bill.
Let me explain some key elements of the regulation-making powers. They provide for the protection of both household and non-household customers who are affected by the exit. As I have said, it is of paramount importance that we ensure that customers are protected. The regulations may provide for the transfer of customers, and set out what will happen in an area where a company will no longer be providing retail services for non-household customers. They must ensure the protection of any non-household customers who are subject to a transfer, as well as household customers who remain with the incumbent. The amendments enable the Secretary of State to make regulations that establish strong safeguards. That extends to requiring the exiting incumbent to take certain steps before making an application, such as consulting its customers.
Our intention is that any exit must be voluntary, and must be delivered in a way that ensures continued protection both for non-household customers and for householders who will not be able to switch their suppliers. In order to prevent forced separation or exit, the amendments require the Secretary of State to consent to any application to exit.
Lords amendment 54 also sets out some of the grounds on which an application to exit could be refused—for example, if the company could not demonstrate that exit was in the best interests of customers or in the public interest. Lords amendments 59 and 61 also underline our intention that exits should be voluntary. In developing the exit regulations, we recognise the regulatory independence of the competition authorities, and the provisions are not intended to undermine it.
The Enterprise and Regulatory Reform Act 2013 reaffirmed the importance that the Government ascribe to an independent competition regime. Lords amendment 61 enables the Secretary of State to make a statement about the Government’s policy on voluntary exits. Any statement issued would fully reflect the Government’s wider approach to competition and the independence of the regulators. Lords amendment 62 provides a power to make changes in the duties and powers of a number of public bodies, including Ofwat and the Competition and Markets Authority. The amendment is necessary because the exit regulations are likely to involve changes in the existing legislative regime. Its scope is limited to the necessary adaptations of the framework governing the exit arrangements in the water sector. Any changes will be very specific to retail exits.
Let me end by welcoming the hon. Member for Penistone and Stocksbridge (Angela Smith) to her new position. While we may disagree on matters of policy from time to time, I have the greatest respect for the contribution that she makes in the House—and it is good to have someone of Cornish descent facing me across the Dispatch Box.
May I start by thanking the Minister for his kind comments?
As it is some time since the Bill was debated on the Floor of the House, I want briefly to refresh the memories of Members on it. It includes many important reforms that attempt to build on three important reviews taken forward by the previous Government: the Pitt review on flooding, the Walker review on affordability, and the Cave review on competition.
Throughout the Bill’s long passage through Parliament the Opposition have been supportive. In the Commons we voted for it on Second Reading and on Third Reading. In the other place, although we raised legitimate concerns and challenged the Government, again we remained broadly supportive of the Bill. We have backed measures to increase competition. We have supported measures that will provide a statutory basis for agreement on flood reinsurance, providing affordable insurance to households who would have otherwise not been covered. However, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) pointed out on Third Reading, there still remains even now a major hole at the heart of the Bill, and at the heart of the Government’s water policy: the absence of any serious attempt to tackle the impact of rising water bills on household budgets, which is adding to the cost of living crisis.
Unfortunately, the Government have failed to back a new national affordability scheme that would have ended the current postcode lottery in which companies choose whether to offer a social tariff and set the criteria for eligibility. Last year the industry made £1.9 billion in pre-tax profits, of which they returned £1.8 billion to shareholders, yet fewer than 25,000 people are eligible to benefit from social tariffs offered by just three water companies. In many ways, therefore, the Bill represents a missed opportunity and remains seriously flawed, despite its being improved by amendments made in the other place.
Although we will not vote against any of the first group of amendments, that does not mean that we believe that the Bill could not have been made stronger and more effective through the adoption of our amendments. We are where we are, as they say. While, as the Minister pointed out, most amendments in the group present a series of technical and drafting changes, amendments 32 and 33, amendments 49 to 52 and amendments 53 to 64 make significant changes to the Bill that was debated in the Commons.
Amendments 32 and 33, which were originally introduced in Committee by Lord Grantchester, give a new role to the Consumer Council for Water. They will require Ofwat to issue rules that will mean that the CCW must be consulted by water and sewerage undertakers on all charges schemes. That will allow the CCW to play a role at an early stage in the charges process and will enable it to flag up problems, before the relevant bills start arriving on customers’ doorsteps and further problems occur. For example, as Lord Grantchester pointed out in Committee, the CCW had previously challenged the charging plans of some companies that restricted half-yearly payment options for those on direct debit payments. Some customers prefer to pay on a half-yearly basis, as it better enables them to manage their money.
Although we welcome the amendments, which we promoted in the other place, it is a pity that the Government have not gone further by accepting our argument that we need to tackle the impact of rising water bills on household budgets. As I said, the Government could have backed our plans for a new national affordability scheme that would have ended the current postcode lottery in which companies choose whether or not to offer a social tariff, with no minimum standards in place to ensure fair and effective affordability measures.
Amendments 49 and 50 introduce parliamentary scrutiny for any regulations that the Secretary of State may deem fit to introduce under clauses 37 and 39. The amendments, which were introduced at a very late stage—I think on Third Reading in the Lords—mean that the affirmative procedure will now apply on the first exercise of those powers. That is quite right, especially given the importance of the regulations in question. It is a pity, however, that the Government have been forced into this position and have had to be pushed into introducing the amendments by Labour Members and the Delegated Powers and Regulatory Reform Committee in the other place. That Committee made firm recommendations in this regard, and has rightly argued that the Secretary of State would have enjoyed so-called Henry VIII powers over many parts of the Act if the Bill had remained unamended, so Parliament is right to assert its right to scrutinise the relevant regulations as and when they see the light of day.
Amendments 53 to 64 deal with retail exit. I want to put it on the record that we have also backed measures in the Bill that increase competition to support businesses that wish to enter the retail market for non-domestic consumers. The measures are similar to those that have been a success north of the border; Scotland became the first country in the world to introduce competition to the non-domestic water market in 2008. We find it odd, however, that the Government have repeatedly dragged their feet in relation to allowing such businesses to exit this market. Without our persistence, which was shared by peers on the Government Benches, the Government’s original proposals would not create a market at all.
Retail exit enjoys a great deal of support, including from Ofwat, the Environment, Food and Rural Affairs Committee and some of the major water companies. Indeed, in Committee, amendments introduced by the Chair of the Select Committee, the hon. Member for Thirsk and Malton (Miss McIntosh), were not supported by the Government. In the other place, Lord Whitty commented that there was bemusement in all parts of the House as to why the Government were so resistant to the concept of exit in the new retail market, and introduced an amendment that would have allowed it. His arguments were not, however, supported by the Government, who gave the lame reason that such a measure would cause investor insecurity. On Report, Lord Moynihan introduced an amendment that would have gained our support, but he withdrew it on advice that the Government would introduce an amendment on Third Reading. Although we welcome the Government’s late conversion, we have to wonder why they resisted such a measure during most of the Bill’s progress through this House and the other place. Surely it would have been more appropriate if the amendments had been brought forward earlier, to allow adequate parliamentary scrutiny. Once again, however, we are where we are.
It is also right that, when and if regulations are brought forward by the Secretary of State, they will be laid before both Houses under the super-affirmative procedure. I pay tribute again to the work of the Delegated Powers and Regulatory Reform Committee in highlighting the need for that even at the 11th hour of the Bill’s passage through Parliament.
First, I welcome the hon. Member for Penistone and Stocksbridge (Angela Smith) to her new position, and pay tribute to her predecessor, the hon. Member for Dunfermline and West Fife (Thomas Docherty). I understand that they have performed a job swap. The hon. Gentleman has made a big contribution to this debate and, in the past, to the work of the Environment, Food and Rural Affairs Committee. I can only apologise to both Front-Bench teams that there are not more colleagues from the Committee here today. The reason for that is that we are undertaking a farm visit this afternoon. I had to give my excuses and will be joining colleagues later for the completion of the visit today and tomorrow. It would be churlish of me not to congratulate my hon. Friend the Minister and welcome both the outbreak of common sense in the other place and in the Department and a very welcome and worthwhile amendment.
I shall briefly go over the deliberations in the Select Committee and the earlier proceedings in this place. In our report on the draft Water Bill, the Committee strongly recommended that the Bill should include provisions to enable incumbent companies to exit the retail market voluntarily. Indeed, as the hon. Member for Penistone and Stocksbridge mentioned, the Committee tabled a new clause in my name on Report to provide for retail exit. Also, during the course of the inquiry both regulators—Ofwat and the Water Industry Commission for Scotland—the incumbent companies and new entrants were united in calling for the Bill to include an exit route. WICS provided a welcome and helpful explanatory note, and I hope the amendment it proposed during the Commons stages of the Bill will bear fruit today.
In the Public Bill Committee, Opposition Members proposed a new clause to allow the incumbent companies to choose to provide to the retail market or wholesale market only, subject to approval by the Secretary of State. Regrettably, that amendment was lost, but we heard some powerful arguments in favour of allowing retail exit, which include the following: an exit clause is needed to allow the market to function as a normal competitive market; a company should be able to organise its business in the way it considers best for the interests of shareholders and customers; and an exit clause facilitates entry by new entrants, particularly larger ones, into the water and sewerage retail market, as they would not have to win one contract at a time. Without today’s amendment, economies of scale would work against new entrants, either preventing them from entering the market or, at the very least, reducing the benefits they could provide to new customers because of the higher costs of entry. It is also not in the interest of the companies or customers to force companies to stay in a market when they have no or very few customers. It is, therefore, entirely appropriate that the amendment recognises that this is about the proper functioning of the market.
Many of the amendments in the group are technical and I do not propose to comment on them, but I believe they go some way towards resolving issues with the drafting of the Bill or addressing concerns expressed during the Lords stages of the Bill. Clearly the amendment on retail exit is the most substantial. I echo the hon. Lady’s concerns, as I am sure other hon. Members would, about the lateness of the hour of this move, but the amendment is before us today and we should welcome its content. I believe the Minister recognises that there are a wide range of views in the industry on this subject, and all companies will wish to have the opportunity to provide input on the detailed arrangements that would be needed to ensure that any option for companies to exit voluntarily the non-household retail market did not have unintended consequences. Therefore, we should welcome the positive development of the amendment providing appropriate opportunities, as he explained, for full engagement and consultation with all interested parties and for consideration of all potential implications of allowing voluntary exit from the non-household retail market. I particularly welcome the role that will be played by the Consumer Council for Water, because it has, certainly in my area, a positive role to play.
I ask the Minister to elaborate on one comment made by Lord De Mauley in the other place when these amendments were discussed on Third Reading. He said that regulations made under these provisions on voluntary exit would be subject to an “enhanced affirmative” procedure, whereby draft regulations would be laid before the House. I have not heard that expression before, so I would welcome any clarification the Minister can provide on it. The right for companies to exit in this way reflects market conditions and it can only enhance investor confidence, because anything else would have been an intolerable situation, as a company would not have been allowed to exit, thus placing both company and its customers in a difficult position. Obviously, it is pleasing to note that the draft regulations will be subject to the full scrutiny by the Select Committee on Environment, Food and Rural Affairs, and our having the earliest sight of the regulations will permit us to perform that scrutiny within the timetable he has set out. I also welcome the fact that the Department has allowed a full consultation. With those remarks, I welcome this small group of amendments, as I recognise that allowing a voluntary exit can only enhance the Bill’s provisions in this sector.
First, may I welcome you to the Chair, Ms Primarolo? I thank the hon. Member for Penistone and Stocksbridge (Angela Smith) and my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for their contributions today, and the latter for the contribution she has made as Chair of the Select Committee, both throughout this process and long before any Bill was formally considered in both Houses.
The hon. Member for Penistone and Stocksbridge raised a number of issues and returned to the issue of affordability. The Government have made it clear that the best thing we can do on affordability is keep bills low for everybody by having a robust regulator and setting out to that regulator the policy framework to which we aspire in order for things to happen. The regulator has taken good action to explore with companies what they can do to keep bills lower; that is the trend we are seeing into the next price review period, with some companies bringing it forward into the current period as well, to the benefit of all consumers. Of course, this Government took action to deal with the acute situation in the south-west, where bills were much higher than everywhere else in the country. The hon. Lady rightly points out the contribution that social tariffs can make and the fact that three companies have introduced them. Other companies are bringing them forward in the next year or so, following consultation with their customer base. It is important that that consultation takes place, because introducing social tariffs involves a funding mechanism.
The Opposition have talked of a national scheme, but they did not introduce one when they were in government. We can continue to debate that, but my concerns with such a scheme, and those of the Government, are that the situation in each water company area is different. Therefore, one scheme mandated across the whole area will have different impacts on different customer groups across those water company areas and may have perverse impacts on the bills of some, given the different demographics and mix of bill payers. We are not convinced of that approach, but I welcome the Opposition’s support for social tariffs where they have been introduced.
The hon. Member for Penistone and Stocksbridge raised the issue of parliamentary scrutiny, as did the Chair of the Select Committee. We have listened to concerns and examined the use of the affirmative procedure where necessary. When we get into the realms of the super-affirmative procedure I bow to those with more experience of the range of options at the House’s disposal and how such a procedure might be used. We feel that the affirmative procedure is the correct one to take things forward, but we very much welcome the work done by the relevant Committee in another place to make suggestions on how to ensure that Members of both Houses, and those observing our deliberations externally, will have confidence that we have got things right.
I spoke earlier about the position on retail exits, but there are a couple of further things to say in response to the two speeches we have just heard. First, the Government’s position has never been that such exits should never happen and that we would never make proposals for them. We said at earlier stages that we had concerns, given the range of opinions held across the industry. Both regulators have supported such provisions throughout, whereas the Consumer Council for Water had a much more nuanced position. Some companies were very concerned about it, as were some investors, particularly with regard to pressure for the forced separation of companies. We know that investors would be concerned about that, and we want to see continuing investment in improving resilience, which is a key feature of where we are going with our programme. We are very concerned about the position of household customers, who will not have the options under this Bill that non-household customers have.
With that in mind, we have introduced amendments that take heed of arguments made by Opposition and Government Members, as well as people outside the House, and which put in place safeguards that make sure that all customers are protected throughout any process of change. There will be further consultation, as my hon. Friend the Member for Thirsk and Malton has said, which is crucial, and the question of forced separation, for example, can be addressed. On that basis, the amendments introduced by the Government allow us to move forward on the potential for retail exit in a measured way. That is the difference between the earlier debates on the Bill and where we are now. I thank the hon. Member for Penistone and Stocksbridge for her contribution, and I thank my hon. Friend the Member for Thirsk and Malton and the Committee for the work that they have done.
When the House considers options on the enhanced affirmative procedure there is a range of processes that can be used, but we believe that the affirmative procedure is the correct one with regard to most of the changes that we have discussed this afternoon. I thank hon. Members for their contributions to the discussion on this group of amendments. I hope that the House approves the amendments and that we can agree the changes made in another place.
Lords amendment 15 agreed to.
Lords amendments 16 to 30, 32, 33, 43 to 64, 101 to 103, 107 to 147 agreed to, with Commons financial privileges waived in respect of Lords amendment 142.
Bulk supply of water by water undertakers
As you have shown, Madam Deputy Speaker, there are many amendments in this group, so I shall try to make my explanation as brief as possible, as I sense that that will be popular.
This group of amendments was tabled in the other place to build on and strengthen further the existing environmental protections under the Bill and to provide reassurance regarding the timetable for abstraction reform and its relationship to the upstream reforms in the Bill. In particular, this group of amendments reinforces environmental protections under the bulk supply and private water storage regimes, improves the resilience duty and the strategic policy statement, and places a new duty on the Secretary of State to provide Parliament with a progress report on abstraction reform.
This group also contains a number of minor and technical amendments. As before, I will not dwell on them, but I am happy to consider any points that hon. Members wish to make. The Government welcome the scrutiny that the Bill has received, and we have listened carefully to all the speeches made in this House and another place. Protection of the environment is close to my heart, and it is important to the Government too. Indeed, one of the Bill’s main objectives is to increase the resilience of our water supplies to ensure a future in which water is always available to supply households and businesses without damaging the environment. I am therefore delighted to bring back a number of important amendments that will ensure the continued protection of the environment.
First, the Government have strengthened environmental protections under the bulk supply regime under clause 8. There are already several bulk supply agreements in the current system and there is a number of environmental protections in place. However, we have listened to the concerns raised on this issue during the passage of the Bill and have enhanced those protections accordingly. Ofwat can only order, vary or terminate a bulk supply agreement at the request of one of the parties, and after consulting the Environment Agency or Natural Resources Wales. Our amendments strengthen the consultation requirement by clarifying the fact that Ofwat can take environmental considerations into account before ordering, varying or terminating a bulk supply agreement. The amendments add a requirement for Ofwat to consult the Environment Agency and Natural Resources Wales before it issues the codes in this area.
Water companies have statutory environmental duties that prevent them from entering into bulk supply agreements that would damage the environment. However, our amendments reinforce this protection by adding a requirement for such codes to require the parties to a bulk supply agreement to consult the relevant environmental regulator before entering into the agreement. We have also added an enforceable duty on the supplying party to provide information about the water supplied at the request of the relevant environmental regulator.
Secondly, we have strengthened the environmental protections with regard to water supply agreements under clause 12. We have amended the clause so that the regulations about water supply agreements between incumbent water companies and other relevant parties can require Ofwat to consult the Environment Agency or Natural Resources Wales before ordering, varying or terminating such an agreement. The amendments to clauses 8 and 12 will provide a greater role for the Environment Agency and Natural Resources Wales. We recognise the important role that those bodies play in ensuring that environmental considerations are taken into account. This is a more proactive approach and one that the regulatory bodies support.
Thirdly, I am pleased to note the widespread support for the new resilience duty under clause 22. Following debates in another place, that support has been further strengthened so that it explicitly requires Ofwat to promote the efficient use of water by water companies. That could include, for example, capturing and retaining water by investing in new water storage or by tackling leakage. That will ensure that this precious resource is used as efficiently as possible, and it will contribute to the Bill’s objective of increasing resilience in the water sector.
Fourthly, we have amended clause 24 so that the Secretary of State and Welsh Ministers must have regard to social and environmental matters when setting strategic priorities and objectives for Ofwat. Clause 24 is designed to help Ofwat to weigh all the relevant considerations appropriately when making regulatory decisions. We agree with Members in the other place that the consolidated guidance must include social and environmental considerations. We have therefore clarified the fact that social and environmental matters form an integral part of this process.
Finally, we have tabled a significant amendment that will place a new duty on the Secretary of State to report to Parliament on progress on abstraction reform in England within five years of Royal Assent. This amendment signals the Government’s determination to progress abstraction reform and ensures that the Government are fully accountable to Parliament for the delivery of this commitment. In practice, this will mean that a written progress report will be laid before Parliament no later than early 2019. We cannot commit to a timetable for introducing legislation on abstraction reform, but our aim is to introduce the necessary legislation early in the next Parliament. The report will also provide the opportunity to update Parliament on the preparations for implementation of both abstraction reform and upstream reform, and how the two are closely aligned, as well as setting out any other progress on moving towards a more sustainable abstraction regime.
I thank the Minister for introducing the second group of amendments, which relate to some very important provisions in the Bill.
Lords amendments 1 to 14 are largely drafting amendments, but they include some important additions to the Bill. Lords amendments 1 to 3 detail the efficient use of water resources and take into account the effect on the environment of water use, with particular reference to what constitutes a bulk supply agreement with water undertakers, and the effect of such agreements on the environment. Lords amendments 1 to 14 and Lords amendment 31 give a greater role, as the Minister acknowledged, to the Environment Agency and Natural Resources Wales with regard to the effects on the environment of bulk supply agreements. We welcome the strengthening of the role of these two bodies to provide environmental expertise and to prevent bulk supply agreements from damaging the environment.
Amendments 34 to 42 relate to social and environmental safeguards more generally, and amendment 38 in particular requires that the Secretary of State and Welsh Ministers “must” have regard to social and environmental matters when compiling their statements to Ofwat, thereby strengthening the requirement in the Bill. The change from “may” to “must” have regard is a major concession by the Government. Given the importance of securing environmental safeguards at the heart of all aspects of water management, one can say only that it is surprising that the Government did not make that amendment of their own volition, rather than as a result of facing pressure from Members of both Houses on the point.
It is important to put on the record our deep disappointment that the Government have not gone further and recognised the need to make the Bill stronger and more effective by making sustainable development a primary duty for the regulator, as is the case with other regulators. We believe that resilience and the associated term that the Government use here—“the efficient use of water”—are not good enough. In the water White Paper, the Government said that they would carefully consider the case for that, and many environmental organisations are concerned that Ofwat does not have the necessary powers to prevent environmental damage and damaging water exploitation. That is particularly important in the light of greater competition, where companies will be looking to maximise efficiency however they can. Without a tough regulatory duty, that could come at the expense of the environment. My question to the Minister about the Government’s failure to grasp the opportunity presented by the Bill to strengthen regulation in this regard is this: why have they failed to respond to this vital issue in a robust manner and safeguard our environment?
On water abstraction, the Government’s White Paper, “Water for Life”, published in 2011, set out the case for a comprehensive reform of abstraction licences, suggesting that the current licensing system was outdated and in need of urgent reform to deal with increasing pressure on water resources—an issue with which we are all now familiar. Pressures develop because of population change and climate change. The Government tabled an amendment requiring the Secretary of State to publish a report on abstraction reform within five years. That is in the context, however, of the Government’s decision to allow the introduction of greater competition in the upstream market to take effect before reform of the abstraction regime.
We, along with leading environmental experts, are concerned that without comprehensive abstraction reform, upstream competition could incentivise existing abstraction licence holders to sell their water to water companies, even when the catchment is already over-abstracted or over-licensed. In response, the Government have said that the Environment Agency is adequately placed to review and/or change abstraction licences. We do not agree with that assessment.
In his response to their lordships’ amendments, Lord De Mauley said:
“The Environment Agency will soon use its powers to revoke or vary abstraction licences without compensation where they are causing serious damage to the environment.”—[Official Report, House of Lords, 4 February 2014; Vol. 752, c. 163.]
However, following budget cuts, the Environment Agency has cut 600 staff since 2010, so surely the Minister must concede that the Environment Agency will now have less capacity effectively to discharge its duties in that respect. What will be the priority for this smaller, rather emaciated, Environment Agency—flood defence schemes or attention to abstraction reform? Given its much reduced resource, is the Minister confident that the Environment Agency can manage all its duties effectively?
Under the new market conditions created by the upstream market reforms in the Bill, more water could be abstracted from water courses than is sustainable or suitable for local ecosystems. We support the amendment for upstream market reforms to allow new water undertakers into the market, but we still think it wise for the Government to deliver progress on abstraction reform, running concurrently.
We asked the Government to bring forward reformed abstraction licences on the same day as the upstream reform measures in the Water Bill come into effect, but they have unfortunately neglected to do so. Instead, under amendments 65 and 104, the Secretary of State is required to produce a report on progress made on water abstraction reform within five years of the Bill being passed, as the Minister indicated. We do not oppose that amendment because it is better than nothing, but it is unsatisfactory overall, because unsustainable water abstraction could continue for some time after the Bill has been passed—before DEFRA effectively addresses the issue.
In conclusion, why are the Government reluctant to commit to ensuring that the abstraction reforms run concurrently with the upstream marketing reforms? I look forward to hearing the Minister’s answer on that point.
I shall make just a few comments. Over the last three years, events in Yorkshire have certainly shown the unpredictability of the weather, which can swing from a real flood to a virtual drought within a matter of weeks. The hon. Member for Brent North (Barry Gardiner), whom I see in his place on the Opposition Front Bench, and my hon. Friend the Minister sat in the Environment, Food and Rural Affairs Committee when we debated these issues—both at the pre-scrutiny stage and when the amendments to the Bill were tabled. It was a constant theme of the Select Committee to call for the implementation of abstraction reform—certainly by 2022. If I understand the Minister correctly, he is saying that this will happen within five years of the Act being passed, whereas we asked for it within seven years. It looks as if we are on course.
Personally, I would have made the case to include abstraction reform within the context of the Bill. I hope this does not come home to roost in the intervening five, six or seven-year period, but given the climatic changes and swings in weather patterns that we have seen, I hope we do not rue the day that we failed to include abstraction reform in the Bill. I understand that there was no appetite for it and that the Department felt, as I am sure the Minister will confirm, that doing so would have brought an inevitable delay to the Bill.
The reason abstraction reform should be included, and the reason I welcome this group of Lords amendments, is that the current system of managing abstraction of water from rivers and aquifers was introduced in the 1960s and is woefully out of date. It does not effectively address the severity of pressures on water resources due to increasing demands from a growing population and an increasingly varied climate. The Environment Agency has mentioned that in a number of areas, including my own, it cannot, for understandable reasons, afford the upkeep of existing flood defence banks. Farm land in those areas will be prone to future floods.
Water from rivers and aquifers has many uses, and there is a fine balance between industrial and non-industrial use. I visited the constituency of my hon. Friend the Member for Witham (Priti Patel), which I had the privilege of representing as an MEP for 10 years, to see the difficulties that many industrial users such as jam manufacturers and others experienced in a climate that they were not used to. Essex has on occasions been compared to Egypt in respect of the amount of water fall that it receives. The weakness in the current system means that it could start to constrain economic growth, reduce the resilience of the water supply and lead to environmental damage.
I would like to hear what discussions the Minister is having with the European Commission’s water unit. That used to be chaired by someone whom I count as a friend, Grant Lawrence, who was a British official who did great work for the European Union, but who was mindful of the uses of water and the competition for use between agricultural users, anglers and industrial users. Mr Lawrence left a number of years ago and since then I have been briefed on a number of occasions by the water unit, and I am struck by the fact that it does not understand our approach to water use. One reason for that, as it explains it to us, is that our rivers might seem long to us, particularly the Thames, meandering as it does through a number of counties, but compared with the Rhine and the Danube they are not. So it approaches river quality, water quality, and—dare I say?—abstraction in a completely different manner from us. When the Bill receives Royal Assent and we proceed within the timetable that my hon. Friend has set out, what discussions will he have in relation to water abstraction and abstraction reform on the reforms to the water framework directive and the other EU directives that are trundling down the river as we speak? That is important with regard to drafting and considering water abstraction reform.
I hope that my hon. Friend will again say that there will be plenty of opportunities to consult a variety of industrial users, and, obviously, I would make a bid for the Select Committee to be consulted at an early stage. I would like to make a plea for the farmers. I represent a deeply rural constituency, and there is concern among the farming community that delaying abstraction reform until 2020 or 2022 will mean that their interests are disregarded, more so in times of drought than in times of flood.
The detail of any abstraction regime will need to be developed following the Government’s consultation, which closed at the end of March, and, as my hon. Friend has set out, legislative proposals will be produced. One of the difficulties with the Bill, which I hope the water abstraction reform legislation will not suffer from, is a bane of the legislative programme. This point of the legislative Session is like midnight, and we have only one more year. I hope that we can make a plea for adequate time in the legislative programme in the next Parliament for the new regime to be introduced and properly considered.
The Opposition tabled a new clause whereby upstream reform could not have been implemented until new primary legislation on the licensing of abstraction had been passed, and they made the case for five years to elapse to allow for its implementation, and that has echoes in what the Government propose today. I would have preferred the new clause that we moved on Report to have seen greater favour, but I take this opportunity to welcome today’s amendments.
It is appropriate to raise water efficiency in terms of abstraction and the environmental protection measures that my hon. Friend set out. The Water Industry Commission for Scotland raised concerns throughout the Bill’s passage that retailers should focus on offering water efficiency advice and other environmental services as opposed to companies being encouraged to cherry-pick customers to the detriment of the generality of an incumbent’s customer base. The amendments that I understand came from WICS were not successful, but they sought to remove the link between the proposed wholesale authorisation and the proposed retail authorisation, by requiring those with wholesale authorisations to interact with water companies rather than retailers, and further that Ofwat would be under an obligation, among other things, to set charging rules in a way that helps to incentivise water efficiency and other services. The Government resisted those amendments, but they go to the heart of what the hon. Member for Penistone and Stocksbridge (Angela Smith) said about the background reports that have seen fruition in this group of amendments, in particular the Anna Walker report on water efficiency. Each and every one of us has a role to play by not heating more water than we need and not running water while we clean our teeth, all of which have an effect. I hope my hon. Friend will have some regard to the powerful arguments that have been made when we go on to consider greater efficiency and in the context of abstraction reform.
Once again, I thank hon. Members for their contributions. It is fair to say that we have a great deal in common, although with slightly different emphases in aspects of debate both today and during previous outings. The crucial issues concern the interaction between what is in the Bill and what is not with regard to abstraction reform and the parallel process, so I take this opportunity to reassure the House that the Government are fully committed to abstraction reform, as our amendment tabled in the other place demonstrates.
Further illustrating that commitment, the Government’s consultation on our proposals for reform of the abstraction regime closed on 28 March. We are analysing the responses, a summary of which we will publish later this year. The proposals in our consultation document demonstrate how seriously we take abstraction reform, as well as the complexity of reforming such a long-established regime. As has been said, it is crucial that we get that right and give people an adequate chance to express their opinions and for those to be taken into account. Our proposals reflect how important abstraction reform is for people, as well as for the environment, and the fact that organisations and individuals throughout the country need access to water to run their businesses.
The Government want to see a real improvement in the quality of water bodies throughout the country, and that means that we must take action to reduce over-abstraction that damages the environment now, while continuing to protect the environment and ensuring access to water in the more challenging conditions that we will face in the future. Abstraction reform and upstream reform are both designed to help to achieve that goal. The intention is for them to be entirely complementary, both in design and in implementation. Both are part of the Government’s wider agenda for securing the long-term resilience of our water supplies and the water environment, as set out in the water White Paper. The upstream reforms in the Bill are important because they will build resilience in the sector, bringing in new thinking and innovation to drive efficiency. Upstream reform will help to keep bills affordable and benefit the environment. We estimate that these reforms will bring benefits of up to £1.8 billion over 30 years.
As I have said, the report to Parliament on progress with abstraction reform will provide the opportunity to update Parliament on the preparations for the implementation of both abstraction reform and upstream reform, and how the two are being closely aligned. There is therefore no question about our commitment to abstraction reform, and no case for delaying implementation of our upstream reforms.
On the points made by the hon. Member for Penistone and Stocksbridge (Angela Smith), we are carrying on the process begun by the previous Government of looking at the reform issues, and we seek to demonstrate that this is an ongoing commitment. There is much support across the House for taking these matters forward, so we can have confidence that the two processes can be aligned.
We considered the sustainable development duty in depth. The Ofwat review recommended that that not be included because it was not necessary. I have sought throughout to make the point that we can integrate the desire for sustainability in the resilience duty, and that is what we did during the Bill’s passage through this place. That move was welcomed by the non-governmental organisations that originally called for the sustainable development duty. In another place we have further drawn out the emphasis on water efficiency. Water efficiency is important not just for environmental reasons—although they are crucial and we want to see the responsibility to improve environmental quality returned to water bodies—but to ensure that we have the water resources that we need to deliver the growth in the economy, allow businesses to grow and to prosper, and deal with the challenges that we face in the future.
Another issue that was raised was the capacity of the Environment Agency to use the powers that it has now and to take forward the regime without compensation. The hon. Member for Penistone and Stocksbridge rightly said that that capacity is now at its disposal. Indeed, the Environment Agency gave evidence to the Public Bill Committee and was quite clear that it has the resources to undertake such duties. It has been undertaking work to return water to the environment to bear down on unsustainable abstraction, and it will continue to do that. It is something on which it will remain focused. This is crucial in respect of our consideration of sustainable development in that, unlike other regulatory regimes, there are multiple regulators of the water sector. We have the Environment Agency, which has a great focus on that particular activity, Ofwat and the Drinking Water Inspectorate. The regime is slightly different from that in other utilities.
My hon. Friend the Chair of the Select Committee was right to make it clear that we need careful consideration of the abstraction reform process, and it is very much the Government’s position that we will provide the opportunity for such work. Were we simply to have put in the Bill some sort of broad enabling power, it arguably would not have had the consideration that it will get as primary legislation in a future Bill, and that is absolutely right in terms of taking forward that process. On that basis, I hope the House will support the amendments made in another place.
Lords amendment 1 agreed to.
Lords amendments 2 to 14, 31, 34 to 42, 65, 66 and 104 agreed to.
The Flood Reinsurance Scheme
This group of amendments is mainly to do with flood insurance measures, and includes the Government’s response to the recommendations on flood insurance from the Delegated Powers and Regulatory Reform Committee. It also includes a small number of minor changes.
Lords amendments 70, 75, 81 to 83 and 91 to 95 are in response to the Delegated Powers Committee’s recommendations on the flood insurance measures. The amendments include changing the scrutiny procedures so that the affirmative resolution procedure is used for all regulations—in certain cases on first use only—and placing some definitions in the Bill.
We agree with the Delegated Powers Committee that the definitions are important. However, it was not possible to include all of them in the Bill as they require further consultation and, in the case of “relevant insurer”, have separate meanings for Flood Re and for the flood insurance obligation—the alternative proposal. By defining those terms in regulations that will be subject to the affirmative procedure, Parliament will be able fully to scrutinise these definitions in due course.
The Delegated Powers Committee also recommended that the powers to make regulations to provide for the sharing of council tax data should be subject to the affirmative procedure. However, to meet the commitment to establish Flood Re in 2015, we need to release the council tax information as soon as possible after Royal Assent to ensure that IT systems can be put in place. Lords amendments 77 to 79 place that data-sharing power in the Bill. I hope that hon. Members will see that that is necessary owing to the challenging timetable to deliver Flood Re. Lords amendments 74, paragraph (ab) to amendment 93 and amendment 100 make consequential changes based on the new power. Although that power does not mandate the release of data, the Government are committed to doing so. They also give a power to add to the list of data releasable in the future. If we do that, the powers also allow for the application of a criminal sanction—for example, where the additional information is of a particularly sensitive nature warranting the protection of a criminal sanction for misuse. It is right that we have powers to protect the release of public information, but the sanction is not automatic and we will consider whether one is necessary following consultation.
I wish to turn briefly to another Lords amendment on the subject of Flood Re’s reserves. To ensure that the power set out in clause 54 cannot compromise the sound operation of Flood Re and its orderly management, a small change was made to make it clear that the scheme administrator’s consent is to be sought first if regulations are proposed to be made requiring reserves to be paid to Government. That consent means that the scheme administrator is able to object to any prudentially unsound proposals, as well as to make representations on the retention of some or all of the reserves; consequently, there is no longer a need to consult the Prudential Regulation Authority as well. Members can be assured that the Prudential Regulation Authority will continue to be closely consulted on this and all other regulations made in relation to the Flood Re scheme.
Lords amendment 72 allows the Secretary of State to require Flood Re, through regulations, to provide information for relevant insurers to pass on to their policyholders who will benefit from Flood Re. We expect the information to cover the Flood Re scheme, flood risk and the actions householders can take to reduce the risk and impact of flooding.
I am intrigued by and interested in this amendment, not least because so many of my constituents—perhaps the majority of them—live in flood-risk areas. Will the Minister say a little bit more about what he envisages the Secretary of State will require to be provided to residents in terms of mitigating risk? This is an interesting idea, but my question is about the breadth of that information and whether it will include particular providers of certain solutions.
The first thing that will be taken forward is information that a policy has been ceded to Flood Re. It is important that people should know that, as the scheme has a life span and the whole direction of policy is to protect more homes and to move to a post Flood Re period in due course. What exactly that information will take forward is a matter for discussion with the industry. When it comes to particular technologies or particular things that may help in certain circumstances, there are experts out there who offer that advice to policyholders. The Government’s current repair and renew scheme is in operation. There is also a body of work out there involving local authorities, which is giving people confidence in what might be done to support them. It is not our intention to be too specific as we consider this measure in the Bill.
I am sure that, like my hon. Friend, other Members will welcome this amendment, because it reflects our belief that it is important that policyholders whose buildings, contents or combined insurance policy are ceded to Flood Re know about their flood risk so that they can take simple steps to manage it. I am talking about signing up to free flood warnings as well as investigating other longer-term options.
To plan for the future, households also need to understand the likely impact of the transitional nature of the Flood Re scheme which is subsidising their premiums. Members should note that it is expected that standardised information will be sent to the customer by the relevant insurer that is ceding the policy to Flood Re, as that maintains the relationship between insurers and their customers.
Lords amendments 84 and 85 provide the power to define in regulations the meaning of “flood” and “flood risk” and are as a consequence of the amendment that I have just described.
Lords amendment 96 addresses the risk that secondary legislation made at the end of the life of Flood Re could be classed as hybrid. I can assure Members that, in any event, we have every intention of carrying out a full consultation before making that secondary legislation to ensure that any private interests are properly considered.
There are also a small number of technical changes made by the Lords amendments to the Bill. They cover the definition of the “eligibility threshold” and are intended to ensure the flood insurance measure is legally enforceable, as the risks relating to flooding are not calculated consistently across the various insurers.
On another matter, the Lords amendments to clauses 56 and 71 on the period of operation of Flood Re ensure that employment contracts within the scheme are transferrable.
Turning finally to the subject of sustainable drainage systems, we have also corrected an error to schedule 3 to the Flood and Water Management Act 2010 to ensure that unused bond funds, called in by a SUDS approving body, can be returned to the right person.
As the Minister has explained, this group of amendments relate, to the provisions in the Bill on flood reinsurance. Again, we will support the amendments, which we believe have materialised primarily because of pressure from a wide range of Members in the other place and from the official Opposition. However, we believe that more could have been done.
In many ways, this is yet another example of a missed opportunity to produce effective and robust legislation. We support the Flood Re scheme and believe that it is important that affordable cover is made available for those who are struggling and are at greatest risk from future floods. It is also important that the policy should be underpinned by the principle of minimal impact on wider bill payers, so it is important that the levy agreed between the Government and the industry remains equivalent to about £10.50 for each UK household with both buildings and contents insurance in place.
We also welcome the fact that Flood Re is designed to be progressive, with the benefits targeted on lower income households, but we are disappointed that the Government could not support Labour’s amendment in the other place, which would have at least enabled parliamentarians to shine a light on the potential problems created by the arrangements for leasehold and tenanted properties. As Lord Whitty pointed out, there are complicated qualifying or excluding conditions surrounding the ownership and occupation rules under the scheme.
The rules could also have an impact on the private rented market, as there is a fear that single property landlords, for instance, might find that their exclusion from the scheme means that the cost of insurance eats away at their capacity to invest in their properties. As Lord Whitty pointed out, the consequence could be increasing levels of dilapidated housing stock with potential impacts at a neighbourhood level. The only option that might be open to the landlord to raise funds for improvements could be to raise rents or the service charge, so tenants might suffer indirectly as a consequence of being excluded from the Flood Re scheme. The risk is clear: the number of new landlords prepared to invest and buy property will diminish in the areas that are affected. Given the housing crisis facing the country, that is not a welcome prospect.
Although we recognise that the actuarial calculations for Flood Re are delicate and depend on various assumptions, we feel it is important that Parliament understand, the position. Labour’s amendment would address that by ensuring that a report was made available so that Parliament could see for itself the consequences of including or excluding different combinations of property before taking the Flood Re scheme forward via statutory instrument.
We also feel that the Government have failed to grasp the importance of using reliable scientific evidence on the potential impact of climate change when making estimates of the current and projected number of properties eligible for inclusion in the Flood Re scheme. That is perhaps not surprising, given that the Secretary of State has been known before now to deny the reality of climate change, but the threat, as most of us agree, is real and we need to be sure that the scheme will operate effectively within its 25-year span and will be adaptable to weather conditions resulting from climate change. If they are to adapt effectively, it is crucial that households can access information that identifies current and projected estimates of the number of people eligible for the scheme.
It is entirely sensible that we should seek the advice of the Committee on Climate Change to inform as accurately as possible our calculations on the challenges that the Flood Re scheme will face over time. Only then can households truly take the necessary action to minimise risk. The Government have tabled amendments providing information on transitioning from Flood Re to risk-reflective pricing, which Labour has been arguing for throughout the passage of the Bill.
Flood Re cannot operate on a static basis. It needs to respond to changing weather patterns, and we continue to believe that the Secretary of State should take advice from a credible expert source. Lord Krebs, chair of the adaptation sub-committee, has indicated that he would be willing to take on that role. However, our amendments, along with others on access to the national database and the right to appeal, were not accepted by the Government. We think that is short-sighted, but we support the amendments in this group and will continue to engage positively on this important issue.
When we took evidence on the insurance aspects of the Bill during the Select Committee’s scrutiny stages, we were told that the package on Flood Re stood as a whole and that we could not consider any exceptions—not small businesses or leaseholders, or anything else, and certainly not band H. I hope that my hon. Friend the Minister will permit me a wry smile as I see that some of those exceptions have been included.
I hope that my hon. Friend will clarify the position on leaseholders. I—like many others, I am sure—have been contacted by constituents asking me to consider the implications for an owner who buys a leasehold property, as my constituents did in their block of flats. Apparently, the cost under Flood Re of the flood insurance alone will run to thousands of pounds, which they cannot afford and which they believe will affect their ability to resell those properties. I would be grateful for an explanation of where we are on that.
I understand that my noble Friend Lord de Mauley confirmed in the other place that domestic contents policies will be available to all under Flood Re, regardless of whether the properties are leasehold or freehold, rented or owned-occupied, except for properties in band H and those built since 1 January 2009. I have seen on many of my flood visits around the country that tenants on low incomes are often the first not to take out an insurance policy for their contents. The cost is therefore greater when they have to replace many of their possessions, some of which are of course priceless and cannot be replaced. Will domestic contents policies indeed be available to all?
Will my hon. Friend the Minister confirm the intention behind the exception for band H properties? It seems bizarre. We are going to exclude from Flood Re leaseholders who are perhaps on lower incomes and often in smaller, more affordable properties, but people in band H tend to be wealthier and in a better position to afford insurance. I want to understand the situation so I can explain to my constituents why these exceptions have been considered.
I know that the date of 1 January 2009 was taken as the benchmark, but did the Department ever look closely at why that was a good date to choose? With hindsight, should it perhaps have been 1 January 2012 or 1 January 2013, when we first began closely to scrutinise these issues through the proposals from the Department and the work of the Select Committee and others in this place?
It would also be helpful to understand the position for small businesses, particularly farms. If the farmhouse itself has been flooded, will that be covered in the provisions of Flood Re?
The greatest concern—I am sure the Minister will recall that I raised it earlier—remains that the Government may end up as an insurer of last resort because Flood Re will not cover a one-in-200-year or one-in-250-year event. We found out that the winter floods in 2013-14 were a one-in-200-year event, so it will be sooner rather than later that the Government will end up as the insurer of last resort. The House will be interested to learn what provisions the Treasury has in place if that occurs earlier than might have been assumed, because there will not be money in the pot if the winter floods are repeated in the autumn of 2014 and 2015.
The hon. Member for Penistone and Stocksbridge (Angela Smith) raised an interesting issue that we discussed in Committee. The evidence we took was that the subsidy was then £8.50. It has already gone up to £10.50, and we need an assurance from the Minister that there will not be an open remit to the insurance industry and that the level of subsidy will be reasonable. Before the Bill leaves this place today, the Minster should comment on what the Treasury has in place were the Department and the Government to be an insurer of last resort.
I have two more issues pertaining to this group of amendments. One concerns regulated as opposed to negotiated access. Amendments were proposed to make it clear in the Bill that access should be regulated, not negotiated. The amendments were unsuccessful, but I understand that the Department has given a commitment that access terms should be regulated. Can the Minister give a commitment today that that will be in the regulations that will give effect to the Bill?
An issue that caused great concern in our pre-legislative scrutiny in Committee and later was the de-averaging of charges. Concern was raised about the risk of a competition or EU challenge to the Department’s guidance or Ofwat’s implementing rules on harmonised or regionally averaged wholesale charging, which could result in a forced de-averaging of charges. My understanding is that that could be seriously bad news for rural areas and I would like the Minister to put my mind at rest. Amendments were proposed to address that risk, but the Government did not accept that the risk existed or, if it did, that the existing provisions in the Bill were not adequate to address it. Any de-averaging of charges that might arise through the application of the Bill would be highly regrettable. Otherwise, I welcome this group of amendments, but I hope that the Minister can put my mind at rest on the concerns I have raised.
I intend to make only a short contribution. The Minister probably heard most of what I said in Committee, but if something is worth saying once, it is worth saying three times, so I will do so.
I begin, as I did in Committee, by welcoming Flood Re, which is important. I pay tribute to the Government for getting us here eventually. It is incredibly important for my constituents and those of my near neighbour, my hon. Friend the Member for Beverley and Holderness (Mr Stuart), who is here for this important debate. I am grateful and delighted that we have a scheme up and running to ensure that insurance cover will continue.
I am still concerned about the scheme’s limitation to properties built before 2009—a point that is often made by my constituency near neighbour, the hon. Member for Kingston upon Hull North (Diana Johnson). Many people in my constituency and constituencies nearby who bought their properties in good faith post-2009 have struggled to obtain insurance. I am still concerned that major developments on flood plains are continuing, including the Lincolnshire Lakes project near the River Trent in my constituency, where the proposal is to provide up to 10,000 properties in a major flood risk area on the River Trent’s natural flood plain. I have called on the developers to put a hold on that until we know where we are with flood defence funding for the Humber catchment area, but unfortunately that has not enjoyed the support of local Labour councillors, who accused us of scaremongering in trying to prevent that building on a flood plain. That is a concern because I am worried that the properties will be built but will not be covered by Flood Re and that there will be a whole set of other problems.
When I was in my constituency on Friday, visiting Hook church, which was launching its new heritage boards, I was approached by a single-property leaseholder who is concerned about whether he will qualify for Flood Re. He is not a major investor, but an individual who is using the property as a pension pot. He has been rejected for flood insurance yet again because of the flooding in Goole two years ago, and he is worried that he will not come within Flood Re. I echo the words of my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) about the need for clarity.
I welcomed amendment 72 when I intervened on the Minister. Informing residents that they are indeed part of Flood Re and providing practical advice on their exact flood risk and how they can deal with it are important. The Minister mentioned the renewal and repair grant, which is an excellent proposal. Providing people with the means and advice on how to protect their properties is important, and funding is required. Whether or not there is funding, there is a big job to be undertaken to ensure that residents are properly informed about their flood risk and how they can protect their properties.
Many residents have it in mind that the only way to protect their property is through every-increasing defensive banks in our area, and that may be true, but it is not the answer to everything, particularly as my constituency is so low-lying. Much of it is below high-tide level, so it is impacted not only by tidal and river flooding, but by surface water flooding. Getting information to residents to ensure that they know how to protect their property is vital. I welcome amendment 72 and look forward to establishing in more depth what information will be provided on flood mitigation measures.
The Minister mentioned the renewal and repair grant. I hope that it is in order, Madam Deputy Speaker, to raise that while I am on my feet. Many of my constituents are trying to use the grant, but there seems to be confusion about whether they will be able to access it if the Environment Agency has come up with community improvement schemes. That is a particular issue for one of my communities because the Environment Agency, after pressure from many of us, has come forth with a scheme that will be in place next year to raise defensive banks at Reedness in North Yorkshire. It is not now clear whether those properties will be eligible for a renewal and repair grant. They will still be at risk of flooding and, in the spirit of amendment 72, which is about providing people with more information on how to protect their properties, it is important that they still have access to the grant. It is not their fault that their improvement scheme will come forward more quickly than other schemes. I hope, Madam Deputy Speaker, that I am in order by linking the matter to amendment 72. I can see from that near-thumbs up that I am straying, so I shall move on.
Right of appeal is another issue that I spoke about in Committee. We need a mechanism of appeal for residents who are judged to be outside Flood Re. We know from the debates in Committee and elsewhere that that will be a very small number of people, but they are an important group all the same. It is important to have a mechanism that allows people to understand why they have been drawn outside the scheme, and they should have a right of appeal. Like my hon. Friend the Member for Thirsk and Malton, I ask Ministers to consider this.
I do not want to say much more. [Interruption.] I hear some chuntering from Opposition Front Benchers—in support of my last comment, I hope. If the hon. Member for Penistone and Stocksbridge (Angela Smith) wants to intervene, I will gladly give way. No? Okay.
The hon. Lady tells me to sit down; that is a good way to work cross-party, if ever there was one. I will heed her advice, however.
I hope that the Minister will be able to respond to those few comments, particularly on leaseholders. This is an important issue for residents who have made small investments for their pension pots, or in lieu of a pension pot, and who may now be drawn outside the scheme. Other than that, I support the scheme and the amendments outlined by the Minister.
I thank all hon. Members who have contributed to this debate, across a broad range of issues, and welcome their questions.
All three Members who spoke mentioned leaseholders. Let me put on record again the point alluded to by my hon. Friend the Member for Thirsk and Malton (Miss McIntosh). All contents policies would be eligible for Flood Re, whether leasehold, freehold, rented or owner-occupied, provided that the properties were built before 1 January 2009 and are in council tax bands A to G. Leasehold houses will also be within the scope of Flood Re in terms of buildings insurance, provided that the leaseholder lives in the property and purchased the buildings insurance in their own name. Flats will be eligible provided that there are no more than three flats in the building and that the freeholder, or one of those with a share of the freehold, lives in the building and takes out the cover.
My hon. Friend says that the scheme applies if there are no more than three flats in the building. Where we lived—the current residents now have the problem—there could be 12, 16 or 20 properties. These are small properties that tend to be more affordable and occupied by those with a mortgage. Residents have put it to me that the increases are unaffordable already. Insurance companies are extracting those increases from them when they renew their insurance policies in an area that they know has already been flooded at ground-floor level because of the properties’ proximity to the river. I urge the Government to revisit this, because it is not acceptable. I do not want to pander to the Opposition’s argument about the standard cost of living, because that would be inappropriate, but I do believe that the Government should make the insurance affordable by reducing the cost. They should take out the below-three number because they have to reflect what working families are living in.
We believe that a significant proportion of the leasehold sector will fall within the scope of Flood Re if the properties are at the highest levels of flood risk. I should emphasise, however, that we expect that most properties will not need to be in Flood Re and will find better prices through normal routes. We have been assured that there is no evidence of a systemic problem with freeholders being unable to obtain insurance for their leasehold properties. Specifically, feedback from members of the Association of British Insurers, representing over 60% of the market, including specialist commercial property insurers, showed no expectation of a widespread issue in an open market. As for the small businesses that are outside the scope of Flood Re, we and the ABI will monitor the market over time.
My hon. Friend the Member for Thirsk and Malton raised a number of other issues, including small businesses, as she has done before. It is important to focus on the fact that the scheme is for residential properties, not for the commercial insurance market. Commercial cover tends to be far more bespoke and of a different nature to the policies that householders usually have. This is relevant to her point about the levy that is paid into the pot. In seeking to add to that pot in terms of what is paid out and the level of risk, we would have to add to what everyone else is paying for. We think that the balance is right and that the level of a more transparent cross-subsidy—there is already a cross-subsidy within the market that has been more hidden—is focused on household policies and not on commercial policies. The danger is that, once we start to get into the more commercial arena, we are then asking for a cross-subsidy from householders to commercial landlords. We therefore think it important to draw this line. Landlords already benefit from tax relief on the cost of their buildings insurance policies. They can offset many of their costs through taxable allowances that can significantly reduce their tax bill—to zero, in some instances. The hon. Member for Penistone and Stocksbridge (Angela Smith) referred to this being more progressive, and I welcome her support. That is one of the reasons why we have had the scheme structured as it is.
My hon. Friend the Member for Brigg and Goole (Andrew Percy) mentioned properties built after 1 January 2009, as did my hon. Friend the Member for Thirsk and Malton. This is in line with the prior agreement with the industry. As I am sure my hon. Friend the Member for Thirsk and Malton is aware, that is where the date comes from, so it should not come as a surprise to those constructing properties in flood risk areas. It is a pre-existing cut-off date that we have carried forward into the new arrangements. As my hon. Friend the Member for Brigg and Goole pointed out, properties built after 1 January 2009 should have been constructed in line with national planning policy and should therefore be resilient to flooding and able to access affordable insurance. Maintaining this approach under Flood Re will help to ensure that new development is appropriate and resilient to flooding. That covers the points made by my hon. Friend the Member for Thirsk and Malton about the levy, in which I have confidence. We have to make sure that we base it on existing assumptions and do not seek now, at this late stage, to add other potential draws on the reserves of Flood Re and the scheme as a whole.
Flood Re will be an authorised insurer operating under the requirements of solvency II. Insurers must hold capital reserves that can be used to cover the cost of a catastrophic event. To assess the required capital reserves, insurers must keep their detailed catastrophe models up to date, including any changes in levels of insured risk such as from climate change. Flood Re will need to take account of climate change as part of its regulatory obligations in ensuring that it remains solvent over time. We therefore expect it to seek the best available advice on climate change, including external verification of its assumptions. Detailed audited information about Flood Re’s ongoing operation will be reported to Parliament on a regular five-yearly basis. Parliament will have the opportunity to vote on the levy and the eligibility thresholds of the scheme. I assure colleagues that the impacts of climate change will be considered during the entire lifetime of the scheme to ensure that Flood Re is resilient to changes to flood risk.
I would like to reassure my hon. Friend the Member for Thirsk and Malton about one-in-200-year events and what we experienced during the winter flooding this year. Although she may be right to point out that we had the wettest January in about 250 years, that does not equate to a one-in-200-year flood event; they are different things. As we have heard from hon. Members in several debates over the past few months, the effects of flooding are extreme for the families and businesses affected, but because about 8,000 properties were affected during the recent winter floods, we were nowhere near triggering the sorts of events that she mentioned. Should a one-in-200-year event occur, however, we have been clear that the Government have no direct liability. The Government would take primary responsibility for deciding how all available resources would be used, but the Government are not an insurer of last resort in that they do not have financial liability for Flood Re.
Will my hon. Friend hark back to the evidence the Select Committee heard from the insurance industry during pre-legislative scrutiny? We were told categorically that, if there is a one-in-200-year event, the pot into which the subsidy will be paid, on which we all agree, will not be sufficient to pay out the resources, and it is generally accepted by the insurance industry that the Government will step in. Perhaps that is a different phrase from the one that my hon. Friend might use, but it means that the buck stops with the Government.
We have been absolutely clear that, in such an event, the resources from the Flood Re pot would be significant and the Government would be involved in discussions about how that money would be used to help the people affected.
Although we have been focusing on Flood Re, my hon. Friend also asked about de-averaging. I want to use this opportunity to put on the record the fact that the Government’s charging principles on de-averaging are unambiguous. Ofwat must not allow de-averaging that is harmful to customers, particularly rural customers. Our charging guidance will follow soon. I am happy to commit, as I have before, to making it plain in that document that there must be strong, definitive boundaries for the scope of any de-averaging and that households in particular must be protected.
We should not, however, be over-simplistic. There is no doubt that there are areas where better cost reflectivity could have substantial benefits for the environment and the resilience of our water supplies. It must be right that the new upstream markets should reflect the environmental costs of supply and that there are economic incentives for business users that use large volumes of water.
My hon. Friend the Member for Brigg and Goole asked about the operation of current Government grant schemes. It might not be appropriate to go into that in detail now, but I would be happy to respond to correspondence from him on the specifics of how the scheme in his area is working.
I thank hon. Members for their contributions to our debates on the Bill today and at various other stages in this and another place. I hope that the House will agree with their lordships’ amendments.
Lords amendment 67 agreed to.
Lords amendments 68 to 100 and 105 and 106 agreed to.
Immigration Bill (Money) (No. 2)
Queen’s recommendation signified.
That, for the purposes of any Act resulting from the Immigration Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by a statutory body or recognised charitable organisation.—(James Brokenshire.)
Immigration Bill (Programme) (No. 2.)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Immigration Bill for the purpose of supplementing the Order of 22 October 2013 (Immigration Bill (Programme)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.
(2) The proceedings shall be taken in the order shown in the first column of the following Table.
(3) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.
Time for conclusion of proceedings
90 minutes after the commencement of proceedings on consideration of Lords amendments
Nos. 16, 24, 1 to 15, 17, 19 to 23 and 25 to 36
Three hours after the commencement of those proceedings
(4) Any further Message from the Lords may be considered forthwith without any Question being put.
(5) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement. —(James Brokenshire.)
Question agreed to.
Consideration of Lords amendments
I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 7, 16 and 24. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the Journal. I should also tell the House that Mr Speaker has selected the five manuscript amendments tabled today by the hon. Member for Brent Central (Sarah Teather). Copies are available in the Vote Office.
Deprivation if conduct seriously prejudicial to vital interests of the uk
I beg to move, That this House disagrees with Lords amendment 18.
The fundamental duty of any Government is to protect the British public and maintain the security of the UK against a range of threats. There is a small but very dangerous number of individuals who, despite having taken an oath of loyalty to become a British citizen, seek to threaten the security of this country. Those same dangerous individuals seek to exploit a loophole in our legislation preventing us from removing their citizenship if it would render them stateless, even temporarily, while they reacquire their former nationality. This Government have sought to address that issue, in line with our international obligations to protect the security of the UK.
Our proposals, previously debated in this House on 30 January, sought to extend the existing deprivation powers of the Home Secretary so that a naturalised British citizen who has conducted themselves in a manner seriously prejudicial to the vital interests of the UK—I underline the high bar that has been set—can be deprived of their citizenship, regardless of whether it would render them stateless. We believe that is vital for the security of the UK and an important point of principle. It is not right that people who subvert our values and fight against our armed forces should invoke our protection and enjoy the privileges of British citizenship.
Many of the debates on this issue have focused on the use of the existing powers in the UK and overseas. I remind right hon. and hon. Members that the Home Secretary has long-standing existing powers to deprive a British national of their citizenship where that individual acquired it using fraud or where she is satisfied that doing so is conducive to the public good. Where fraud has been used, a decision can be made to deprive, which leaves a person stateless. Our proposals have built on the non-conducive powers to target a narrow cohort of naturalised Britons who are a real threat to our national security.
Is the Minister able to clarify the numbers involved and how the Secretary of State and, indeed, her predecessors have used those powers? The Joint Committee on Human Rights has repeatedly asked for those data, but has been unable to access them. I have asked similar questions and have also been unable to get the data, so could the Minister tell us how many people have had the power used against them?
It might be helpful if I explain that since the law was changed in 2006, 27 people have been deprived of their citizenship through different conducive powers. Twenty-six people have been deprived on the grounds of fraud, false representation or concealment of a material fact, and one further person has been notified of the intention to deprive on those grounds. Perhaps that gives my hon. Friend an idea of the context in which the power is used. It is used extremely sparingly: it is not undertaken lightly and the Secretary of State considers its use extraordinarily carefully.
I recognise that the proposals that were suggested when the Immigration Bill was last before this House have, rightly, provoked a great deal of debate and discussion. It is important that the House understands the significance of the measures and that the other place has had an opportunity to consider them after our debate on Report. There has been much debate, both here and in the House of Lords, about the impact of leaving a person stateless, and there are concerns about those who cannot acquire another nationality.
Although the Government are confident that our original proposals would have affected only a small number of people—given the pre-existing utilisation of the power and the high hurdle that needs to be cleared, most people would have been able to acquire their former nationality or another—we are now seeking to address the concerns expressed about leaving individuals permanently stateless and with no recourse to another nationality. Our amendment (a) provides that deprivation of nationalised citizens under clause 60 can take place only when the Home Secretary has reasonable grounds to believe that, under the laws of a country or territory, an individual is able to become a national of that country or territory.
Amendment (a) is certainly a helpful move on some, if not all, the concerns, but how will the provision be interpreted? For example, if somebody who is not a British citizen leaves another country and would otherwise have claimed asylum in this one, will that factor be taken into account? Will the Home Secretary be able to take into account the idea that a country may refuse to give citizenship because we had taken away their British citizenship? How will she make it work in practice?
It may be helpful if I say that the Home Secretary will consider the relevant nationality laws of a person’s country and that person’s circumstances, and she will make a decision based on whether, under those laws, the person is able to acquire another nationality. The test is whether there is a route under the law, but she will have regard to other considerations—for example, about practical or logistical arrangements. Those considerations will obviously vary from case to case, but she will consider them in forming a view. We have reflected that in the concept of the reasonable grounds. The Home Secretary will need to be satisfied about those reasonable grounds in determining whether the proposed power can be utilised.
The hon. Gentleman clearly makes the point about what we are seeking to achieve in respect of the concerns highlighted in the House and elsewhere, which is that if the Home Secretary cannot satisfy herself on reasonable grounds that the individual can acquire the citizenship of another state, she will not be able to use the power.
In this context, we are seeking to address the specific issue highlighted by the Supreme Court in the al-Jedda case, with which many right hon. and hon. Members are familiar. The case showed that the existing law was well within our international obligations, but we are seeking to act on the Supreme Court’s statement in that case about how to address the issue appropriately. We judge that the proposed provision is an appropriate mechanism for guarding our national security. It will ensure that what appears to be a loophole identified as a consequence of the al-Jedda case is not open to abuse and, building on the existing deprivation powers, it will therefore ensure that our national security is properly protected.
I am listening carefully to what my hon. Friend is saying, and the House should realise that he is simply putting the law back to its position before it was changed by the previous Government. I listened carefully when we debated the issue on Report, and many of the concerns involved people who have no recourse to citizenship elsewhere being left permanently stateless. Government amendment (a) deals with the very real concerns of many hon. Members. It is a very welcome move that should be supported.
I am grateful to my hon. Friend for his intervention. I pay tribute to him for his work on the Bill and for the steps he took, quite properly, to consider not only this issue, but the provisions more broadly. We will no doubt move on to those provisions in considering the Lords amendments. My hon. Friend highlighted the fact that the law was changed in 2002. In many respects, we are seeking to bring the law back more closely to the pre-existing position. The law was changed in 2002, and changed again in 2006. There is, therefore, a long history, with clear precedents to setting provisions that comply with our international and UN obligations on statelessness.