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House of Commons Hansard
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Commons Chamber
04 November 2014
Volume 587

House of Commons

Tuesday 4 November 2014

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Treasury

The Chancellor of the Exchequer was asked—

Northern Powerhouse

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1. What progress he has made on his policy to create a northern powerhouse for the UK economy. [905838]

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6. What progress he has made on his policy to create a northern powerhouse for the UK economy. [905843]

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9. What progress he has made on his policy to create a northern powerhouse for the UK economy. [905846]

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10. What progress he has made on his policy to create a northern powerhouse for the UK economy. [905848]

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13. What progress he has made on his policy to create a northern powerhouse for the UK economy. [905851]

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In July I set out my plan to build a northern powerhouse to connect the great cities of the north with the counties that surround them—and, of course, north Wales—by investing in transport science, and by devolving powers from Westminster to elected city mayors. We now have plans for High Speed 3 and for major new science investment. Yesterday I signed an historic agreement with the civic leaders of Greater Manchester to create the first directly elected metro-wide mayor outside London, with powers over transport, economic development and policing. I hope that Manchester will be the first of many cities to take advantage of the greater devolution of powers. Today I have opened my door to discussions with any metropolitan authority that wants to adopt a new model of governance. All that is part of our ambition to reduce the decades-old gap between north and south, which is central to our long-term economic plan.

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Does my right hon. Friend agree that key to the northern powerhouse vision is the improvement of transport connectivity throughout the region, and does he agree that north Wales is well placed to benefit from such improvement?

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As a Cheshire Member of Parliament, I know that the north Wales economy is closely connected with the economy of the north-west of England. We have already committed ourselves to reopening the Halton curve, re-establishing a regular direct rail link between north Wales and Liverpool for the first time since the 1970s. That is something that my right hon. Friend asked me to do, and campaigned for. Moreover, High Speed 2 gives us the potential of a station at Crewe, which will greatly increase capacity for journeys to north Wales and reduce journey times. We are ready to listen to further ideas for ensuring that prosperity is experienced in north Wales as well.

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For 13 years Labour neglected jobs and growth in the north, including Weaver Vale, thus creating an economy that was dangerously unbalanced. Does my right hon. Friend agree that it is only the Conservative party, with its long-term economic plan, that will deliver job security for the whole United Kingdom, not just the south?

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My hon. Friend is absolutely right. A record number of people are now employed in the north of England, but the gap between north and south grew under those 13 years of Labour government. If the House wants one example of a project that was waiting to be completed but was entirely neglected by the Labour Government, it is the Mersey Gateway bridge, which this Government are now building and to which they are committed—and, thanks to my hon. Friend’s campaigning, there will be no tolls for local residents.

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I welcome the Chancellor’s obvious commitment to the northern economy. Does he agree that a commitment to exports will be at the heart of its regeneration, and will he join me in praising Victrex, a company in my constituency, which exports 97% of what it produces? Is that not what will drive a northern renaissance?

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My hon. Friend, who is a powerful champion of the businesses in his constituency which employ local people, has told me about Victrex and its exporting success. That success is being replicated by other manufacturers in the north of England which are increasing their exports. The energy revolution in the Fylde area and on the Blackpool coast is creating the potential for a national college to develop the engineering and other skills that will be required. My hon. Friend has made a strong bid for that college to be in his constituency, and I am listening very carefully to the case that he is making.

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I welcomed what my right hon. Friend said when he was in Manchester yesterday. However, a northern powerhouse must not just be about our biggest cities. In Pendle we have landmark regeneration projects such as the £30 million redevelopment of Brierfield Mill, which is in need of my right hon. Friend’s support. Will he tell me what benefits the northern powerhouse will bring to my constituents, and how his investments in transport and regeneration will help them?

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Crucial to the vision of the northern powerhouse is not just supporting the great cities of the north, but ensuring that they are connected with the towns and counties surrounding those cities. We are investing hugely to improve transport links in Lancashire. My hon. Friend, who is such a champion of his constituency, has raised with me the Brierfield Mill site, which is now called Northlight. We are taking a close look at what we can do to redevelop the area and bring more jobs to his constituency, and that is due to his campaigning efforts.

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The idea of a northern powerhouse is welcome, as is the introduction of an elected mayor, which I am sure will provide real leadership. However, it is vital for smaller places such as Carlisle to benefit as well, which will mean ensuring that the next generation has the right skills to enable local businesses to succeed and prosper. How will the Chancellor ensure that that happens?

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Thanks in part to the efforts of my hon. Friend and the support he has given to investment in Carlisle, we have seen a 34% fall in the unemployment claimant count in Carlisle in the last year alone. We are also devolving more responsibility for setting the skills agenda to local businesses, so we can have skills that are specific to the Carlisle area. I am always happy to talk to my hon. Friend and to meet people he would bring to see me, to see what more we can do to make sure that Carlisle is part of the strong economic revival of the north of England.

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The Chancellor opened the door for other metropolitan areas to go down the route of the northern powerhouse. Has he given any consideration to what he regards to be an optimum size for those units? In the west midlands, would that be a Greater Birmingham and black country metropolitan area or an entire west midlands metropolitan area?

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I do not think any one area is the same as any other area. There is a specific model for Greater Manchester, and of course the Greater Manchester councils had worked well together as a combined authority. Clearly Birmingham city council is much larger than Manchester city council alone, so I would like to have a conversation with the hon. Lady, and with Albert Bore and other civic leaders in Birmingham, about whether we can move to a mayoral model, perhaps just in the city. That is a discussion to be had with local people, however.

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I must congratulate the Chancellor of the Exchequer on his organisational brilliance by peppering us with all these planted questions on this subject, but I tell him, as the co-chair of the Yorkshire group of MPs, that we are a bit canny in Yorkshire; we are a bit worried about this northern powerhouse. We agree with it and support it, but it is a bit close to the general election. Where has he been for four and a half years, and where is the money coming from? We have not seen any resources for it.

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We have already made investments over the last four years in things such as the northern hub and the electrification of the trans-Pennine railway, which of course will have helped the hon. Gentleman’s constituency. I welcome his support for the northern powerhouse. This agreement with Greater Manchester was struck with Labour leaders of Manchester councils as well as the Conservative leader of Trafford and the Liberal Democrat leader of Stockport. I want to work across party divides with local Labour civic leaders and local Labour MPs to see what we can do for Huddersfield and other towns in the north of England so that they are connected to the northern powerhouse.

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Can we see the colour of the Chancellor of the Exchequer’s money? How much is being allocated for so-called HS3, and has he ring-fenced the amount of funding for north Wales?

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We will have developed and costed plans for HS3 from—[Interruption.] There was no proposal for HS3 from the Labour party for 13 years in government and then for four years in opposition. Labour Members are now complaining that I came up with a proposal four months ago. We already have detailed support for that proposal from David Higgins and we are going to have a costed plan for it. There was absolutely no attempt to connect the north of England from east to west under the last Labour Government. It is happening under this Conservative-led Government.

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Is not the best way to have a northern economic powerhouse to have full fiscal autonomy for Scotland? After all, the Prime Minister did say that all options for devolution are there and all are possible. Does the Chancellor agree, or is he afraid of the competition from a more socially just Scottish treasury making better policies for the people of Scotland?

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We will honour the commitments made during the referendum campaign by all the Unionist parties to devolve further fiscal powers to Scotland. We will honour the commitment we made, and I would ask the Scottish National party to honour the promise it made that this was a referendum which would settle the issue of Scottish independence at least for

“a generation…perhaps for a lifetime”—

I am quoting Alex Salmond. Perhaps the SNP should stop trying to reopen the question that was resolved, and work with us to make sure that Scotland has a great economic future.

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The Chancellor talks about creating a northern powerhouse, but really is he not just struggling to play catch-up, because while he has been shifting funds from northern cities to wealthier parts of the country, the unemployment rate in the north-east is the highest in the country, wages for working people in the north have fallen by even more than the national average and across the north the number of people unemployed for a year or more is up 62% since the last election? Why will he not match Labour’s plan to devolve real power and £30 billion of funding not just to the north, but to all city and county regions?

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Labour ran one of the most centralised Governments in history. It did not devolve any powers to anyone—

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We did in Scotland.

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Not in England. In regard to playing catch-up, I would say to the hon. Lady that we have heard from Labour’s civic leaders in Greater Manchester that they want a directly elected mayor. We have heard from the Conservative Chancellor of the Exchequer. What is the view of those on the Labour Front Bench on this proposal? Last week, the Labour leader was in Manchester saying that the Labour party would never sign up to such a deal, but four days later all his civic leaders did so. What is the policy of the Labour party?

Income Tax Allowances/Thresholds

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2. What plans he has to bring forward legislative proposals to change income tax allowances and thresholds. [905839]

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By next year, the personal allowance threshold will have reached £10,500. This will mean an £805 cut in income tax for the typical basic-rate taxpayer, and 3 million people being taken out of income tax altogether. Under a Conservative Government in the next Parliament, we would go further.

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Enabling people to keep more of what they earn is the best thing any Government can do for ordinary hard-working taxpayers. Can the Chancellor tell me how many of my constituents in Thurrock will be likely to benefit from these proposals?

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My hon. Friend is a champion for the hard-working people in her constituency. Not only have our personal tax cuts helped many thousands of those people, but if we go ahead with our plans to raise the personal allowance to £12,500, more than 5,500 people in Thurrock would be lifted out of income tax altogether and 58,000 of the people she represents would benefit.

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Raising tax thresholds disproportionately benefits men, because many women earn so little that they do not even reach the lowest threshold. On the other hand, consumption taxes have a disproportionate effect on women who are responsible for managing the family budget. Will the Chancellor rule out any increase in VAT, in order to ensure that our tax system can be fair to both genders?

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We do not need to raise VAT, because our plans are paid for by the Government living within their means. Does the hon. Lady speak for the Labour party, because she seems to be opposing the increase in the personal income tax threshold? That is a policy that has lifted many low-paid women out of income tax altogether, and I find it surprising that once again the Labour party is against the interests of hard-working people.

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By raising the personal allowance, the Chancellor has pulled 3.2 million people out of tax altogether. At the same time, however, he has dragged 1.6 million people into paying the higher rate of 40p. It is the marginal rates that matter, and that is a massive disincentive to wealth creation in this country. Does he acknowledge that, as soon as the fiscal room to do so is available, it will be essential to act to take as many people as possible out of higher-rate taxation altogether?

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As my hon. Friend knows, people earning up to £100,000 who are paying the higher rate have seen the benefit of the increase in the personal allowance. They have seen their income tax bills fall. He is right to say that more people have been pulled into the 40p rate, however, and that is why we are proposing to increase the threshold to £50,000. That will be in our election manifesto, and it is something that we can deliver in the next Parliament so that people on middle incomes, as well as those on lower incomes, can benefit from a tax-cutting Conservative Government.

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The Chancellor did not give us the small print relating to the promises that he has just repeated: terms and conditions apply. Will he acknowledge that there is a price tag attached to those promises, and will he tell us specifically what the cost of those commitments would be?

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What I would say to the shadow Chief Secretary to the Treasury is—

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What is the answer?

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It is around £7 billion when we add it all up. That would be paid for by lower public expenditure. These are tax cuts that are paid for. I note that that is not the approach taken by the Labour party, which would increase tax, increase borrowing and increase spending, sending the economy back into the mess that it left it in.

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So we have established that this would mean £7 billion of lower public expenditure. What elements of public expenditure would be involved? Would the Chancellor cut the police again? Would he take the money from schools and hospitals? Or are we to judge him on his usual track record, which would mean that after the election he would simply add it on to VAT?

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What we have seen under this Government is a party that is able to bring our public finances under control; to reduce the welfare bill; and to make sure the egregious waste in Westminster and Whitehall that took place under the previous Government no longer takes place. We will fund that by lower public expenditure, because once we get the public finances under control we are going to keep them under control.

Tax Receipts (Deficit)

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3. What assessment he has made of the effect of tax receipts on the deficit in the last 12 months. [905840]

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Progress has been made on reducing the deficit; it is down by more than a third from its peak and borrowing in 2013-14 was under £100 billion for the first time in six years. The latest public finance release shows that the impact of the great recession is still being felt in our economy and the public finances. The Office for Budget Responsibility expects real earnings to rise faster than inflation, and receipts are expected to perform more strongly in the second half of the year. It is therefore important to stick to the plan, which is building a more resilient UK economy.

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The Chief Secretary to the Treasury will be aware that although unemployment has been falling, income tax receipts to the Treasury have stayed flat, despite the Government predicting a significant increase. Does that not show that this Government are presiding over an explosion of underemployment, zero-hours contracts and low pay, and until they deal with that, they will never bring the deficit down?

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First, I would think that the hon. Gentleman would welcome the substantial increase in employment we have seen in the past two or three years—after all, it was his Front-Bench team who predicted that that would not happen under this Government. In fact, 80% of the jobs created in the past 12 months have been in full-time employment, not the part-time employment he is talking about, which is greater than the level in the economy as a whole.

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Tax receipts and deficit closure are contingent on a strong economy, so does the Minister welcome the fact that the Legatum Institute’s prosperity index shows that the UK is now the most prosperous economy in all the major EU countries?

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I agree with my hon. Friend that strong tax receipts require a strong economy, and the focus of this Government’s economic policy since the coalition was formed has been to rebuild the UK economy and clear up the mess left to us by the Labour party. We now have the strongest growth in the major world economies, and Government Members should be very proud of that.

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Revenue officials have always been slow to catch up with the latest tax-avoidance scams in the construction industry, the latest of which is the umbrella company. Such companies are costing the Revenue huge sums and are exploiting workers. This is spreading rapidly to other sectors, including supply teaching. What is the Minister going to do about the scandal of umbrella companies?

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We introduced measures precisely to deal with intermediary companies, which are often vehicles for tax avoidance or for minimising tax. We take that very seriously. If the right hon. Gentleman has evidence that he wishes to bring to my attention of specific issues that have come to his attention, I would gladly look at it.

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Does the Chief Secretary agree that the best way to increase tax receipts is to create the conditions for business confidence and growth? That is happening in my constituency, with the recruitment firm eResponse choosing to set up in Rugby because it has assessed that between 1,500 and 2,000 new jobs will become available.

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I welcome that sort of investment, and I very much agree with what my hon. Friend says. Businesses like that one, in every constituency up and down the country, are creating jobs because they have confidence in the economic policies of this Government.

Uncollected Tax

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4. What estimate Her Majesty’s Revenue and Customs has made of the amount of uncollected tax in the last year for which figures are available. [905841]

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HMRC published its latest tax gap estimates on 16 October, and in 2012-13 the gap was estimated at £34 billion—6.8% of total tax due.

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Thirty-four billion pounds is a very significant amount of money, and under this Government the amount of uncollected tax has risen by £3 billion. Why has the Minister allowed that to happen?

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Let us be clear: a rate of 6.8% is lower than was achieved in any year under the last Labour Government. In addition, HMRC’s yield—the money that has come in as a consequence of its efforts—was £7 billion higher in 2013-14 than it was in 2010-11. The fact is that this Government have an excellent record on dealing with tax avoidance, tax evasion and the tax gap.

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Can the Chancellor of the Exchequer say how the Government are encouraging greater payment of tax through international agreements that we have achieved, for example, with Switzerland?

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I am sure that the Chancellor can explain that, but as I am already at the Dispatch Box, I will answer the question. The UK has very much led the way in the OECD base erosion and profit shifting process, ensuring that the international tax system is fit for purpose. We have made good progress on that, but there is still work to do.

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18. Does the Minister think that there is any link between the deep cuts to HMRC staff, particularly in Cardiff, and the uncollected tax that is rising under this Government? [905859]

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As I say, what has happened under this Government is that the yield brought in by HMRC has increased year after year. The tax gap is lower for 2012-13 than it was in any year under the previous Labour Government. In truth, the record of HMRC is one of getting more from less, but we have invested in the areas that bring in money on tax avoidance and tax evasion.

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Will the Minister ensure that the unacceptable and unwelcome £1.7 billion bill from the European Union remains an uncollected tax demand, and that there will be no payment of interest on any late payment?

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First, I congratulate my hon. Friend on the ingenuity of his question. Secondly, let me repeat what the Prime Minister said: we will not be paying £1.7 billion on 1 December.

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It was indeed an extremely ingenious question, as HMRC would not be the tax collector, but, understandably, that did not trouble the hon. Member for Kettering (Mr Hollobone) in any way.

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20. One in four children across the UK lives in poverty while this Government allow £34 billion in unpaid tax to go astray. Does the Minister not see an urgency in collecting that tax so that he can eliminate that disgraceful statistic? [905862]

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Let us be clear: the tax gap is lower than it was under the previous Government and yield is higher. By international standards, the UK has one of the lowest tax gaps in the world. We have a good record, but we always seek to do more, which is why at the Budget and autumn statement we have always been able to bring forward measures to deal with tax avoidance and tax evasion, and that is a record with which we will continue.

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The Minister has failed to acknowledge that families struggling to make ends meet expect the Government to ensure that everyone pays their fair share, and yet the amount of uncollected tax has risen by £3 billion since he came to office. Is it not the truth that that is both deeply unfair to hard-working families and further evidence that this Government have totally failed to tackle tax avoidance?

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No; we have brought forward 40 measures to reduce tax avoidance, reduced the tax gap as a proportion of tax receipts, and increased by £7 billion the yield brought in by HMRC. The truth is that it is this Government who have acted in this area, and the record of the previous Government does not bear comparison.

Fiscal Consolidation

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5. What progress he has made on his fiscal consolidation plans. [905842]

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The Government inherited the largest deficit since the second world war. Since then, we have made substantial progress in reducing the deficit. By the end of last year, borrowing had fallen by more than a third. The Government’s consolidation plans have been central to the reduction in the deficit. Indeed, by the end of last year, we had implemented 70% of the £126 billion of fiscal consolidation planned for the end of 2015-16.

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Does the Chief Secretary to the Treasury agree that if we have a credible plan to reduce the deficit, we can credibly plan to protect spending on the NHS and cut taxes? As the Labour party’s announced fiscal rules would allow for an extra £166 billion-worth of borrowing over the next Parliament, there can be no credibility in its deficit plan and in its plan for this country’s economy.

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I agree with my hon. Friend that Labour’s plans would put at serious risk the jobs and stability that this coalition Government have secured. There is a lesson in what he says for all parties in this House, because economic credibility is hard to win and easy to throw away. Any party that does not put forward a plan to sort out the economy or offers unfunded tax cuts to the British people will put its credibility at serious risk.

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On the deficit, the Chancellor and the Chief Secretary to the Treasury have failed the test they set themselves, which is to close the deficit by the end of this Parliament. Worse than that, they have failed the test that my constituents set for them, which is to put money back in their pockets. That was said to me this week by a grandmother who is desperately worried about her grandson, as he is on a five-hour contract and unable to afford to take a day off work. What will the Chief Secretary do about that?

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The first thing that we are doing is delivering on what we promised to do when we created this Government in the first place, which is to repair the deep damage that the hon. Lady has to admit was done to the economy under her party’s stewardship. We have now got the United Kingdom into a position in which we are creating more jobs than in the whole of the rest of the European Union combined, and we have the strongest growth rates in the developed world. She should welcome that as something that creates opportunities for young people.

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This fiscal consolidation plan will be heavily influenced by the dramatic liberalisation of pensions announced in the Budget, which will be significantly influenced by the success or otherwise of the guidance guarantee that is now being legislated for. Does the Chief Secretary agree with Ros Altmann that the Financial Conduct Authority should ensure that people who do not receive or take the guidance in this new environment are at least asked proper questions about their circumstances, such as about their partner and their health?

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Order. A question can be wide, at a stretch, but it should not also be over-long.

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I agree with my hon. Friend that the pensions reforms are a great liberalisation of the pensions system. We will give people, rightly, the opportunity to make use of the money that they have saved for their retirement as and when they choose. The guidance guarantee is enormously important. We have been working closely with organisations such as Citizens Advice to make sure that people have access to the guidance in the way that my hon. Friend has set out, and we need to deliver on that.

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Has the Chief Secretary to the Treasury factored into his fiscal consolidation arithmetic the extra £1.7 billion contribution demanded by the EU? Does he accept that that payment is properly due under the formula agreed by the UK Government? When will it be paid, contrary to the answer given by the Chancellor?

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The Office for Budget Responsibility takes into account forecasts for EU payments in its own forecasts. It did so at the time of the Budget and will do so again at the time of the autumn statement. A demand of this size in this manner is simply not acceptable, and we are absolutely right to do everything that we can to deal with the issue. That is what we in the coalition will ensure happens.

Tax Avoidance

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7. What recent steps he has taken to reduce tax avoidance. [905844]

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The Government have taken a wide range of actions to tackle tax avoidance over the Parliament, including introducing the UK’s first ever general anti-abuse rule. This year’s Finance Act introduced a tougher monitoring regime and penalties for promoters of high-risk tax avoidance schemes. We have also given HMRC the power to collect disputed tax bills up front. That removes the incentive for tax avoiders to delay and frustrate HMRC’s efforts to settle disputes and brings forward £4.3 billion in revenues.

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I am aware that, as a result of measures taken by the coalition Government to crack down on tax avoidance, a record £24 billion in additional tax revenue was raised in the last financial year. Does my hon. Friend agree that much more remains to be done to make sure that multinationals such as Starbucks and Google pay their fair share?

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My hon. Friend is right to highlight the record yield for the last financial year. Indeed, there are reasons to believe that that record may well be broken for this financial year. As for multinationals, I do not want to be drawn on individual companies, but it is right to say that we need to work internationally, as I mentioned earlier, through the OECD base erosion and profit shifting process. As my right hon. Friend the Chancellor made clear at the Conservative party conference, we are looking to take further action in respect of multinationals not paying the tax that they should.

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The Chancellor has said that the Swiss tax deal will raise £5 billion by next year. How much has been raised so far?

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We have already got in about £800 million, and we will get more, but that is money that we would not otherwise have received. That is a deal worth doing. It is worth pointing out that some people said that if we had not had this deal with the Swiss—which has brought in additional revenue—we would not have been able to make progress on automatic exchange of information, whereas the reality is that just last week the Chancellor signed a deal on behalf of this country that made progress on that.

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Does my hon. Friend the Minister agree that under the previous Government the tax gap grew and that all the running in this Parliament on ensuring that businesses pay their fair share of tax and cracking down on tax dodgers has come from our side of the House, and that this Government have made the case internationally as well?

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The tax gap as a proportion of tax receipts was higher under the previous Government than for every year under this Government. We have introduced about 40 measures to close loopholes, one of which, on disguised remuneration, let us not forget the Labour party opposed.

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Given the Government’s commitment to clamping down on tax avoidance, can the Minister give us a prediction or a commentary on the yield he expects next year as a result?

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As we heard earlier, the yield for 2013-14 was £24 billion. HMRC anticipates that that will be broken and that the yield will be higher for this financial year—the details are to come, but that is encouraging. On the tax gap, the small increase is largely due to the VAT tax gap being higher in 2012-13 than the previous year, but we already know that for 2013-14 it will fall.

Regional Economies

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8. What recent steps he has taken to rebalance regional economies. [905845]

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This Government are committed to rebalancing the economy in order to strengthen every part of the UK. In July this year local growth deals were agreed with all 39 local enterprise partnerships across England. Each deal reflects the particular needs and capabilities of the local area. Growth deals are just one of several ongoing investment programmes aimed at helping every region in the United Kingdom achieve economic success.

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May I explore the link with governance? What is the concrete evidence outside London of the slightest connection between economic growth and elected mayors?

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It is fair to say, as we have heard today, that devolving power to more local areas enables the regions to take responsibility for the decisions that affect their areas, which in the long run will create good, solid, strong local long-term economic plans.

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The Minister talks about supporting regional growth and rebalancing the economy, yet promises are being made— £7 billion to Greater Manchester, £7 billion potentially to top taxpayers. That money would sort out transport connectivity issues and help us grow our economy, so will she commit to the Dawlish avoiding line and the resilience measures that we need in the south-west now?

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We are currently looking specifically at that.

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In the past four years the Tees valley has received five times as much investment from the regional growth fund as in the last four years of the Labour Government. That is going not just to large companies, but to smaller ones too, such as Wards and ElringKlinger in my constituency. Will the Minister ensure that regional growth funding continues to be a key element of rebalancing the economy?

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My hon. Friend is right that, by handing back power to local leaders, we are enabling them to back local jobs and to create prosperity and long-term economic growth. That is exactly what this Government are committed to doing.

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I welcome yesterday’s announcement in Greater Manchester and put on record my gratitude to the leadership in Greater Manchester for their efforts. May I offer some advice to the Chancellor? If he wants to endear himself further to the voters of Manchester, he might consider the totality of his Government’s policies on the area. When will he consider going further in fiscal devolution and secondary legislation devolution so that we can truly live up to our aims?

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I welcome the hon. Lady’s support for the package, which is substantial. The priority must be its implementation and delivery, and we look forward to working with all parties to make sure that it is a success.

Deficit Forecast

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11. What recent forecast he has made of the change in the deficit between May 2010 and May 2015. [905849]

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In 2010 the Government inherited the largest deficit since the second world war at 10.2% of GDP. We have made substantial progress in reducing the deficit since 2010. By the end of the last financial year 2013-14, the deficit had fallen from £149 billion to £95.6 billion, estimated at Budget 2014. As a share of GDP that is a fall of more than a third from its peak.

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The Chancellor’s promise to eradicate the deficit in this Parliament has long since been abandoned, but with the deficit going up in the first half of this financial year, the scaled-back aim of halving the deficit by the end of this Parliament looks in serious trouble as well. The Chief Secretary has just attacked the unfunded tax cuts that the Chancellor announced. Does the Minister still think that the tax deficit will even be halved by the end of the current financial year?

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The right hon. Gentleman is possibly being a little mischievous. As a veteran Chief Secretary to the Treasury from the previous Government, he should well understand that, according to the OBR’s comments and looking at its 2010 forecast errors over time, the biggest difference between 2013 and earlier was the lack of external shock. In 2011, high commodity prices ate into disposable incomes and the euro area crisis damaged credit and confidence. He should well understand why the deficit reduction was impacted by external shocks.

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According to the International Monetary Fund’s “World Economic Outlook”, the UK is set to grow at rates that will put other major European economies to shame. What measures does the Minister believe have allowed that out-performance of our European partners?

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My hon. Friend is quite right. The UK is now growing at the fastest rate in the G7 and, indeed, is forecast to grow at the fastest rate in the G20. That is the result of our long-term economic plan—reducing business tax rates in order to get more people into work; more people paying their taxes and more people able to bring home a wage. That long-term economic plan is what is bringing our economy back into growth.

Tax Credits

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12. How many working people are in receipt of tax credits. [905850]

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In April 2014 there were 3.3 million people in work receiving tax credits, down from 4.8 million in April 2010.

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When the Chancellor came to office, less than a quarter of housing benefit claimants in Croydon were making claims to supplement low pay. Today that figure is two fifths. Will the Minister apologise for pushing growing numbers of hard-working Croydon families into poverty?

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When it comes to the cost of living, Labour’s great recession is what made the country and the hon. Gentleman’s constituents a whole lot poorer. We now have record levels of employment, including a 9% increase in his constituency. Perhaps he would like to welcome that.

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There are a great many studies and much empirical evidence showing that the surest way to combat poverty is through work. Is it not a badge of pride for this Government that in four years we have reduced the number of people in households where no one works by 671,000?

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My hon. Friend is absolutely right. When it comes to tackling the country’s economic problems, we can improve living standards only by getting more people back into work. This Government have been reducing child poverty and ensuring that work pays.

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Tax credits are meant to be moving into universal credit. What timetable is the Treasury working to for phasing out tax credits?

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That matter will be subject to the next Parliament.

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It is time to hear from a Lincolnshire knight—Sir Edward Leigh.

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If someone comes here to work from the European Union, and if they are in a relatively low-paid job and receive tax credits as a form of benefit, they might effectively be paying no tax at all. Will the Government tell the European Commission that we should have a new system by which people have to pay tax for at least three years before drawing any tax credits or benefits?

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We have already made changes to that whole area, and that is something we will look at further.

Economic Growth

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14. What estimate he has made of the rate of growth in the economy. [905852]

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In the year to the third quarter of 2014, GDP grew by 3%; it is now 3.4% above the pre-crisis peak. The International Monetary Fund expects the UK economy to be the fastest growing in the G7 in 2014.

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Clearly the fact that we are leading our European partners in economic growth shows that the long-term economic plan is working. Does my right hon. Friend agree that, with the eurozone in crisis and external factors uncertain, the last thing we want to do is return the keys to those who crashed the car in the first place?

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I am sorry that my hon. Friend has brought up the shadow Chancellor’s recent driving incidents, but I agree with the point that the Labour party made the economic mess that we—Liberal Democrats and Conservatives—came together in a coalition to sort out. We have made strong progress in this Parliament, including achieving the strongest growth in the G7. The last thing that the country needs is to hand the keys back to a majority Labour Government.

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The long-term economic plan is not working in terms of the living standards of people up and down the country. What has been the rate of growth of wages over the past year?

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The rate of growth of real wages has been low, and that needs continued attention in the months and years to come. However, I hope that the hon. Gentleman would join me in welcoming the fact that millions of our fellow citizens are now in work as opposed to being unemployed, as they were under the Labour Government. We now need to work to make sure that we increase business investment, enhance productivity, and make sure that the benefits of the economic growth we are seeing are shared as widely as possible. I think that he and I would agree about that.

Average Earnings/Rate of Inflation

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15. What recent comparative assessment he has made of growth in average earnings and the rate of inflation since May 2010. [905854]

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Inflation is at 1.2%—lower than at any point since 2009. We appreciate that times have been tough for families in recent years, but as the Institute for Fiscal Studies has said, that is

“a direct but delayed result of the 2008 recession”.

Since May 2010, this Government have taken decisive action to support families. We have increased the personal allowance, frozen fuel duty and council tax, and cut energy bills. In the past year, unemployment has fallen at the fastest rate since records began, and the proportion of workless households is lower than it ever was under the previous Government.

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For how many months under this Government have wages risen faster than prices?

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We have gone through a difficult period, but, as I said, that is

“a direct but delayed result of the 2008 recession”.

Employment Trends

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16. What assessment he has made of recent trends in the level of employment. [905855]

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A record 30.76 million people are in employment. Since the coalition came to power, employment has increased by more than 1.7 million. Over 2 million private sector jobs have been created since early 2010, meaning that for every public sector job lost, over five have been created in the private sector.

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Can the Minister help my constituents, who are pleased by the record number of people in jobs in my constituency but confused by the Leader of the Opposition’s claim that our plan would mean the loss of 1 million jobs, and concerned about the impact that Labour’s pledges of more spending, more borrowing and higher taxes would have on jobs in my constituency?

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My hon. Friend is right to point out that irony. Under this Government, we have just seen the biggest drop in unemployment ever. In particular, long-term unemployment and youth unemployment are dropping fast, giving hope, prospects and a decent wage to so many in our country. We should be celebrating these things and definitely not letting Labour put them in jeopardy.

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Twenty per cent. of my constituents earn less than the living wage. People are working at two or three jobs and still cannot make ends meet. When is the Minister going to recognise that her so-called vaunted increase in employment is based on people earning poverty wages?

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I completely refute what the hon. Lady says. A lot of the particularly big increases in employment have been among very young and older workers, who tend to earn less, but is not that great news for the longer-term prospects of those young people, who are off the unemployment register and developing skills for the future?

Pensions (Taxes)

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17. What progress he has made on measures to reduce taxes on pensions. [905858]

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The Taxation of Pensions Bill that is currently before the House will reduce tax rates that previously applied if people wanted to withdraw money from their pension flexibly. It will also reduce the 55% tax rate on pension assets when someone dies. These tax cuts will leave people with more of their own money and more choice about how to spend it.

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These measures clearly show that we are the party on the side of those who do the right thing, work hard, and save. Does my hon. Friend agree that Labour would adversely affect those people through its new pensions tax plan?

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My hon. Friend raises an important point. We often heard Labour Members say that they were going to oppose a tax cut for hedge funds. It turned out that it was not a tax cut for hedge funds but a tax cut that benefits pension funds, yet they want to reverse it.

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While the Minister is talking about cutting tax on pensions, will he spare a thought for the 4,000 members of the British Midland International pension scheme who lost considerable sums of pension entitlement when their airline was taken over? Lufthansa offered them substantial compensation, but Her Majesty’s Revenue and Customs is now insisting on taxing it. What is he doing about that?

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I am grateful for the hon. Gentleman’s question and I have met a couple of hon. Members to discuss the issue. Her Majesty’s Revenue and Customs needs to apply the law as it currently stands, but that does not give it a great deal of discretion. This is a complicated matter and I am more than happy to set out details in writing for the hon. Gentleman.

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Given the significant number of pensioners in my Fylde constituency, may I welcome the sweeping reforms announced by the Chancellor earlier this year? What plans will be put in place to make sure that those pensioners who access their own money get sound advice?

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As my hon. Friend will be aware, we have set out our plans for a guidance guarantee. My right hon. Friend the Chancellor has announced that we are working with Citizens Advice in particular to provide a face-to-face service. Good progress is being made, so that service will be available in good time for next April.

Topical Questions

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T1. If he will make a statement on his departmental responsibilities. [905828]

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The core purpose of the Treasury is to ensure the stability and prosperity of the economy.

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How on earth can the Chancellor of the Exchequer justify a tax cut of £3 billion to those getting more than £150,000—like Nigel Farage—while at the same time cutting the wages of nurses and midwives? What a load of hypocrisy.

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We have cut taxes for 25 million working people. In Bolsover, there are more people in work, fewer people unemployed and the claimant count is down by a third. It is the Conservative party that is the party of the working people now.

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T4. Does my right hon. Friend agree that the level of employment is a good economic indicator? If so, will he join me in congratulating Southend businesses on their outstanding apprenticeship schemes, which have helped a huge number of young people and reduced youth unemployment by 47%? [905831]

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I certainly congratulate Southend businesses on the apprenticeship schemes they run. Apprenticeship schemes number 2 million in this Parliament and we aim to take that figure to 3 million in the next Parliament. That is all towards achieving our goal of full employment. We have the highest number of people in work, but we want to go further still.

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The whole country was shocked to learn on the night the Prime Minister arrived at the European Council that the European Union is demanding from the UK a backpayment of a staggering £1.7 billion. The Prime Minister was unclear on this last week, so may I ask the Chancellor just how long before the Council meeting did he and his Ministers and officials learn that the UK was going to be asked to pay more, and why on earth did he not tell the Prime Minister?

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First of all, may I say that it is very good to see the shadow Chancellor in his place? We had heard disturbing rumours that there was going to be a shadow Cabinet reshuffle. We waited nervously by the phones, but we are absolutely delighted that he is still in his place.

Let me answer the shadow Chancellor’s question directly. There was a meeting at the Commission on Friday 17 October. On Tuesday 21 October, Treasury officials prepared advice for me, and the Prime Minister was aware of the advice on Thursday 23 October. That is very similar to the timetable that the Dutch Government have set out.

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The revisions of the Office for National Statistics came months beforehand and the Financial Secretary knew weeks before. The Chancellor knew only two days before and he still forgot to tell the Prime Minister. Was he not just asleep on the job?

Let me ask the Chancellor another question about the way in which Europe is affecting the public finances. The Government promised to get net migration down to the tens of thousands. According to the latest figures, net migration is 243,000—up 38% on the previous year. Will the Chancellor confirm that his Budget forecast for net migration has been revised not down, but up? What is his assumption for net migration for the 2015 public finance forecasts?

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The reason there has been an increase in European migration is that the British economy is succeeding while the economies in Europe sadly are not. That is why we want to seek a different relationship with the European Union, to take into account that and other features of our relationship. I notice that the last Labour Chancellor now supports a referendum on Britain’s membership of the European Union, but the shadow Chancellor does not. The truth is this: we will set out our forecasts to the independent Office for Budget Responsibility, but the idea that Labour would get a better deal in Europe is total fantasy, alongside the shadow Chancellor’s fantasy that Labour left us with a golden economic legacy and that he has been right all along and everyone else is wrong. The right hon. Member for Lewes (Norman Baker) has resigned, so there is now a vacancy for a conspiracy theorist at the Home Office—the shadow Chancellor should apply.

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T7. Small businesses and retailers are the backbone of our economy. With small business rate relief, a relief for businesses re-occupying long-term empty properties and other discount schemes, this Government have shown their support for small business. Will my right hon. Friend go further and review the business rate system to ensure that it is fair and does not deter investment? [905834]

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My hon. Friend makes a good point about the impact of business rates. That is of course why we have extended small business rate relief and helped 360,000 small properties. It is why we have offered the £1,000 high street discount to stores in Harrogate and elsewhere around the country. We are going to review the business rate system to make sure that it is simpler, fairer, more transparent and more responsive to economic circumstances, and he is very welcome to take part in that review.

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T2. What is the link between the Chancellor’s £7 billion of unfunded tax cuts and his blocking of the OBR from auditing the tax and spend plans of other political parties ahead of the election? I suggest that the clue is in the question. [905829]

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Interestingly, we conducted an independent review by one of the Canadian officials involved in auditing their finances—

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Oh, come on!

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The right hon. Gentleman says “Come on”, but there were no independent forecasts when he was in the Treasury. He was the economic adviser who cooked up the forecasts, and came to the House and as a result misled this country about its economic fortunes. The OBR is working as an independent institution. The independent review of the OBR said that we should not extend its powers. We do not want the Labour party undermining the independent institution that has brought confidence back to public statistics.

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T8. Last week, the Queen opened a new Jaguar Land Rover plant in Wolverhampton, which is creating 1,400 new jobs. The enterprise zone and the black country city deal are set to create nearly 10,000 more new jobs. Does my right hon. Friend agree that we could go even further in Birmingham and the black country if our local authorities followed the example set by those of the northern powerhouse? [905835]

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The investment by Jaguar Land Rover is very welcome. I was at one of the Jaguar Land Rover plants in September, and saw the incredible investment that is going in there. The new engine plant in the black country is a huge and welcome investment in the west midlands. I take very seriously my hon. Friend’s suggestion that we should talk to authorities in the west midlands to see if we can build on what has been achieved in Greater Manchester. I would be very happy to start those discussions with civic leaders and local MPs.

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T3. Will the Chancellor confirm that the only way to reduce the £1.7 billion bill from the EU and avoid paying interest requires the UK to secure support from a qualified majority of EU members on rule changes and get a vote in the European Parliament on delaying the deadline for payment? How confident is he that he can achieve that? [905830]

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We are operating under a tough set of rules. The rules were put in place in 2007.

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T10. There are now 1,217 fewer people claiming unemployment benefit in my constituency than in 2010. Does the Chancellor agree that we need to continue the job of reducing business taxes to incentivise business to create jobs, rather than to adopt the policy of slapping higher taxes on business, which will only have the effect of destroying jobs? [905837]

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My hon. Friend is absolutely right. I have been lucky enough to visit successful manufacturing businesses in his constituency with him and, indeed, to see the investment that as a result we are able to make in new hospitals in the west midlands. He of course makes the very strong point that if you increase business taxes—that is the official policy of the Labour party—in such a competitive world, you will destroy jobs, reduce revenues and not be able to fund good public services.

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T5. Will the Chancellor, as the self-styled champion of the north, now look again at his early decisions and their impact, and will he commit to a fairer funding settlement for north-east councils? [905832]

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The whole United Kingdom has had to make difficult decisions because we inherited a record budget deficit, but I am willing to work with councils in the north-east to see whether we can build on what we have achieved in Greater Manchester. There is real potential to do that and to make key investments in the infrastructure of the north-east. For example, I think there is a strong case for the A1 north of Newcastle to be dualled.

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This Government’s support for apprenticeships has hugely helped the 40% drop in youth unemployment in Gloucester. Will my right hon. Friend confirm that the Government will continue to look constructively at new and innovative vocational schemes in sectors where there are jobs available—such as HGV drivers, haulage companies, and electroplaters for the Poeton company—but a shortage of skills at the moment?

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Order. I try to get in as many Members as possible, but I think some colleagues have forgotten—or perhaps never learned—that topical questions are supposed to be shorter. Please do not abuse the process because you are spoiling it for other people.

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I know that my hon. Friend the Member for Gloucester (Richard Graham) has worked with local employers to improve skills, and I visited a successful apprenticeship and training scheme with him. We want to ensure that local employers are involved in shaping those apprenticeships and further education courses, and that is precisely what we are now setting up.

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T6. The Institute for Fiscal Studies has forecast that under the Chancellor’s current policies 900,000 more children will be in relative poverty by 2020 compared with 2011. Is his real attitude towards the working poor in this country too much stick and too little carrot? [905833]

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The hon. Gentleman raises an important point about child poverty, which under this Government is down. That does not in any way reduce the need for us to continue taking steps to reduce child poverty, the most important of which is having an economy that creates jobs. In the end, for most people the best route out of poverty is to get back into employment.

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May I urge the Chancellor to meet me and my hon. Friend the Member for Carlisle (John Stevenson) so that we can make the case for including the dualling of the A69 in the autumn statement? Hopefully such a meeting could be before the autumn statement takes place.

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My hon. Friends the Members for Hexham (Guy Opperman) and for Carlisle (John Stevenson) have made a strong case for improving transport links in the north of England and between the north-east and Carlisle. They have already brought the A69 to my attention, and I would be happy to have that meeting.

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T9. Given that the Chancellor is claiming to be the champion of the north, will he explain why he has given a £3 billion tax cut to people who earn £150,000 a year, while people in Hull are on average £1,600 a year worse off? [905836]

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We have cut taxes, including taxes for people in the north of England, for 25 million working people. Under the Labour Government, the gap between the north and south increased. We are working across party divides with local authority leaders to get in the investment and change this decade-long imbalance in our country.

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The last Labour Government cancelled the Supertram scheme in Leeds and then told the city that it could only have a bus-based solution. Does my right hon. Friend agree that as well as devo-max and “devo Manc”, we also need “devo Yorks”?

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I could not agree more with my hon. Friend, and the Deputy Prime Minister has been championing that agenda in government for the last four and a half years. If the leaders of Leeds wish to come forward with proposals for further devolution and more power over the things he has been talking about, to ensure that we get the right economic developments in the Leeds area, we would be delighted to have those discussions in an active way, to try to settle a deal there as well.

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The Chancellor has rightly said that Europe is in danger of pricing itself out of the world economy, and one way in which it is making itself uncompetitive is through its costly renewable energy agenda. Will he try to persuade his neighbour in Downing street to abandon that dogma and liberalise the UK energy market?

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The Prime Minister achieved a good deal for the United Kingdom, and got away from the solid and fixed renewables target that the Labour Government signed up to. If the hon. Gentleman wants Britain to leave the European Union, that will be achieved with a Conservative Government offering a referendum, and him having a vote and seeing what the outcome is. [Interruption.] Under the Conservative Government, the British people will get a referendum. We will make the argument for staying in a reformed Europe, and the hon. Gentleman can make the case he wants to make. That will not happen under a Labour Government.

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May I urge the Chancellor to support the Secretary of State for Business, Innovation and Skills in calls for banks not to shut the last branch in a town? HSBC is about to shut its last branch in Lee-on-Solent, leaving businesses with no banking support at all.

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My hon. Friend makes an important point. Many people are concerned about bank closures. I recently had a round table with a number of banks and challenger banks to discuss the issue, not least the change towards mobile and telephone banking. We are certainly looking closely at the matter.

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Her Majesty’s Revenue and Customs figures released this month show that the amount of uncollected taxes has increased by £3 billion each year under the Chancellor. What difficulties has he found in collecting those taxes, and what does he propose to do about them?

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I am not sure whether the hon. Gentleman was in the House when we debated that at some length a few minutes ago. The fact is that the tax gap for 2012-13 was lower as a percentage of tax receipts than in any year under the Labour Government. Tax yield from HMRC has gone up by £7 billion since 2010-11.

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rose

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Order. I am sorry to disappoint colleagues but, as they will know, at Treasury questions demand always massively outstrips supply. Whether the business managers want to extend the sessions or provide further sessions with the Chancellor’s concurrence, who knows? But we must now move on.

London Borough of Tower Hamlets

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With permission Mr Speaker, I wish to make a statement about the London Borough of Tower Hamlets.

The Government have long been concerned about the worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration in Tower Hamlets. Following persuasive evidence presented to me making serious allegations in April, I commissioned PricewaterhouseCoopers to undertake a formal best value inspection report of the council. In my written statement this morning, I published the PwC report. It paints a deeply concerning picture of obfuscation, denial, secrecy, the breakdown of democratic scrutiny and accountability, and a culture of cronyism risking the corrupt spending of public funds.

Let me outline some of the conclusions. PwC found that the mayoral administration’s grants programme handed out taxpayers’ money with no apparent rationale for the grant awards. There were no objectives, and there was no fair or transparent approach to grants, which the council’s so-called corporate grants programme board was supposed to ensure. There was no proper monitoring. Grants were systematically made without transparency. Officer evaluation was overruled—across mainstream grants, 81% of all officer recommendations were rejected. More than £400,000 was given to bodies that failed the minimum criteria to be awarded anything at all.

On land disposal, properties were sold to third parties without proper process. Poplar town hall was sold to a company involving a person who had helped the mayor in his election campaign, against internal advice, and the winning bid was submitted after other bids had been opened. A number of other property transactions similarly had dubious processes.

Taxpayers’ money was spent on unlawful political advertising for the mayor. Ofcom ruled that the spending was in breach of the Communications Act 2003 and the code of broadcast advertising. There was a lack of any documentation or monitoring of the use of media advisers, so taxpayers’ money could be improperly and unlawfully used to pay for the mayor’s political activities.

Irregular practice took place in the awarding of contracts. For example, PwC identified cases in which one of the council’s officers recalls that, during a meeting, the mayor allegedly annotated a list of suppliers to indicate which suppliers he did not wish to be selected. As a whole, PwC concluded that the council had failed in numerous aspects to comply with the best value duty.

The council’s core governance arrangements have centred on the three statutory officers: the head of paid service, the chief financial officer, and the monitoring officer. The council has failed to make permanent appointments to those key positions. Currently, all three posts are held by interim appointments. PwC concludes that the governance arrangements do not appear capable of preventing or responding to the succession of failures by the mayoral administration. Executive power is unchecked and executive power has been misused.

The PwC report is not the only evidence of where the council is seriously failing on high profile activities that are open to abuse by, for example, political interference. Concerns have been raised about the ability of the senior officers responsible—the electoral registration officer and the returning officer—to ensure the proper administration of elections. The current election petition on the May 2014 European and mayoral elections is now sub judice. I will make no comment on anything before the election court, but I note that on 1 July the Electoral Commission published a report on the elections in Tower Hamlets. The commission concluded that there are significant lessons for the returning officer appointed by the council. Immediate and sustained action must be taken to provide assurance that future elections and electoral registration will be well managed and efficiently and effectively delivered. Free and fair elections must be the bedrock of local democracy.

There is a clear picture that there has been a fundamental breakdown of governance in this mayoral administration. If unchecked, it will allow improper conduct to run rife, further undermining public confidence in the council, damaging community cohesion, and, ultimately, putting public services across the borough at risk. The consequence of this conclusion, expressed in formal terms, is that I am satisfied that the council is failing to comply with its best value duty. I will therefore need to consider exercising my powers of intervention to secure compliance with the duty. To that end, in line with procedures laid down in the Local Government Act 1999, I am today writing to the council to ask it to make representations, if it wishes, both on the PwC report and on the intervention package I am proposing.

The proposed package will need to do three things: first, it will need to put an end to all council activities that are not compatible with its best value duty; secondly, it will need to remove, so far as possible, the risk of further failures to comply with the duty; thirdly, it will need to rebuild the governance and financial management capacity of the council to secure its future compliance with the best value duty. My proposed intervention is centred on putting in place a team of three commissioners whom I will appoint and who will be accountable to me. Their role will be to oversee or, as appropriate, exercise certain functions of the council. I envisage that the commissioners will be in place until 31 March 2017. It will be open to Ministers to review this in the light of the progress made by the council to secure compliance with its best value duty.

To help me assess progress, I propose that within three months of launching the intervention the council will, with the commissioners, draw up and agree an action plan to secure the council’s future compliance with the best value duty. The commissioners will report to me at six-monthly intervals on progress being made. The action plan must reflect the specific intervention measures in the proposed package, which are as follows.

First, I propose to direct the council as a matter of urgency to undertake, as the commissioners may direct to their satisfaction, a recruitment exercise to make permanent appointments to the positions of the three statutory officers, all currently only interim appointments. I also propose to direct that any subsequent dismissal, suspension or further appointment of statutory officers must be with the agreement of the commissioners.

Secondly, I propose to direct that the council’s functions on grant making are to be exercised by the commissioners. The council must provide the commissioners with all the assistance they need. The commissioners will have regard to any views the council has on individual grants.

Thirdly, I propose to direct that the council obtains the prior written agreement of the commissioners before entering into any commitment to dispose of, or otherwise transfer to third parties, property other than individual housing.

Fourthly, I propose to direct that the council prepares a fully costed plan for how its publicity functions can be properly exercised. It must agree that plan with the commissioners, report to the commissioners on the delivery of that plan and adopt any recommendation of the commissioners with respect to that plan or to publicity more generally.

Fifthly, I propose to direct that the council’s functions of appointing an electoral registration officer and a returning officer for elections are to be exercised as a matter of urgency by the commissioners.

Sixthly, I propose to direct the council to prepare with the commissioners a plan for addressing the weaknesses on contracting identified in the PwC report. It must seek the written agreement of the commissioners before entering into any contract or service agreement contrary to any recommendation of the statutory officers.

Finally, I am seeking two written undertakings from the council: first, that it will not, without my approval, enter into any agreement or modify any existing agreement for the making of grants, pending any decision on any proposed intervention package; and, secondly, that the council will not appoint or designate any statutory officer without my prior approval, pending any decisions on any proposed intervention package.

If I receive no satisfactory undertaking within 24 hours, I will use the urgency powers I have under statute. I can direct the council not to take any action on the making of grants or appointing of statutory officers without my approval in this interim period. I am also asking the council to provide information about any property transactions it has in the pipeline. Depending on what, if any, information I receive, I may need to use my urgency powers of direction to safeguard the council and its resources.

The council now has 14 days to make representations to me on the PwC report and on my proposed intervention package. I shall then consider carefully any representations the council makes and decide how to proceed. If I decide to intervene along these lines, I will then make the necessary statutory directions under the 1999 Act and appoint the commissioners. Any directions I make will be without prejudice to my making further directions, should it prove necessary. I will update the House on any conclusions in due course.

The report has cost just under £1 million, which will be borne by the council. It would have been much cheaper, had the mayoral administration not been so obstructive. But to place this spending in context, the financial irregularities identified relate to a £1.4 billion a year council budget. There is significant scope for taxpayers’ money to be protected and saved from these interventions. This is a rare occasion where central Government intervention is required.

The commissioners I sent into Doncaster in 2010 show that such a targeted approach can turn around a dysfunctional mayoral administration. This thorough scrutiny by independent auditors shows we now have a stronger audit regime following the abolition of the Audit Commission, which did nothing to stop corrupt practices emerging.

Localism requires local accountability and local democracy. Municipal corruption undermines the local checks and balances that are vital in a democracy and essential in mayoral systems with their concentration of power. We cannot risk such corruption elsewhere, but it is not just about the money. The abuse of taxpayers’ money and the culture of cronyism reflects a partisan community politics that seeks to trade favours and spread division on the rates. Such behaviour is to the detriment of integration and community cohesion in Tower Hamlets and in our capital city.

This is a borough where there have been widespread allegations of extremism, homophobia and anti-Semitism that have been allowed to fester without proper challenge. Certainly, Tower Hamlets has challenges given its level of deprivation and its diverse population, but one has only to look across the border at the mayoral system in Newham to see that there is an alternative. Councils should be championing a common sense of identity and Britishness—across class, colour and creed.

In all of this, it is the residents of Tower Hamlets who are being let down, whose services are being put at risk, whose taxpayers’ money is being wasted and whose home borough is being criticised rather than being cited with municipal pride.

Despite rare cases such as that of Tower Hamlets, councils as a whole have a good record of transparency, probity and accountability, and that is a reputation worth protecting. As a former councillor, I am proud of the standing that local government has in the United Kingdom, and of what it contributes to the lives of our communities up and down the country. I will take whatever steps are necessary to uphold the good name of local government, because there can be no place for rotten boroughs in 21st-century Britain.

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I am grateful to the Secretary of State for allowing me to have advance sight of his statement. Given that he had received serious allegations about Tower Hamlets earlier this year, and given the material that had been submitted to the Department, it was clearly right for him to exercise the powers granted to him under the Local Government Act 1999 to appoint PricewaterhouseCoopers to conduct an inspection of the authority’s compliance with its best-value duty. As I said at the time, that audit had to be full, open and transparent if it was to command public confidence. The publication of PwC’s report today has fulfilled the requirements for openness and transparency, and it has certainly done a comprehensive job, which may well explain why the process has taken slightly longer than I think both sides had originally hoped.

The findings of the report are indeed very troubling. There was a lack of transparency in regard to the giving of grants, the governance of grant awards was not effective, and grants were given to organisations that had been ruled ineligible or did not meet the required evaluation score. As for property transactions, in three of the four cases that were investigated—those of Poplar town hall, Sutton street depot and Mellish street—the inspection concluded that

“the Authority failed to comply with its best value duty.”

In the case of Poplar town hall,

“The Authority accepted a late bid from the winning bidder after other bids had been opened, creating a risk of bid manipulation”,

and the authority did not, in fact, select the highest bidder.

In relation to publicity and the use of media advisers, the report refers to a finding by Ofcom that a broadcast constituted political advertising, and states that

“the clear implication is that Authority monies were spent inappropriately on what amounted to political advertising for the benefit of the Mayor…This in itself constitutes a failure to comply with the best value duty in this instance."

The overall conclusion of the inspection is that the current governance arrangements do not appear to be capable of preventing, or responding appropriately to, the failures identified. The fact that the council is still without permanent appointments to its three most important statutory officer posts should also be a matter of great concern to the House. In the light of what has been found, we support the course of action announced by the Secretary of State, although we must recognise that it is a very serious step to take. It is important for the considerable powers with which the Secretary of State has been entrusted to be used not lightly or because of a political disagreement with decisions made by a local authority, but because that local authority has failed in its statutory duties.

When does the Secretary of State propose to announce the names of the three commissioners, and what background and experience will he be looking for in appointing them? Does he intend to consult anyone in making the appointments? Will the commissioners be paid, and, if so, who will bear the cost? The Secretary of State said that he envisaged that the commissioners would be in place until March 2017. Will the length of their term of office depend on the progress that they and the council make, together with the mayor, in dealing with the problems that have been identified? What progress reports will the Secretary of State, and the House, receive? What relationship will the commissioners have with the elected councillors in Tower Hamlets, and what role does he envisage for wider local government in the provision of support for Tower Hamlets, as happened in the case of Doncaster?

At the time of the Secretary of State’s original decision to send in the auditors, he told the House that a file had also been passed to the Metropolitan police for their consideration. The police subsequently announced that they had found

“no credible evidence of criminality”.

Does the Secretary of State believe that the PwC report contains any further information that might warrant its being referred to the police, or is that aspect of the allegations now closed?

In respect of publicity, the inspection report says that a

“significant proportion of the budget is allocated to the”

—weekly—

“publication of ‘East End Life’”,

which seems to be little more than a vehicle for promotion of the mayor. The Secretary of State knows of my concern about that particular publication. Will he tell us when he intends to make a final decision about “East End Life”?

There are, of course, other legal processes under way relating to Tower Hamlets, and it is right for us not to discuss them here. I will say, however, that given the concerns that have been expressed about the conduct of elections, we also support the Secretary of State’s decision to ask the commissioners to take responsibility for the appointment of an electoral registration officer and a returning officer for future elections.

Local authorities have important powers and duties, which they exercise on behalf of the people whom they represent. They should be free to do that independently, in the way that they see fit. However, with those powers come responsibilities, and, in particular, the responsibility to ensure that all decisions are made on an open, fair and transparent basis. The people of Tower Hamlets are proud to live alongside each other in a community that reflects the face of modern Britain, which is why there can be no place for the politics of division in Tower Hamlets or elsewhere, whatever its motivation. It is the job of every locally elected representative to care for the interests of all his or her constituents.

It seems clear from the report with which we have been presented today that those standards have not been upheld in a number of instances in the case of Tower Hamlets and its mayor. Just as, in April, Tower Hamlets welcomed the opportunity to demonstrate that council processes had been run appropriately—which, as we have learnt today, was not the case—it should now accept the findings of this report, and work with the commissioners to ensure that what has gone wrong is put right.

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I agree with the right hon. Gentleman’s assessment. In particular, I agree with his view that in a diverse and vibrant community, a community to be proud of, it is the job and the responsibility of councillors and the mayor to ensure that no one feels out of place and everyone feels welcome.

The right hon. Gentleman asked me a number of questions, of which I hope I have made a reasonable note. He asked me for the names of the commissioners. I hope that he will forgive me: I have not yet made a decision. He asked whether I would want to consult and discuss matters once I had made a decision; well, of course I will. He asked about pay. The council will pay expenses and a reasonable fee. He asked about progress reports. As I said in my statement, we will expect such reports every six months, and, as in the case of Doncaster, we will of course share that information with the House.

I noted the right hon. Gentleman’s special pleading in respect of “East End Life”, which, perhaps, represents an exception to his usual views. We will listen to representations and make an announcement in due course, but that will be entirely separate from the process that I have described.

The right hon. Gentleman referred to criminal activities. I recall what the police said about the subject. I also recall their subsequent statement that they were continuing to look at the issues. I have no idea whether the report contains allegations of criminality, although we will of course send a copy to the police for their information. However, I have here a statement from the mayor of Tower Hamlets which relates directly to the right hon. Gentleman’s point. He said that I had announced that I was “concerned about potential fraud” and that

“the Evening Standard ran these claims on its front page” .

He added:

“These allegations have been rejected by PwC.

The report highlights flaws in processes. These are regrettable. We will learn from this report and strengthen our procedures accordingly.”

I am afraid to say that it seems to me that the mayor’s test is, “If you’re not actually caught with your fingers in the till, you’re innocent.” There are serious flaws in what has occurred. If I was the mayor of Tower Hamlets, I would be hanging my head in shame, because what he has allowed to occur in Tower Hamlets is shameful—not that I have made a final decision.

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Forty years ago our electoral systems and controls were the envy of the world. They have deteriorated dramatically in the past 15 years and this report highlights that fact. This is not only a question for Tower Hamlets, but it features largely in Tower Hamlets. Will the Minister speak to the Electoral Commission to see whether we can have a proper review of electoral systems to ensure this sort of thing does not happen again in areas right across our country?

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I am sure the Electoral Commission regularly reviews procedures, but my hon. Friend says things have deteriorated in the past few years, and he is of course right. Our rules and regulations with regard both to electoral law and to local government conduct assume people will behave reasonably—and the truth is that in the overwhelming majority of local authorities around the country people obey not only the law, but the spirit of the law—which makes it very difficult when we are dealing with an authority that has a cavalier disregard for good practice and probity. I will certainly ensure that the Electoral Commission is made aware of my hon. Friend’s very wise words.

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Every community in our country is entitled to the highest standards of probity and honesty in our democracy, and no community should put up with lower standards and poor governance and transparency, so I welcome the sentiments expressed by the Secretary of State and the shadow Secretary of State. In particular, I welcome the Secretary of State’s commitment to appointing an electoral registration officer and returning officer. For too long the Electoral Commission has relayed concerns about public confidence in the electoral process, and it is vital that we give people confidence that the forthcoming elections will be free and fair. Can the Secretary of State say when those officers will be appointed, as this is, as he says, a matter of great urgency?

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Clearly I will want to listen to what the council has to say to my suggestion, and we have given it two weeks to respond. Assuming—although I make no assumption—that I am not satisfied with its response, it will be a high priority for the appointed commissioners, should I decide to appoint them, to get those two people in place. Given that a general election and London elections are coming up, people need to feel confident in the system.

I did not reply to an earlier question so, with your indulgence, Mr Speaker, I would like to do so now: will we be looking to get a package of care together, as we did in Doncaster with the Local Government Association? Yes, of course we will.

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I thank my right hon. Friend for his statement, but where taxpayers have been deliberately short-changed will he reconsider reintroducing surcharging?

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I have no intention of reintroducing those measures in the lifetime of this Parliament. What is most important for us is to get a strong sense of corporate identity for Tower Hamlets and some transparency, so when people are overriding the sensible decisions made, they understand that it will be given the full glare of publicity.

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Tower Hamlets is a great borough, whose reputation is being destroyed by independent mayor Lutfur Rahman and his Tower Hamlets First party. The mayor tries to present himself as a victim but, from reading the report, it seems that he and his senior colleagues are either in denial—they are the only people who do not know what is going on in Tower Hamlets—or they are lying to PricewaterhouseCoopers. Maybe the Secretary of State could indicate which he thinks is the case. Can he reassure us that the commissioners, if and when appointed, will meet the leaders of the Conservative and Labour groups on the council as a matter of urgency, and may I ask him to reconsider his decision to charge the taxpayers of Tower Hamlets the full sum of £1 million? Given the profile of Tower Hamlets—the poverty of the borough, notwithstanding the new business district, with Canary Wharf—charging Tower Hamlets taxpayers the £1 million seems unfair, especially as they are being victimised by Lutfur Rahman more than anyone else.

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On the latter point, I entirely agree with the hon. Gentleman, but the method of charging is laid down in the legislation, and it needs to be emphasised strongly that the amount PricewaterhouseCoopers charged would have been considerably less had the mayor decided to co-operate and not to obfuscate and delay. The only reason I did not make this statement in July is the delays by that administration. If the mayor would like to make a substantial contribution out of his own pocket to the report, that would seem to me to be a sensible thing to do.

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My right hon. Friend will know that I recognise from personal experience that intervention of this kind is very seldom used and its significance is not to be understated, but will he accept from me, from the experience of when we worked together in Doncaster, that this is utterly justified in this case, and that cumulatively this well-balanced report from PricewaterhouseCoopers indicates an overall political culture that is worse than that discovered in the Doncaster case and that justifies the high level of intervention? Will he pay particular attention to the need to have strong commissioners with experience in electoral and administrative processes, because the lack of objectivity of former monitoring officers has been the subject of comment in the House before, and in Tower Hamlets opposition members, both Labour and Conservative, have in the past not had the protection from the statutory officers that they were entitled to when subject to personal—in the case of my friend Councillor Peter Golds, deliberate homophobic—abuse from supporters of the mayor? That cannot be accepted in a civilised country.

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My hon. Friend was a very distinguished Minister in my Department, and he will know how long I agonised over the decision on Doncaster, because this kind of intervention goes against everything I believe in. I believe that local government is an independent entity and that is one of the strengths of our constitution, but there comes a point at which we need to ensure transparency, fairness and accountability, and it is certainly my hope that one of the commissioners will have extensive experience of practical election law and procedure, as that will strengthen that. It is also certainly my intention that Tower Hamlets will come out of this process much stronger.

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I welcome the actions and proposed actions of the Secretary of State and his comments about the general good conduct of local government and local councillors throughout the country. He referred to audit arrangements. There have been some changes, but there is nothing in them that means that throughout this period the auditor in Tower Hamlets did not have the ability and powers properly to audit these accounts. However, in December 2012 the overview and scrutiny committee, despite being quite weak in many respects, highlighted concerns about the grant process and asked for a referral to the district auditor. Despite that, the external auditor, KPMG, signed off these accounts without qualification for 2012-13, as it did for 2011-12. Are there not serious questions to be asked about the role of the external auditors in this regard and about their value for money, or lack of it, in carrying out this work?

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I was probably unkind to the Audit Commission in many respects, but it did stand around doing nothing on this, as, indeed, it did on Doncaster—which required the LGA to act in Doncaster. The existing auditors have to answer for their own conduct, but I will say that I do not think this was their finest hour.

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There are some good councillors in Tower Hamlets representing the major parties and, as other hon. Members have said, they have been raising these issues for a number of years. Will the Secretary of State ensure that the commissioners have the powers to ensure that the statutory council meetings and the scrutiny meetings of the committees are carried out properly, so that those councillors who have a proper democratic mandate can finally be heard?

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I need to emphasise, and not just for form’s sake, that I am waiting to hear from Tower Hamlets in response to my report, but should I decide to appoint commissioners, one of their prime responsibilities would be to ensure that there was a robust system of transparency, scrutiny and accountability. The reason that I want to do that is that that is exactly what happens in just about every council up and down the land. That is normality, and no one ever really questions it. Sometimes, when I talk to other Government Departments about introducing new things for local government, people suggest nailing them down and making them a statutory duty, but the truth is that we probably do not need to do that. This is how local government operates, and how it has always operated. It puts its citizens first, so when we have one council that disregards that principle, it makes the system much more difficult to operate.

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I, too, welcome the Secretary of State’s statement, and I entirely support the actions that he has outlined. It is absolutely right that there should be effective intervention in the exceptional cases in which individual local authorities have manifestly failed. I was involved in a similar action some years ago in Hackney, which I am pleased to say led to significant improvements. Hackney is now a very different authority from what it was. One of the lessons from that is that intervention to root out problems should also involve trying to build on the strengths of the authority and of the elected members who want to transform the area. Will he tell us what more will be done to encourage the elected representatives of Tower Hamlets who want to transform that area for the better to work with the commissioners to achieve a lasting improvement in the service?

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I might be doing the right hon. Gentleman a disservice, but I think he was the architect of the powers that I am currently using, so I shall be freshly polishing the substantial bust of him that sits in my office. He is right to refer to experience. In Doncaster, we used the Local Government Association and peer-to-peer monitoring, and we got alongside the councillors. It was not just the mayor that we were trying to bolster up; it was the councillors as well. We took cognisance of the fact that we needed to bring out the best. Not everything is wrong in Tower Hamlets, as the hon. Members for Poplar and Limehouse (Jim Fitzpatrick) and for Bethnal Green and Bow (Rushanara Ali) have said. It is a wonderful, vibrant place, but frankly it deserves better leadership.

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I will leave open the question of whether a bust of the right hon. Member for Greenwich and Woolwich (Mr Raynsford) is any more or less substantial than any bust of the Secretary of State.

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I thank my right hon. Friend for his statement, and I want to revisit a comment that has been made by colleagues on both sides of the House. It appears that the rot started to set in as a result of electoral fraud at the very beginning, and that that was the first step. Many people from a south Asian community background feel that it is unfortunate that this spotlight has been shone on the community. I hope that, for the sake of community cohesion, the proposed action can be a stepping stone towards ensuring that we have a full, robust and fair electoral system. Many migrants come to these shores to escape electoral fraud and dishonesty in the countries they came from.

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I agree that electoral probity, honesty and transparency are hallmarks of our democracy. No one, on being elected—or failing to be elected—should have to wonder whether that was the electorate’s decision or a result of the system. With regard to your last remark, Mr Speaker, may I respectfully suggest that it is just a matter of scale?

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We cannot explore this issue at length, but in terms of being intellectually substantial, the right hon. Member for Greenwich and Woolwich and the Secretary of State both score very highly.

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Members on both sides of the House will be shocked by many elements of the report. Knowing how rigorous the process relating to securing grants is in Liverpool, I think many people will be appalled to learn that £407,700 was given to bodies in Tower Hamlets that failed to meet the minimum criteria for being awarded anything at all. What efforts will the Secretary of State’s Department be making to recover that money?

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We will certainly look into that possibility. It is the council and the people of Tower Hamlets who have not received the appropriate sums. In the early part of the report, there is a map that shows how the grants have been allocated in a quite arbitrary way, concentrating them on just one area. The fact that more than £400,000 was simply handed out, as though by some mediaeval monarch, with no thought or consideration goes to the heart of the matter. Public money is precious and it should be accounted for. No one should receive public money without proper scrutiny. I refer the hon. Lady to the map on page 23 of the report, which shows the way in which the money has been distributed. It is an absolute disgrace.

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We are all deeply grateful to the Secretary of State. I hope that everyone saw the map that he took the trouble to show to the House. Inspections can no doubt take place afterwards as well.

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Notwithstanding what has been going on in Tower Hamlets, does my right hon. Friend agree that elected mayors can provide a positive and effective form of leadership in local government?

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Of course elected mayors can provide an effective form of leadership, but given their enormous power, they have an even greater obligation to ensure that there is proper scrutiny of their decisions and that the public have an opportunity to be assured that those decisions are made fairly and reasonably.

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I need to declare that my husband works for the Leadership Centre for Local Government. I welcome the Secretary of State’s statement and, in particular, his comments about good mayors. In Hackney, the mayor has done an incredible job of leading Hackney towards becoming one of the best local authorities in the country. I believe that the mayor of Tower Hamlets should resign on the back of this report. Will the Secretary of State comment on that? Will he also, for clarity, outline to the House what the citizens of Tower Hamlets could do to abandon the mayoral model if they chose to do so?

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The most important thing is for us to get into a position in which the residents of Tower Hamlets can feel confident in the mayoral system and in the functioning of their local government, which is now at best dysfunctional and at worst riddled with cronyism and corruption. I am not entirely sure that it would be appropriate for us to consider a big constitutional change. This is not about something being wrong with the system; it is about something being fundamentally wrong with the way in which the system has operated and with the people that are chosen. Should the mayor decide to resign at this point—I have no belief that he will—can I say that he would not be missed?

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I speak as a vice-president of the Local Government Association and I was a London borough councillor for eight years. I have seldom seen such an appalling indictment of local governance. It is appropriate that we should put on record our thanks and pay tribute to those brave civic leaders such as Councillor Peter Golds who blew the whistle, and to journalists such as Ted Jeory and Andrew Gilligan who, in the best journalistic tradition, have fought a lonely battle to reveal the crooked and rotten regime in Tower Hamlets. May I point out to my right hon. Friend that that regime came about following an election? As my hon. Friend the Member for Northampton South (Mr Binley) said, we need to revisit the election arrangements in Tower Hamlets, focusing on postal votes, personation, polling place identification and, particularly, voter intimidation at polling places. This is imperative, not just in Tower Hamlets but across the country.

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My hon. Friend has a justified reputation for being knowledgeable about matters relating to elections, and if I have a particular problem in this area, he is the first person I seek out. He outlines the task that awaits the returning officer and the electoral registration officer in Tower Hamlets. I hope that robust schemes are put in to support those two officers, be that through commissioners or through the council, should I decide not to act.

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I thank the Secretary of State and his shadow, my right hon. Friend the Member for Leeds Central (Hilary Benn), for defending the best traditions of local government in England from the Dispatch Box today. Given that this week we have seen a further roll-out of the mayoral model, particularly in Greater Manchester, perhaps now is the time for the Secretary of State to define more closely the roles, responsibilities and expectations of an elected mayor and to uphold the independence of the local civil service in law.

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I am not sure whether it will be necessary to uphold the local officials, some of whose rights are enshrined in law. I refer the hon. Gentleman to the point I made earlier to the right hon. Member for Greenwich and Woolwich (Mr Raynsford), which is that for the most part local government operates under this system and we do not need to regulate it too closely because everyone operates, and has always done so, for the benefit of the public. The difficulty comes when a council disregards the norm, the rules and the normal give and take that occurs in local authorities. I am not entirely persuaded that we should legislate for all local authorities because one has behaved badly, but I am persuaded that whatever system we operate, be it a cabinet, committee or mayoral system—I do welcome the variety—it must conform to probity, transparency and accountability under the law.

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Words such as “crooked” and “corrupt” have been used across the Floor of the House in response to the issues before us, yet the police have no reason for action. I just do not understand how one can reconcile corruption as laid out in the forms that my right hon. Friend has pointed out and there being no criminal implications whatsoever. What can be the answer?

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That of course is a matter for the police—it is not a matter for me—but let me quote from the PwC report about the sale of Poplar town hall: It said:

“The Authority accepted a late bid from the winning bidder after other bids had been opened, creating a risk of bid manipulation…While the difference was small, the Authority did not in fact select the highest bidder, in spite of the external adviser’s recommendation to do so….The winning bidder was, as a matter of fact, connected to a person with other business interests that had an association with the Mayor.”

Would a well-run, accountable, transparent council act like that? I suggest that it would not.

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This report may not be welcome but it is certainly timely, and in its comprehensive nature it correctly identifies the mayor’s parlour as the most likely source of the foul, fetid, reeking stench that has been a blight on a wonderful part of our city. I appreciate that the Secretary of State does not wish to rewrite the handbook of local government, but one problem in Tower Hamlets is the conflation of the roles of executive mayor and chief executive officer, with officers of the local government civil service reporting directly to this joint body. Will the Secretary of State at least consider, as we expand the role of the mayoralty, a system that would avoid that sort of contradiction and that sort of conflation occurring in future?

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The conflation is made worse by the fact that the head of paid services is an interim appointment. An interim appointee does not have the same authority as someone who has their feet well and truly under the table, which is why, should we decide to use commissioners, it would be a priority to get a person in place who cannot be removed without their permission. The hon. Gentleman will have heard that, should I decide to act, we are setting up a framework whereby things come into being if the principal officer’s advice is ignored. That is where things are important.

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Some 20 years ago, I was elected to Lambeth council on a mandate to fight corruption. In that struggle, I found that it is a many-headed hydra and that these cultures are long in the making. Mayor Rahman has been running Tower Hamlets since 2008. Is it not right that there should be accounting as to how long this has been going on and how widespread the problem is?

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One certainly wants to root out corruption, no matter where it took place and how long ago—that is fundamentally important. But the priority, should I decide to act, is to give the people of Tower Hamlets the opportunity to make a proper informed decision about their council and the mayor whereby, first, their votes would count, secondly, their voices will be heard and, thirdly, fairness will be there.

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Does the Secretary of State agree that the misuse of public funds and any hint of corruption or fraud in public office brings the whole of our political system into disrepute and risks undermining public confidence in our democracy, and therefore any such incidents should always be vigorously investigated and the individuals responsible held fully to account?

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I entirely agree with that. Many of us will have experienced people on the doorstep saying, “All politicians are on the take. They are all on the make. They are all out for themselves.” Many of us in this Chamber can think of our local councillors, people we have seen in politics for years, and realise that the overwhelming majority are people who simply want to put something back into their local community, to do civic service and to contribute to the value of life. The thing about what has happened in Tower Hamlets is that it besmirches even the most benign, hardest-working councillor, in even the remotest part of this country. That is why I will consider acting.

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I refer the House to my entry in the register as a member of Kettering borough council. Is not one of themes common to what happened in Doncaster, Rotherham and Tower Hamlets the importance, but sometimes the ineffectiveness, of local government scrutiny by councillors in their own authority? What can be done to strengthen the power of scrutiny committees, and raise the profile and esteem of scrutiny work? Instead of councillors always wanting to be in the administration, they should increasingly want to be in the scrutiny side of things, to hold mayors and chairmen of committees to account for making decisions about very large sums?

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We could learn from the hon. Gentleman’s parliamentary example.

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Not for the first time, Mr Speaker, you take the words out of my mouth. My hon. Friend is a member of a very well-run council and he expresses some wise views. I would be interested in hearing his views, and those of any right hon. or hon. Member, as to how we might strengthen scrutiny in local authorities. Given that we have had a while to bed it down, there probably is a time for a re-examination.

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indicated assent.

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I see the Chair of the Select Committee nodding wisely.

Abortion (Sex-Selection)

Motion for leave to bring in a Bill (Standing Order No. 23)

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I beg to move,

That leave be given to bring in a Bill to clarify the law relating to abortion on the basis of sex-selection; and for connected purposes.

Sex-selective abortions are happening in the UK, and there is widespread confusion over the law, which is why this Bill is needed. The Bill is extremely straightforward, merely clarifying that nothing in section 1 of the Abortion Act 1967 allows a pregnancy to be terminated on the grounds of the sex of the unborn child. It is a shame that this clarification is needed. Successive Health Ministers and even the Prime Minister have been very clear on the matter. They state that abortion for reasons of gender alone is illegal. The Prime Minister has described the practice as “simply appalling”. But these Ministers are being ignored. The British Pregnancy Advisory Service, which performs around 60,000 abortions a year, flatly disagrees with them. Even today, it is advising women, in one of its leaflets and on its website, that abortion for reasons of foetal sex is not illegal, because the law is “silent on the matter”.

The British Medical Association holds yet another interpretation. It argues that there may be cases where having a child of a particular gender may be

“a legal and ethical justification for an abortion”

on the grounds that the sex of the child may severely affect the pregnant woman’s mental health. I wish to address that point. Some say that the sex of the unborn child can be a legitimate ground for an abortion where a woman is being threatened with abuse if she carries the baby to term. Those who make that argument perhaps fail to realise that, in such tragic cases, it is not the sex of the child that is the ground for the abortion but the threat of abuse, which may constitute a physical or mental risk. I find it deplorable that anyone would be satisfied to provide a sex-selective abortion to a woman who, after she has had it, is then sent back to an abusive partner. What needs to be addressed in those dire circumstances is the abuse itself. Those women need help, and that is one aim of the Bill.

The BMA represents every doctor who permits or performs an abortion and BPAS is the UK’s biggest abortion provider. We cannot sit idly by as it contradicts Ministers over a practice that the Government state is illegal. Urgent clarification from this House is needed.

The main motivation for the Bill, which is more than merely a desire to achieve a consistent policy line on this issue, is that we know that sex-selective abortions are happening in the UK and little is being done to stop them. We know that because a growing number of courageous women are speaking out about their experiences. Here is the story of Rupinder, which is not her real name, told by Jeena International, which works with UK women who have sex-selective abortions.

“Rupinder decided to abort her third child as she was expecting a girl. She was the eldest of six girls and she recalls that each time her mother went to hospital how disappointed everyone was when each time it was a girl. This experience traumatised and consumed her so much that the thought of giving birth to a girl meant disappointment, betrayal and lowered status within the family and the community. Rupinder made a painful decision to abort which she now regrets as she felt that she had no other choice.”

Then there is the experience of Uraj—also not her real name—which might help to persuade those who doubt that son-preference is a problem in this country.

“During a routine ultra-sound scan Uraj’s husband asked what the sex of the baby was and was told a girl. During the drive home, there was pin drop silence in the car. When they arrived home, Uraj started to prepare the evening meal in the kitchen, trying to silence her daughter at the same time as she was crying. She knew her husband was not happy and was angry that she was expecting another girl. She remembers him repeatedly punching and kicking her in the stomach and passing out. When she regained consciousness her husband had walked out and he sent her divorce papers a couple of months later.”

Despite the existence of such stories, there are still those who claim that there is no evidence for the practice. In response to these critics, Rani Bilkhu, the director of Jeena International, said:

“Saying that there is no evidence is tantamount to saying that these women are lying and that our organisation is making things up.”

It is hard to disagree with her, and it is crucial to note that Ms Bilkhu is referring to the brave few who have come forward in the hope that, in so doing, they will help to combat the practice. Their stories are only the tip of the iceberg. Another organisation, Karma Nirvana, which runs a crisis helpline for women in such situations, says:

“We believe the prevalence of sex-selective abortion in the UK is currently under-reported and this has been the case for many years. We have received, and continue to receive, calls from victims who are pressured to identify the gender of the child for the purposes of identifying if it is a girl. Victims express how they are then pressured by family members to abort the child and to give reasons other than sex selection and how they face abuse if they refuse to request this or abort.”

To those who argue that there is no evidence of sex-selective abortion in the UK, I pose a question: what reason do we have to doubt the word of these organisations? If the testimony of these women and those who work with them is not enough, consider the statement of the GP and former BPAS consultant, Dr Vincent Argent, who said he had “no doubt” that this was a problem in the UK and that there were

“an awful lot of covert sex-selective abortions going on.”

Indeed, I am told that some hospitals operate a policy of not telling the women the sex of their baby for fear that it will lead to a sex-selective abortion.

We can no longer ignore the fact that sex-selective abortion is a reality in the UK. Lest anyone think that this is an issue that applies only in certain communities, they should consider the tragic fact that the words “family balancing” are heard with increasing frequency and understanding across the country.

Thankfully, at the moment, countrywide analyses of birth data do not seem to show significant gender imbalances, but sex-selective abortion is clearly happening. Surely we cannot be saying that we will do nothing until the statistics show a national skewing in gender ratios, as in other countries. That would be wrong. How many more women must come forward before we take action? The time at which Government support should have been offered to women such as Rupinder and Uraj passed long ago, which is why I, and other colleagues, have brought this Bill to the House today.

The Bill is sponsored by 11 female MPs from all parts of the House and supported by a large number of other MPs. Today, I wish to place on record my thanks to those MPs, including: the hon. Members for Stoke-on-Trent South (Robert Flello) and for Linlithgow and East Falkirk (Michael Connarty), my hon. Friends the Members for Rossendale and Darwen (Jake Berry), for Dover (Charlie Elphicke), for Salisbury (John Glen), for Enfield, Southgate (Mr Burrowes), for Stroud (Neil Carmichael), for Daventry (Chris Heaton-Harris), for Stafford (Jeremy Lefroy), for Wolverhampton South West (Paul Uppal), for Harrow East (Bob Blackman), for Sittingbourne and Sheppey (Gordon Henderson), for Tewkesbury (Mr Robertson), for Calder Valley (Craig Whittaker) and for Cleethorpes (Martin Vickers), the hon. Member for East Lothian (Fiona O'Donnell), my hon. Friends the Members for Gainsborough (Sir Edward Leigh) and for Pudsey (Stuart Andrew), and my right hon. Friends the Members for Chelmsford (Mr Burns) and for North Somerset (Dr Fox). All of them support this Bill and I sincerely thank them for that.

Clause 1 would send a clear signal that abortion for gender is not permissible under UK law, clearing up considerable confusion. Subsection (2) would make it clear that the clarification relates only to sex-selective abortions, therefore putting the Bill squarely in line with the Government’s interpretation of the Abortion Act. Clause 2 obliges the Secretary of State for Health to ensure that the law is being upheld. That will enable the Government to think about ways to help such women.

This month, for the first time, the UK has dropped out of the gender equality top 20. It is a further damning indictment of our commitment to female parity that we allow national institutions to contradict the Government on an illegal practice that predominantly affects girls. Even worse, we are choosing to ignore the evidence of women who have gone on the record and who have suffered under this appalling practice. This has gone on long enough. We must now act. As an editorial in The Independent said in January:

“Sex-selective abortion is barbaric and socially destructive.”

This Bill would be a step on the way to addressing this tragic and discriminatory practice and the first and most fundamental form of violence against women and girls. I commend it to the House.

Question put (Standing Order No. 23).

Division 67

4 November 2014

The House divided:

Ayes: 181
Noes: 1

Question accordingly agreed to.

View Details

Ordered,

That Fiona Bruce, Rosie Cooper, Mrs Mary Glindon, Kate Hoey, Pauline Latham, Naomi Long, Fiona Mactaggart, Sheryll Murray, Tessa Munt, Caroline Nokes, Sarah Teather and Dame Angela Watkinson present the Bill.

Fiona Bruce accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 23 January 2015, and to be printed (Bill 112).

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On a point of order, Mr Deputy Speaker. My hon. Friend the Member for South West Devon (Mr Streeter) and I divided the House so that it would have the opportunity to express its view. May I put it on the record that both of us support my hon. Friend the Member for Congleton (Fiona Bruce) and the measure? I have been advised by many right hon. and hon. Members who are members of the Government and who abstained, as is usual practice, that they, too, would have supported it.

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As the House is well aware, that is not a point of order for the Chair, but it is certainly on the record.

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Further to that point of order, Mr Deputy Speaker. As has just been mentioned, there is a convention that Ministers, Parliamentary Private Secretaries and members of the shadow Cabinet and their PPSs do not vote on ten-minute rule Bills. Will you confirm to the House that when the Bill receives a Second Reading, there will be a further opportunity to vote on it, and that the usual convention that it should be a conscience vote will apply?

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It is not a point of order for me to advise people how to vote, but I am sure they will reflect on that when they read Hansard tomorrow.

modern slavery bill (programme) (no. 2)

Ordered,

That the Order of 8 July 2014 (Modern Slavery Bill (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration 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.

Table

Proceedings

Time for conclusion of proceedings

New Clauses and new Schedules relating to transparency in supply chains; new Clauses and new Schedules relating to offences, other than offences of procuring sex for payment; remaining new Clauses and new Schedules, other than new Clauses and new Schedules relating to the Gangmasters Licensing Authority, overseas domestic workers or prostitution; amendments, other than amendments relating to the Gangmasters Licensing Authority, overseas domestic workers or

prostitution.

4.00 pm on the day on which the proceedings are commenced.

New Clauses and new Schedules relating to the Gangmasters Licensing Authority; amendments relating to the Gangmasters Licensing Authority; new Clauses and new Schedules relating to overseas domestic workers; amendments relating to overseas domestic workers; new Clauses and new Schedules relating to prostitution; amendments relating to prostitution; remaining proceedings on Consideration.

6.00 pm on that day.

(4) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at 7.00 pm on the day on which proceedings on Consideration are commenced.—(John Penrose.)

Modern Slavery Bill

Consideration of Bill, as amended in the Public Bill Committee

New Clause 11

“Transparency in supply chains etc

‘(1) A commercial organisation within subsection (2) must prepare a slavery and human trafficking statement for each financial year of the organisation.

(2) A commercial organisation is within this subsection if it—

(a) supplies goods or services, and

(b) has a total turnover of not less than an amount prescribed by regulations made by the Secretary of State.

(3) For the purposes of subsection (2)(b), an organisation’s total turnover is to be determined in accordance with regulations made by the Secretary of State.

(4) A slavery and human trafficking statement for a financial year is—

(a) a statement of the steps the organisation has taken during the financial year to ensure that slavery and human trafficking is not taking place—

(i) in any of its supply chains, and

(ii) in any part of its own business, or

(b) a statement that the organisation has taken no such steps.

(5) If the organisation has a website, it must—

(a) publish the slavery and human trafficking statement on that website, and

(b) include a link to the slavery and human trafficking statement in a prominent place on that website’s homepage.

(6) If the organisation does not have a website, it must provide a copy of the slavery and human trafficking statement to anyone who makes a written request for one, and must do so before the end of the period of 30 days beginning with the day on which the request is received.

(7) The Secretary of State—

(a) may issue guidance about the duties imposed on commercial organisations by this section;

(b) must publish any such guidance in a way the Secretary of State considers appropriate.

(8) The guidance may in particular include guidance about the kind of information which may be included in a slavery and human trafficking statement.

(9) The duties imposed on commercial organisations by this section are enforceable by the Secretary of State bringing civil proceedings in the High Court for an injunction or, in Scotland, for specific performance of a statutory duty under section 45 of the Court of Session Act 1988.

(10) For the purposes of this section—

“commercial organisation” means—

(a) a body corporate (wherever incorporated) which carries on a business, or part of a business, in any part of the United Kingdom, or

(b) a partnership (wherever formed) which carries on a business, or part of a business, in any part of the United Kingdom,

and for this purpose “business” includes a trade or profession;

“partnership” means—

(a) a partnership within the Partnership Act 1890,

(b) a limited partnership registered under the Limited Partnerships Act 1907, or

(c) a firm, or an entity of a similar character, formed under the law of a country outside the United Kingdom;

“slavery and human trafficking” means—

(a) conduct which constitutes an offence under any of the following—

(b) conduct which would constitute an offence in a part of the United Kingdom under any of those provisions if the conduct took place in that part of the United Kingdom.”.(Karen Bradley.)

Brought up, and read the First time.

This New Clause requires businesses over a certain size to disclose annually what steps they have taken to ensure that slavery or human trafficking is not taking place in any of their supply chains or their own business through a statement published on their website, if they have one.

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I beg to move, That the clause be read a Second time.

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With this it will be convenient to discuss the following:

New clause 5—Duty on large UK companies to report efforts to eradicate modern slavery and forced labour

‘(1) The Secretary of State must, not later than 5 October 2015,—

(a) make regulations under section 416(4) of the Companies Act 2006 (c. 46) requiring the directors’ report of a company to contain such information as may be specified in the regulations about modern slavery and forced labour in the supply chain for which the company is responsible, or

(b) lay before Parliament a report explaining why no such regulations have been made.

(2) Regulations made under section (1)(a) must be in force in relation to quoted companies by 6 January 2016 and in relation to large private companies as the Secretary of State believes to be appropriate by 2 January 2018.

(3) Subsection (1)(a) is complied with if regulations are made containing provision in relation to the company’s reporting of work in the following areas—

(a) accountability for tackling modern slavery and forced labour, including policy commitments, resourcing and actions to exercise due diligence;

(b) investigation, monitoring and auditing of modern slavery and forced labour risks in the UK and throughout their global supply chains;

(c) support and access to remedy for victims of forced labour and modern slavery; and

(d) training of staff and suppliers, access to expertise and advice.

(4) No regulations made under this section shall apply to small companies as defined by section 381 of the Companies Act 2006 (c. 46).”

New clause 15—Legal liability for the beneficiaries of slavery

‘(1) The Secretary of State shall within six months of this Act coming into force bring forward regulations to ensure that a person benefiting from an offence under section 1 or 2 of this Act committed by a third party shall have committed an offence where—

(a) the third party acted for that person’s benefit; and

(b) their lack of supervision or control made possible for committing of the offence by the third party.

(2) Regulations under subsection (1) shall not be made unless a draft has been laid before and approved by both Houses of Parliament.”

This new Clause requires the Secretary of State to bring forward measures along the lines set out in EU Directive 2011/36/EU on preventing trafficking in human beings.

New clause 14—Ban on importation of goods produced by slavery or forced labour

‘(1) The Secretary of State shall have the power to prohibit the import at any point of entry to the United Kingdom of any good, ware, article, or product mined, produced, or manufactured wholly or in part in any foreign country that can be demonstrably shown to have been produced by slavery, forced labour, child labour or with the involvement of human trafficking.

(2) The Secretary of State shall—

(a) prescribe such regulations as may be necessary for the enforcement of this provision;

(b) co-ordinate with and issue guidance to the Treasury, HMRC, devolved authorities and any other relevant public authority in relation to the exercise by them of their powers and responsibilities under this Clause; and

(c) have a duty to publish and maintain information on banned goods including a publicly available list of products which there is a reasonable basis to believe might have been mined, produced, or manufactured in the circumstances described in section (1).

(3) The Secretary of State shall establish a process whereby a petition can be made by any person, public authority or organisation who has reason to believe that goods produced in the circumstances in section (1) are being or are likely to be imported into the UK to communicate theses concerns to the relevant authority. Every such communication shall contain—

(a) a full statement of reasons for the claim;

(b) a detailed description or example of the product; and

(c) all relevant information regarding the production of the good.”

This would allow for the banning of the import of any product produced by slavery, convict, forced or indentured labour, including child labour.

Government amendment 62.

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It is a pleasure to open this important debate. Modern slavery in supply chains is an issue that this Government take extremely seriously and have been considering very closely for some time. Tackling modern slavery is not only about catching the perpetrators; it is about making sure that we as consumers and businesses do not inadvertently fuel the demand for slave labour. We do not want businesses in the UK to have any connection to these abhorrent crimes, and UK consumers should not be put in the position where they inadvertently buy goods that could have been produced by individuals who are abused and enslaved.

The Government have been listening carefully to the views of NGOs, businesses and parliamentarians on this issue. I know that many right hon. and hon. Members here today have been campaigning on it for a long time, and their contributions and insight have been invaluable in developing our thinking. I would particularly like to thank the pre-legislative scrutiny Committee on the draft Modern Slavery Bill, who collected such valuable evidence, and the chair of the Committee, the right hon. Member for Birkenhead (Mr Field), for his leadership. I would also like to thank the hon. Members for Slough (Fiona Mactaggart) and for Linlithgow and East Falkirk (Michael Connarty), who have both tabled private Members’ Bills on this topic and have campaigned so tirelessly.

The Government have always been committed to encouraging businesses to take action on modern slavery, but I and the Home Secretary wanted to make sure that any further legislative changes were of real value and would not confuse existing arrangements. Having considered carefully the evidence and calls for change, I believe that we can improve the legislative framework further to encourage business to take action. That is why I am extremely pleased that we have brought forward new clause 11, which will require organisations carrying on a business in the UK above a certain size threshold to disclose each year what they have done to ensure that there is no modern slavery in their supply chains or their organisation. Once businesses are required to disclose what they are doing to tackle modern slavery, consumers, shareholders and campaigners will have a better understanding of what action each business is taking, and can call for more action if they think more is needed.

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I am glad that the Minister is introducing this clause. May I ask two questions? When companies report, will the Government comment? Will the new independent anti-slavery commissioner be expected to comment and try to raise the standards of firms?

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I thank the right hon. Gentleman for his questions. Later in my remarks I will come to how we envisage the provision working. I hope that will address his concerns.

Many businesses are already taking steps to eliminate modern slavery. Once it is clear what activity major businesses are undertaking, we expect that public pressure and competition between businesses will encourage those who have not taken decisive steps to do so. Introducing this measure is an important step, and that is why we want to get it right. The provision does not specify the size of business on the face of the Bill. That is because we genuinely want to listen to businesses and stakeholders about the best possible approach and we will formally consult on the threshold level.

Our thoughts are that this provision should apply to large companies in the first instance. We will consult fully on the threshold and then set the threshold through regulations subject to the affirmative procedure, which will ensure that Parliament has the final say on the initial threshold, and can subsequently review and amend it over time, if required. We will also produce statutory guidance to accompany this provision, setting out the kinds of information that might be included in a disclosure, so that companies understand and have the support they need to comply. Again, we will consult on what information should be in the guidance, working with businesses and other interested parties so that they have a good understanding of what information might be used to comply with the disclosure requirement.

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Like the right hon. Member for Birkenhead (Mr Field), I am glad that the measure is being included in the Bill. Can my hon. Friend give us an idea of the time scale involved in the consultations and when we might see the resulting legislation?

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My right hon. Friend deserves credit for campaigning tirelessly on this and other issues related to modern slavery. I will come on later to how we envisage the process working. We are considering an appropriate timetable. As he will appreciate, we have to get the balance right between letting both Houses have their say and the need to make progress.

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I look forward to hearing further details. We are all aware that over the weekend, for example, there was a furore about T-shirts. That emphasises that many companies think they are free of slavery, but they are not. We must sure that we get on with the measure, because it is important.

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I take my right hon. Friend’s comments and will ensure that they are considered in the process. He is right that one of the difficulties and one of the reasons that we have considered the matter carefully is that many businesses are trying hard to comply, but we need to help them and support them to do so. That is why it was vital that we spent time consulting businesses to make sure that we came up with an effective approach that would make a difference.

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The Minister has not spelled out any dates. The matter has gone through the Joint Committee, it has been debated and there have been various hearings. New clause 11 says that the Secretary of State “may issue guidance”. What we are not getting is any sense of the operational requirements on a company such as Tesco, which was benefiting from slave labour in the fishing industry in Thailand. What would companies be required to do operationally under this guidance?

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I will come, as I said, to how we envisage the measure working. My hon. Friend reflects exactly the balance that we are trying to achieve between getting on as quickly as possible and letting Parliament have its say to make sure that we reflect what Parliament wishes in this respect.

The statutory guidance will only be guidance. We will not tell businesses what a disclosure must include, and we fully expect disclosures to differ from company to company, which is why the Bill does not specify what information a disclosure must contain. Businesses will be at different levels of maturity and will work in very different sectors, so what is applicable to one might not be applicable to others. We therefore believe that well-constructed guidance is the best approach.

In developing that provision, we looked carefully at the California Transparency in Supply Chains Act 2010, which is often cited as the first Act to address transparency issues. We recognised that any measure seeking to address the issue must create a level playing field, which is why we decided not to follow the amendment to the Companies Act 2006 proposed by the pre-legislative scrutiny Committee. The duty in that Act applies only to public limited companies. Our measure will require all companies over a certain size to disclose what they are doing to ensure that there is no slavery in their supply chains.

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My hon. Friend refers to the proposed amendment to the Companies Act. Does she accept that when Parliament put forward a human rights disclosure requirement, it was plainly the intention that it should also include supply chains?

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My hon. Friend, who was such a committed member of the Public Bill Committee, makes an important point. The Government have already legislated to require companies to disclose in their annual reports under the Companies Act that they respect human rights throughout their business. We wanted to ensure that there was a further requirement on slavery, so we ensured that there was full transparency on slavery in supply chains in addition to the requirement that we have already included in the Companies Act.

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I take the Minister’s point about the Government’s approach being superior to our proposal to amend the Companies Act. One of the advantages of her approach is that the proposed legislation will cover those companies that are large but are owned offshore. We want to bring them within the ambit of the Act, because they are really important traders in this country.

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The right hon. Gentleman makes exactly the right point. This is about ensuring that any company doing business in the UK makes transparent disclosures on the action it has taken on slavery in its supply chains. We want UK consumers to understand what actions have been taken by the businesses they transact with so that they can then put pressure on them if they feel that not enough is being doing. The Government will be able to help those companies through the guidance we issue on the action they may take that would give consumers the reassurance they need. We have also improved on the California model by capturing any commercial organisation that produces not only goods but services.

We are also looking at public sector procurement, recognising that modern slavery could happen anywhere. All public sector suppliers are already required to comply with relevant human rights and employment law, and EU procurement rules require contracting authorities to exclude suppliers that have been convicted of certain offences. Social responsibility information is also sought annually from Government suppliers, including details of the steps taken and planned by suppliers in the areas of ethical procurement and supply chain management.

I will now turn to new clause 5, tabled by Opposition Front Benchers, which would require the Secretary of State to make regulations under section 416(4) of the Companies Act 2006 so that quoted companies and certain large private companies are required to include in their directors’ reports information relating to modern slavery and forced labour in the supply chain. It is fair to say that we are all trying to achieve the same aim—ensuring that the supply chains of UK businesses are free from slave labour—but the ways in which we are seeking to do that may well differ. In considering this important issue, we have looked at a number of approaches, including amending the Companies Act and, in particular, the Companies Act amendment proposed by the pre-legislative scrutiny Committee.

I believe that introducing a specific provision in the Modern Slavery Bill, rather than in the Companies Act, sends out a clear signal that the UK will not tolerate any form of modern slavery. It also explicitly raises the profile of the issue by ensuring that the provisions are front and centre of what the Bill and this Government are trying to achieve: to stamp out modern slavery in all its forms. I think that all of us in this House are trying to achieve that. Those who disclose little or no action risk their reputation and, ultimately, their profits.

New clause 14, tabled by the hon. Member for Foyle (Mark Durkan)—he, too, served on the Public Bill Committee—would ban the import of any product produced by slavery, forced or child labour or human trafficking. As I have said, I believe that slavery in all its forms is abhorrent. The provisions we have brought forward to increase transparency in supply chains are both effective and proportionate. It would simply not be feasible for UK agencies to police the import of goods on the basis of whether they had been produced using slave labour. We need those trading with companies in other jurisdictions to apply due diligence and take decisive action where they believe that slave labour is being used. Waiting until the point when products are being imported into the UK is simply too late. That is why it is for businesses to take action to check their supply chains and for the Government to influence and encourage other Governments to do more, such as by improving the application of their employment laws or their approach to human rights issues.

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I thank the Minister for working so hard to introduce new clause 11, which I very much welcome. Will she cover the point raised in an earlier intervention about the role of the anti-slavery commissioner? As she will know, the terms of reference were discussed in Committee. It would be useful to know whether the Government think that the commissioner’s remit will include looking at company reports and assessing how effective they are.

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I thank my right hon. Friend for his comments and for all his work, not only in the Public Bill Committee but in the pre-legislative scrutiny Committee—he has truly lived this issue for most of this year, so I know how committed he is. I think that policing the measure is a matter for us all. In particular, the non-governmental organisations that work on victim protection—I discussed this with them last week—have such an important role to play in bringing to our attention those companies that they believe are not doing the compliance and disclosure that we all expect. We will move on to the specifics of the anti-slavery commissioner’s role later in the debate. My emphasis for the commissioner is on identifying victims and then ensuring that we get prosecutions in order to protect victims. The role is not so much about policing the supply chain measure. Obviously, as the commissioner’s role develops, we may see new issues come to the fore.

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I commend my hon. Friend for listening to Members on both sides of the House regarding the supply chain issue and bringing forward this new clause. Does she agree that the strongest policing of the issue will come from the large companies at the head of supply chains, because they have the infrastructure really to do due diligence and stamp out slavery down the line? The proportionate way in which she is introducing this, with company size being a factor, is one of the strongest signals we could possibly send to the wider world that we want no part of it in our supply chains.

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I thank my right hon. Friend for her comments. She, too, was a member of the pre-legislative scrutiny Committee—there is definitely great experience and knowledge of the issue in the Chamber today. Her work on the issue has been of great help to the Government. She is right that this is about the large businesses. When the Government discussed how best to secure this, it was the large businesses that were keen to see the level playing field, with everyone crossing the line together. She is absolutely right.

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The Minister is being very generous in giving way. This whole measure can be seen not as a burden for businesses, but as an empowering measure, because all responsible businesses will be able to see how they can root out and eradicate slavery. Is there a way in which we could move on in the timing of this measure and on enforcement by ensuring that everyone can see those businesses that are disclosing and complying, and by shaming those that are not? We could do that straight away on the website. Perhaps the anti-slavery commissioner could have their own portal to allow that to be communicated so that we could name and shame in an easy and accountable way.

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My hon. Friend is right to say that this process does not need to wait for the legislation to come in. Businesses can start to make these disclosures now; there is nothing to stop them doing that. The point of the Bill is to make sure that there is a level playing field and that all are crossing the line together. He makes some very interesting suggestions that I will reflect on.

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Will not successful disclosures involve some companies that, having found they are guilty of having slavery in the supply chain, rather than just sacking the suppliers, work with them on paying the workers proper wages? I would not want this measure to perpetuate poverty by pushing slavery further underground. If the public are to take a really rounded view on these reports, they should praise companies that find they are using slave labour and then go on to say what they are doing about it.

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The right hon. Gentleman is absolutely right. This is about getting transparency in supply chains. On the very first day I started as a Minister, the first thing I was lobbied on was transparency in supply chains, and it became clear that this is all about finding out what is going on—shining a light. As he says, there may well be slavery within these supply chains, and if so action can be taken to deal with that.

I would add that in my experience of meeting Governments overseas where there may be concerns about human rights abuses, one of the strongest and most powerful tools to convince those Governments that they need to take action is that their businesses will not be able to trade with businesses here in Britain because we expect to be sure that there is no slavery in the supply chain, that human rights are not being abused through the supply chain, and that when consumers buy goods in Britain they can be confident that all action that possibly can have been taken has been taken to eradicate these practices from the supply chain. That is what transparency does—it shines that light and gives that clarity to the consumer.

New clause 15, tabled by the hon. Member for Foyle, seeks to require the Secretary of State to lay regulations to ensure that individuals who have benefited from modern slavery that has been perpetrated by a third party are criminally liable where their lack of supervision made the modern slavery offence possible. We do of course want business to take action to eliminate modern slavery from supply chains, and, as we have discussed, the Government are bringing forward a legislative measure to achieve this. However, I am not persuaded that a potentially very broad criminal liability in this area is the best approach. I want these provisions to drive a change in behaviour. That is why I firmly believe that the Government’s amendment to introduce a bespoke provision into the Bill is the right one. As I said, it goes much wider than the provisions in the California Act by including all sectors, not just retail and manufacturing, and the provision of services, as well as goods, but it does so in a way that does not create undue burdens for business.

I fully acknowledge the good intentions behind right hon. and hon. Members’ amendments. However, in the light of discussions and the work that the Government have undertaken in this area, and the effective provision that we are proposing today, I hope that they will feel able to withdraw them.

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I rise to welcome the Government’s new clause 11 and to speak to new clause 5, which stands in my name and the names of other right hon. and hon. Members. It is very good news that the Government have finally moved on this matter in the final stages of the Bill. Not including supply chains was the single biggest omission from the draft Bill and the Bill introduced to this House, and it is good to see that this important concession has been secured from the Government.

I congratulate all those who have campaigned on this issue, including my hon. Friends the Members for Linlithgow and East Falkirk (Michael Connarty), for Slough (Fiona Mactaggart) and for Birkenhead (Mr Field), and, on the Government Benches, the right hon. Members for Uxbridge and South Ruislip (Sir John Randall) and for Meriden (Mrs Spelman). The hon. Member for Foyle (Mark Durkan) has tabled two new clauses that seek to extend the responsibilities of UK companies towards those who work in the supply chains, including compensation for victims and a ban on the importation of products produced using slavery.

Outside this House, a huge number of groups have also campaigned on the issue. I pay particular tribute to the Walk Free Foundation, the Ethical Trading Initiative, and the British Retail Consortium. I would like personally to thank all the groups and companies that I have met in order to inform Labour’s position, including Next, Primark, the Co-operative Group, Focus On Labour Exploitation, and Amnesty International.

Including supply chains in this Bill is the right thing to do. We cannot be serious about tackling slavery in the United Kingdom if we are prepared to accept products made using slave labour being sold on our high streets or commissioned by our companies. There has been an increasing awareness that slavery and forced labour are increasingly linked to the production of goods for major UK companies. We saw the collapse of the Rana Plaza factory where, sadly, 1,200 people lost their lives, many of whom were making clothes for UK stores. We saw the newspaper story by Felicity Lawrence—she won awards for it—about the prawn fishermen who were held in a lifetime of slavery reinforced by routine murder, having to watch individuals being tied to masts between boats and torn apart. We know that those prawns were being sold to Tesco, the Co-op and Aldi in the United Kingdom. We also know of small children who have been paid pennies a day to sew sequins on to children’s clothes.

The strength of feeling about dealing with such examples is very high. Eighty-four per cent. of the UK public want legislation on this, and so do the overwhelming majority of companies. For far too long, it was just the Government who were holding up progress. While most large retailers are implementing policies to tackle the issue, it is hard to see tangible progress, and hard for consumers to judge between companies. We want to introduce mandatory standards for reporting to force companies to adopt standard procedures. It is important to stress that we want to support British businesses that are acting to create the level playing field that the Minister mentioned. This is not just about forcing companies to act, but helping them to act.

One thing that has become clear to me in looking at this issue is how complicated the supply chains for UK companies are. It is hugely complex for UK companies to inspect their suppliers. Even the best practice in auditing is not foolproof. As the right hon. Member for Uxbridge and South Ruislip said, we saw at the weekend the story about Whistles and the Fawcett Society T-shirts. I very much hope that The Mail on Sunday, which took such an interest in this area, will be campaigning hard to make sure that it talks about getting supply chains into the Bill and supports it as a very important piece of legislation.

The Bill is about changing market conditions and creating market incentives for suppliers to show themselves to be fair. That would mean suppliers being able to show that they are meeting International Labour Organisation standards, backed up by kite-marking and an inspection regime. This is hard for UK companies to implement individually, but collective action could make it the norm. The Bribery Act 2010 has been hailed for reducing the burden on businesses by creating consistent standards and an industry to audit what is happening.

The Opposition’s proposal in new clause 5 builds on the recommendations of the Joint Committee and is modelled on section 85 of the Climate Change Act 2008. It does not bring in regulations directly; rather, it requires the Secretary of State to do so using an enabling power in the Companies Act 2006. While the regulations are in secondary legislation, the new clause lays out the framework for how they should work. I want to emphasise how our new clause addresses the three key issues in making a workable change to the Bill.

The first issue is coverage. Our new clause 5 is explicit that this must cover large private companies and quoted companies. Of course, that may exclude some international firms working in the UK, but it is important to know that most will have UK subsidiaries that will be covered by the law.

The second issue is comparability. I am concerned that the Minister seemed to say that she did not think that this issue is particularly important. Consumers, non-governmental organisations and investors must be able to look at two reports and make direct comparisons between companies. Any large company could write a report laying out work in this area, but we need regulation to be specific enough to ensure that we can compare like with like.

Our new clause demands regulation under four headings, which were drafted in coalition with the Ethical Trading Initiative. The first is

“accountability for tackling modern slavery and forced labour, including policy commitments, resourcing and actions to exercise due diligence”.

The second is

“investigation, monitoring and auditing of modern slavery and forced labour risks in the UK and throughout their global supply chains”.

The third is

“support and access to remedy for victims of forced labour and modern slavery”.

The fourth heading, which fits in with what my right hon. Friend the Member for Birkenhead has said, centres on

“training of staff and suppliers,”

giving them access to expertise and advice.

Finally, our new clause deals with the issue of enforcement by placing the regulations within the framework of the Companies Act 2006. That is absolutely key, because if we look at what has happened in California—the Minister referred to the Californian model—we will note that it has been very hard to see which companies have complied and how they have done so. Proper enforcement is not just about companies writing a report; it is about companies complying with the reporting requirements. As we have seen in California, without an enforcement procedure, companies are able to interpret the reporting requirements however they see fit.

Placing the reporting requirement in the Companies Act deals with that. There is already a range of personal and corporate enforcement procedures. Directors would have individual fiduciary duties to ensure the accuracy of the report and those involved in the compiling of the report, including accountants and lawyers, would also be under a professional duty to ensure the report is not misleading.

Moreover, this is a report that would be used by investors, not just consumers, so it could put pressure on companies from both sides. If firm x produces a report saying it has done a and b to eradicate slavery and then a newspaper shows that to be incorrect, investors would have the right to take action against the firm for the resulting fall in share prices. That seems to me to be one of the biggest incentives we could provide in pursuing this objective.

We support the Government’s new clause 11, but the details of the three points I have just set out are to be left to secondary legislation.

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The hon. Lady is making powerful points about what teeth the guidance will have. Does she think that there are lessons to be drawn from when this House debated the Financial Services and Markets Act 2000, when it was believed that the behaviour of the banks would be influenced by reputational damage, a belief that was found to be false in the light of their future conduct? There seems to be a reliance on the idea that guidance in itself will have a deterrent effect on major corporations, but that has to be backed up with some teeth.

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I could not agree more. That is why it was important that I set out why new clause 5 deals in detail with the kind of issues that need to be clearly addressed in secondary legislation. I am grateful for the hon. Gentleman’s intervention.

Just to recap: we support the Government’s new clause 11. Obviously, we want to wait and see what happens with the secondary legislation as it is introduced. It is surprising that the Government have gone against the Joint Committee’s recommendation and the evidence presented by several large companies arguing against stand-alone regulation, although the Government have now seen fit to pursue that. That poses particular problems for enforcement. I am sure the Minister has seen the briefing from the coalition of groups campaigning for change, which states:

“Monitoring of compliance with the provision needs to be taken seriously as this will be central to its success in driving change. We are concerned that the provision is currently weak on how monitoring and enforcement will be undertaken. The Government’s approach relies on a civil enforcement procedure by the Secretary of State, which means that in reality the measure would be unlikely to deter any businesses other than those who would in any case seek to comply on a voluntary basis.”

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I thank the hon. Lady for giving way—I hope she will be able to wet her whistle while I speak. Does she agree that the monitoring process could make a start through the anti-slavery commissioner taking a more active role in observing and supervising company reports?

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The right hon. Gentleman makes a very important point. Time is limited this afternoon, but I hope there will more discussion in the other place about extending the role of the independent anti-slavery commissioner to do exactly what the right hon. Gentleman has said.

In the Minister’s closing remarks, I want assurances that whatever is proposed will apply to all large companies; that the regulations will be detailed enough to allow comparability; and that there will be a clear enforcement mechanism so that consumers, investors and NGOs can see who has complied and know that they can trust the report they have read.

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It is a pleasure to contribute to this debate and, in particular, to support the principles in new clause 11. Some good points have also been made about new clause 5. As was evident on Second Reading, the House has coalesced around the principle of providing transparency of supply chains. It has taken a while to get there. I pay particular tribute to the Minister for the work she has done and the leadership she has shown in bringing together the Government in this way. That takes some doing.

The importance of the integrity of basic human rights in supply chains has not been recognised until now, unlike—shamefully, in some ways—the integrity of products in supply chains of hardwood, tobacco and pharma- ceuticals. Today represents a big and important step change in recognising the integrity of those human rights.

New clause 11 covers the principles of accountability and reporting, which are also addressed by new clause 5. We can deal with the qualms and queasiness surrounding burdens by saying that any responsible business will welcome new clause 11 as an empowering measure that can help them disclose any issues and root out slavery.

I accept the point made by the right hon. Member for Birkenhead (Mr Field). When I said that we should name and shame, I did not mean that this is about good guys and bad guys. This is about disclosure. We should take a rounded approach. There needs to be full, transparent disclosure all the way along the chain so that everyone can shine a light to see what is happening and then deal with it appropriately. By shining that light all the way down and up, the most responsible businesses will expose some things that they are not happy about. They will then be able to say, robustly and confidently, “We’ve done that.” We should ensure disclosure by naming those who are disclosing in a proper and full way, and shaming those who are not disclosing, which is an issue of concern.

Once this measure is on the statute book, compliance and enforcement must be effective. From a light-touch point of view, I agree that transparency and accountability can happen through individual company websites, but we need to go further and enable all concerned to access information centrally. That is why I suggested in an intervention that the independent anti-slavery commissioner should have a portal. The responsibility for maintaining it would not be the commissioner’s alone, but people would be able to look at that independent website and see the names of those companies that have complied with the manner, spirit and intention of the statutory guidance. That is important and I think it would help. Given the timing involved with this measure and the need to get the office of the anti-slavery commissioner up and running, it is important that we make progress, possibly through the Home Office website, ahead of any parliamentary processes, including secondary legislation, and give people the opportunity to show that they are very much on the side of full disclosure.

I must say that I have one or two concerns. I am concerned about whether new clause 11 may be unduly complex, particularly in relation to enforcement via civil enforcement injunctions. Are such injunctions to expose the fact that a company is not up to speed on disclosure, or are they to get to the root problem of exposing its supply chain? The provision may be unduly bureaucratic and costly, and it may well not serve the purpose that everyone wants.

To deal with that concern, we need to consider encompassing the approach covered by the Companies Act 2006. That has been suggested as an alternative, but we should consider how to embrace it. Last autumn, Parliament’s intention was that quoted companies must report on human rights issues, and it was plainly our intention that those issues must include supply chains. In its response to the Joint Committee, the Home Office stated that

“there is no specific requirement, rather an expectation, that companies report on supply chains…under the current rules.”

We need to ensure that the expectation is made a requirement, so that that indeed happens.

One alternative, as the Joint Committee said, is to add supply chains as a reporting requirement, so let us at least make it clear that Parliament’s intention is to ensure that when public companies report on human rights issues, they include supply chains. Why would that be very useful? The Companies Act route is a top-down approach from public companies and does not cover the offshore issue—the Government have certainly embraced a much more comprehensive reporting obligation—but it imposes duties on directors and such reports are audited. The approach therefore already has independence or teeth at an early point. We cannot simply have companies reporting on their website; it is important to have auditable reporting. Companies Act processes ensure that directors, accountants or lawyers make sure that reports are up to speed, and we need to find a practical way to embrace that advantage.

We want to ensure that the Bill leads the way internationally and is world-class, as the Home Secretary has said. The Companies Act approach gives it portability across different legal systems. New clause 11 is important, but it relates to our country’s legal system in the relief that it provides through injunctions. The Companies Act approach would allow other corporate governance ways to ensure that our lead is followed internationally. At the very least, we now have consensus, and I appreciate the direction in which the Government have gone.

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Could not other countries follow our lead by simply taking new clause 11 into their legislation?

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Other countries could do that, but they have different means of enforcement, which cannot be simply transferred. However, they could certainly take a lead by adopting much of what new clause 11 says.

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My hon. Friend has done valiant work on this topic. I agree with him that the enforcement angle needs more attention, but does he not agree with me that new clause 11 takes us a huge step forward? We should congratulate the Government on that, and now invite them to take the next step and get the enforcement right.

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I do not want to understate my praise—this is a huge step forward—but we, as legislators, want to ensure that what we approve is really fit for purpose and has the necessary teeth. There are other elements that can be done without legislation: the issue of international corporate governance goes beyond legislation, and it can best be dealt with by sharing good practice internationally.

I will finish on a very positive note. Today, we can say that British law is no longer just concerned about the sustainability of the wood in our furniture, but is more concerned about the freedom and safety of the millions of men, women and children involved in making that furniture.

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I, too, want to pursue the theme just followed by the hon. Member for Enfield, Southgate (Mr Burrowes) in congratulating the Government, but drawing attention to just how important new clause 11 is. The Home Secretary made it very plain in her first article in The Sunday Times that she wanted a clause on supply chains in the Bill. I therefore congratulate her, her very able Minister and the person in No. 10 who changed his mind at this very late stage in the Bill’s passage. Heaven rejoices at the sinner who repents even at the eleventh hour, and some credit should go to the Prime Minister for changing his mind on this matter.

My hon. Friend the Member for Kingston upon Hull North (Diana Johnson) has played a valiant role in spearheading our approach to the Bill and has borne all the heat of the day on it. However, I think we all accept, whatever efforts we have put in, that the legislation is the easy part of the process. The next part will be very hard—to get a genuinely mass consumer movement of people who do not buy goods if they are not kitemarked as being free of slavery.

As we draw stumps on this House’s proceedings on the Bill, it is important to commend it, as the hon. Member for Enfield, Southgate has just done—it will not just be a good Bill, but a world leader when it leaves the other place—but the real work will be on enforcement and on convincing consumers that they have the vital job of not buying goods that are tainted by slavery.

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In following the right hon. Member for Birkenhead (Mr Field), I want to acknowledge the Minister’s efforts in making good the serious deficit in the Bill, but also those of the right hon. Gentleman and many other colleagues during the pre-legislative scrutiny, on Second Reading and ever since. Those efforts by him and the many others who spoke on Second Reading and in Committee have reflected the very strong concern of some of the groups that have worked so hard to support and promote the Bill and that understand the issue so well.

I am one of those who can take yes for an answer, now that the Government have made good on this matter. However, I would say, “Yes, up to a point, but maybe it could be improved.” I believe that the Bill could go further. The hon. Member for Kingston upon Hull North (Diana Johnson), who tabled new clause 5, has shown that there are important issues. The headings given in subsection (3) are clear and useful, and it is right for them to be in primary legislation, rather than left to remote chance by way of secondary legislation.

New clause 5 is also important in what it would do with respect to the Companies Act. I understand what the Minister said about not only using that Act as the way to deal with the problem, but how it brings in very clear corporate responsibilities. In that context, it also highlights relevant professional obligations, which would give real meaning to what the Government and others are trying to encourage in relation to ethical investment, and in relation to the understandings we should all have about any investments—all the new pension provision and everything else—for which we are the source of the money.

The hon. Member for North East Cambridgeshire (Stephen Barclay) has referred to financial services legislation. We have said that more and more needs to be done to ensure full and due transparency in that context. We should complement such provisions in the Bill. I therefore hope that the Minister—I support her new clause 11—can see her way to accepting new clause 5 as well.

I tabled two of the new clauses in this group of amendments. The Minister has addressed new clause 15, but let me point out that throughout the gestation of the Bill, we have been told that it is meant to be world leading. New clause 15 is an attempt to bring in the clear standards in EU directive 2011/36/EU on preventing trafficking in human beings. If the Government are at pains to consolidate and codify much existing law in the Bill and to present it as world-leading legislation, the question arises whether we should not also use it to show that we are at least matching and adhering to international standards and obligations, including EU ones. My clause on the legal liability for the beneficiaries of slavery would be consistent with the EU directive, and I see no reason why we should not explicitly ensure that our legislation is up to that standard.

New clause 14 seeks to go further on questions of the supply chain and sourcing, and the possible use of slavery or exploited labour. We are meant to be discussing world-leading legislation, but the new clause reflects legislation that was introduced 84 years ago in the United States of America. We hear a lot about Californian legislation on supply chains, but the Tariff Act 1930 in America gave power to prohibit the importation of

“goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country…by forced labour.”

The new clause is therefore hardly a radical view or innovation, and the Californian legislation—referred to often in debates on the Bill—exists in wider US legislation.

New clause 14 does not just rely on language in the 1930 legislation, which puts responsibility on the Secretary of State at the Treasury to prescribe the necessary regulations, but it also reflects the essence of the code of federal regulations in the United States, which establishes the process whereby anyone can petition the Department of Homeland Security. That explicitly provides for:

“Any person outside the Customs Service who has reason to believe that merchandise produced in the circumstances mentioned is being, or is likely to be, imported into the United States.”

The United States legislation does not guarantee that the state will fully police all those issues, but it indicates that it will respond to legitimate petitions or legitimately presented evidence that gives rise to concern, and that it will act. Legislators in the US have ensured that the state reserves that power to act to prohibit the import of a good.

In the Government’s new clause 11, the onus is—understandably—on companies, which have to be able to show what they are doing regarding their supply chains. We wanted supply chains included in the Bill not as a badge for companies, but as a shield for workers in developing countries and other places—including the UK—who could be exploited. The difference is between this measure being a corporate badge or a shield for human beings. If companies have only to present what they say they are doing, and consumers then make their judgment and choice, why—if we are legislating for company responsibility but also for consumer responsibility and activism—is there still no rule for the state or Government?

New clause 14 clearly states:

“The Secretary of State shall have the power to prohibit the import at any point of entry to the United Kingdom of any good, ware, article, or product mined, produced, or manufactured wholly or in part in any foreign country that can be demonstrably shown to have been produced by slavery, forced labour, child labour or with the involvement of human trafficking.”

By rejecting that new clause we are saying that even if exploitation can be demonstrably shown, we do not want the state or any Secretary of State to be able to act against that. Whether in relation to the T-shirts that were in the newspapers recently, or anything else, we are saying that when such issues are raised, we do not want anybody or any part of the state to have responsibility for saying, “The nature of those products in terms of the quality of the supply chain is clear, but it is nobody’s job to move to do anything other that what companies are inspired to do, or what consumers are mobilised to do.”

New clause 11(9) provides that:

“The duties imposed on commercial organisations are enforceable by the Secretary of State bringing civil proceedings in the High Court for an injunction or, in Scotland”.

Will the Minister clarify what provisions will be made in Northern Ireland? Other amendments that we will discuss later thankfully include measures to improve the scope and smooth interface of the legislation vis-à-vis Northern Ireland, which I was at pains to address in Committee. I notice, however, that reference to Northern Ireland is missing from new clause 11, although the reference to Scotland is clear.

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It is a great pleasure to stand up on Report and commend the Government for the progress we have made, but let us be clear that we are a little way along the journey. It is not as if the exploiters of women and children—whether for cheap labour, slave labour or sexual exploitation—are going to quake at the knees because we are passing this Bill, so let us be honest about that. As we try to close the loopholes, increase vigilance, and impose discipline on the trade that the exploiters are involved in, they will change the way they run that trade.

I spent time with the Serious Organised Crime Agency as part of the Government’s great police service parliamentary scheme. It showed us a model that it has drawn up of much of the trafficking that goes on throughout Europe and that it is trying to combat. It looked like a five-dimensional or 10-dimensional spaceship, and had been drawn up by the London School of Economics to show exactly how such organisations work. They are multinational and beyond any discipline; they have no morals and think only about the money at the end of the chain.

In reality, for many people at the “murky” end of the supply chain—that is how it was described by some of the witnesses from whom the Joint Committee took evidence—that is where the abuse takes place. To reach into that is very difficult as we get further and further from the first payment of money from a customer to a company, and the first payment from a company to its supplier, who supplies in a nice neat box with a nice label—it might be a nice T-shirt, for example, that costs £45 but is made by people who get paid 62p an hour and are locked in the factory and not allowed out in case, as the owner said, “They might come back hung-over and not able to work well the next day”. That is what we are dealing with.

We have made some strides, and many people were mentioned in the Joint Committee and the Bill Committee. Some, however, will not be mentioned—the right hon. Member for Meriden (Mrs Spelman) has unfortunately left her place, but she took an interest in this matter and went to see the Secretary of State for Business, Innovation and Skills to talk about the need to include this measure on the supply chain, at a time when we were getting the resistance referred to by my right hon. Friend the Member for Birkenhead (Mr Field). People of good will saw that a Bill that did not refer to supply chains was not in the spirit of the efforts that have been made over the past 10 years by people such as Anthony Steen and the Human Trafficking Foundation, and the EU Parliamentarians against Human Trafficking, who were involved in trying to deal with an international, pan-European and pan-world trade.

When I saw new clause 11, which followed a generous promise by the Minister in the final Committee sitting to introduce a measure on supply chains, I was impressed. It is fairly thorough. There is a lot of bureaucratic writing that I would not necessarily have put into my Bill, not knowing how the mechanisms of the Government’s legislation works in all its depth, but part after part reflects the matters I referred to in my private Member’s Bill in 2012. I thank the Minister and all those who supported that measure for what has been done. We are on a journey and we have a long way to go, even if we pass the Bill and it is effective. We know that there are reservations. They will come up again in the other place to deal with the things that are not dealt with in the amendments and new clauses tabled here.

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The hon. Gentleman makes a valid point that some people will seek to avoid the provisions, but does he accept that that is the case with all forms of criminality, and that the Bill gives us a platform, for the first time, to tackle some of the worst cases of modern-day slavery?

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I have absolutely no reservation in supporting that as a principle. We are doing the right thing. We have set together a number of pieces of legislation in the Bill that will deal with those who will wish to avoid its provisions, and I will mention some of the measures in new clause 11 that I think are effective and welcome.

I am glad that Government amendment 62 says there will be an affirmative resolution for regulations, because it is right that we will go into a Statutory Instrument Committee with them, and that we are given the chance to debate them with the Minister. I will mention some of the things I hope we will discuss when we get there.

New clause 5, which was tabled by my hon. Friends on the use of the Companies Act 2006, is something we should look at, because it is right. The hon. Member for Enfield, Southgate (Mr Burrowes) made the point that we need as many tools as possible as well as the court of public and business displeasure when people do not act as we want. Therefore, we should look at how we can put some firmer things in the Bill, but I think that the big change in the Government’s thinking is to be welcomed, because they are using the principle of the California Act, which is much wider than the Companies Act.

By the way, I notice that the British Retail Consortium wants to include smaller companies. When I introduced my Bill, I used the figure of £100 million. In California, the figure was $100 million, and my amendment used £60 million, which is the equivalent. Clearly, quoted companies under the Companies Act are likely to be well outwith that in size. We want to respond to that and use the same reporting structures as the Act would use.

I tabled amendment (a) to new clause 11 because we should look at international standards. I have respect for the Secretary of State and the civil servants who advise her, but international organisations have looked at the issues again and again. In my Bill, I had a reference to the 1999 International Labour Organisation convention No. 182, which is about the definition of the worst form of child labour, because there can be difficulties with that in other countries.

I will tell a quick tale. When I was 10, I went out and found a job as a milk boy. I wanted to go out and become useful to my family. My brother had a job delivering rolls. I got 10 shillings—50p now—and about 1 shilling and sixpence in tips a week. I walked from the centre of town home and gave my mother 11 shillings and sixpence for the family budget. There were five of us and basically one labourer’s wage. It was not easy to survive. Was that child labour? I did not feel exploited. I loved it—I loved every bit of it. I am sure it is why I am so healthy now in my older age. I ran and ran, and perhaps built up the infrastructure for a long life. It was great and I loved it.

In other situations, people say, “If a woman takes a child with her when she is making bricks in India, at what age does that become a breach of child labour? When is that child able to contribute to a very low family budget and when do they want to do so?” The ILO has looked at those questions but we have not looked at them in great detail in the House. Hopefully, the ILO’s considerations will be used in the recommendations made under new clause 11(8), which is about giving guidance on the information that should be reported.

There is a bit missing from this Bill that was in my Bill: my clause 3 said that there should be some way of ensuring that the company that is found to use such labour provides assistance and protection for the victims of slavery. The guidance should continue that. It should say what a company should do as a benchmark. We should not just say, “We’ll not use that company any more,” but do something about it.

Mention was made of consumers. When I went around talking to people in supermarket networks—Mumdex is in many supermarkets in my area—they had a concern about slavery and the things that bothered their conscience, but they said, “If you’ve got four or five kids coming up to the summer, you buy the cheapest stuff you can get that is going to last the summer, because most of it’s going to be thrown in the bin by the end of the summer anyway. It is the company’s job to make sure I am not buying something that is contaminated by slave labour.” That is totally right. Perhaps some people who go up the high street and buy very highly priced goods ask themselves about that, but most people in my constituents’ environment will not.

I therefore welcome new clause 11(9). It is fantastic to see. If hon. Members read what is on the net about the Bill, they will see that people in Scotland think it has nothing to do with them. They think it is an English Bill. People should look at the new clauses to realise that it is a trans-border, transnational Bill. Subsection (9) states that people in Scotland can take an organisation to the Court of Session to enforce the fact that it is not carrying out the duty in the Bill. That will be very welcome.

I do not know whether the new clause covers Northern Ireland—I had that question in mind because it does not mention Northern Ireland. Do people there go to the Court of Session? Where do they go? Do people in Northern Ireland go to the High Court in England if they feel that a company in Northern Ireland is not doing something they should be doing? I am grateful to the Minister for including Scotland. That is an important measure.

We are making progress and I welcome the proposals. I hope the Government are listening when the Bill goes to the other place because they could add other things to it.

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I, too, was a milk boy, and a butcher’s boy and a paper boy, in my younger days. My hon. Friend has raised the subject of tips many times over the years. My wife and I booked a cruise two years ago through a British travel agent company. The cruise sailed from Southampton. When we spoke to the staff on the cruise, they said they did not receive any wages, and that they only got tips. If that is not modern slavery, I do not know what is. I was not fortunate enough to be on the Joint Committee. Does the Bill cover that?

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I could not quote the legal detail, but I would think that if a company based in the UK did things like that, it could be taken to the Court of Session in Scotland or the High Court in England and found not to be complying with the law.

As a Scot and as an economist, I read Adam Smith’s “Wealth of Nations”. It talks about comparative advantage, but before that, he wrote a document about the morals of competition. The good thing about the Bill is that it says, “We believe in competition.” We are not talking about pricing people out of the market entirely. We are saying that it must be morally justifiable as well as economically justifiable.

I want to finish with a response to one of my constituents, who, when it was reported that we were discussing the Bill, wrote in an e-mail blog: “What’s that got to do with creating employment in Scotland and your constituency?” The reality is that, if we can stop people using cheap labour, and particularly slave labour at the worst end, we give British companies the chance to compete better. That is why the BRC is behind the Bill. If there is a voluntary code, the bad companies just will not comply, whereas if there is a mandatory code and if we can take people to law to enforce it, everyone must do the right thing or be held to account.

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I will not detain the House for long as we have other matters to come on to, but I want to make a few closing remarks.

This has been a very good debate and I am very grateful to all right hon. and hon. Members who have contributed to it. I think we can safely say that all those who have made contributions are great campaigners on this issue. They all deserve credit for getting us to this point, and they have changed the views of so many.

The Government have taken their position from the evidence in the discussions and debates we have had with business and others on the best way to tackle this issue. The point was made that the Companies Act 2006 has already been amended to ensure that human rights are respected in companies’ annual reports. We considered whether that, and measures coming forward from the EU, would be enough. We consulted fully with business to ensure we did not take action rashly that would have been ineffective. Many people have campaigned on this issue for many years, but we wanted to ensure that the measures would be effective, appropriate and proportionate. Representations have been made to me, particularly by smaller businesses. It has been important for us to consult properly and fully. We have listened to businesses and taken the point that the way to achieve the transparency we all want is to introduce the Bill. We want businesses to start to act as soon possible. They do not need to wait for the Bill—they can start now.

The right hon. Member for Birkenhead (Mr Field) referred to the mass consumer movement and he is absolutely right that Fairtrade is a model. We consulted the Fairtrade Foundation on how it approached this matter and how it managed to make the public aware of fair trade to the extent that Biddulph and Leek in my constituency are Fairtrade towns. That happened because people wanted it to happen. The Bill seeks to enhance that and to add to it.

Points were made about tougher enforcement. We do not expect companies to ignore the new disclosure duty, but rightly the injunction procedure is there so that if a company does fail to disclose as required, the courts can force it to do so.

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I am sure the Minister is aware that one of the common tactics used by banks when subject to regulatory action is to get rid of middle management, settle with the regulator at the earliest opportunity and profit from the 30% discount as a way of mitigating the fact that they have been caught out by enforcement breaches without actually changing their culture. Is there not a risk of the same thing happening with these injunctions?

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I hope that businesses will act in a way that deals with this problem. That is what businesses told us they want to do. They want to ensure there is no slavery in their supply chains, and consumers and others want to see that too. I hope that will be the case.

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On consumer action, what are the Government’s intentions with regard to public procurement, because the public purse will be a significant consumer? On sourcing and supplying, will there be a Government public procurement standard for companies?

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I addressed that point briefly in my opening comments, but I will come on to it again in a moment. I will just finish the point about enforcement.

The courts can force companies to disclose, but that is different from the issue that some companies may make disclosures that consumers, shareholders and campaigners feel show that inadequate steps are being taken to eliminate slavery from supply chains. The courts can act if no disclosure is made, but there is action that civil society can take if it feels that companies are not making appropriate disclosures. The Government believe it is for civil society to put pressure on businesses that are not doing enough to eliminate modern slavery from their supply chains. The Government’s new clause makes this as easy as possible by ensuring that disclosures are easily accessible. The link to disclosure must be in a prominent place on a business’s website home page.

Before coming on to public sector procurement, I would like to address the concerns expressed by the hon. Member for Foyle (Mark Durkan) on the extent of the new clause. I can confirm that the new clause on supply chains will apply to England, Wales, Scotland and Northern Ireland. This is made plain by later amendments to be taken later. I want to put it on the record that I am grateful to the Northern Ireland Executive and all the devolved Administrations for the excellent work we have done together to ensure that this provision can extend to the entire UK. He will know, from our discussions in Committee, that there were points on which we needed agreement—not just on this matter, but on many others as well. I am pleased that we have made so much progress. It was important throughout that this was not Westminster imposing on the devolved Administrations. Action has been taken because the devolved Administrations wanted to take that action.

On public sector procurement, all public sector suppliers are required to comply with applicable law, including relevant human rights and employment rights law. UK public procurement policy is that social, environmental or ethical issues can be taken into account in the procurement process where that is relevant, proportionate and non-discriminatory. We expect public sector procurement to be as transparent as other procurement, which is covered elsewhere. We will consult on this matter, and I encourage people who are concerned to respond to the consultation. It should be noted that whatever action is taken will be taken only following the affirmative procedure to ensure that Parliament has its say. We will ensure that points are put forward.

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The Minister speaks very well on Parliament giving affirmative support to these proposals. Does she envisage that being given before the first week of May next year? [Interruption.]

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The shadow Minister makes the point that perhaps that needs to be by the end of March, if the right hon. Gentleman is asking whether it will happen before the general election. I cannot answer that question at the moment. Perhaps I could write to him on the specifics.

I am delighted that new clause 11 will amend the Bill to include the measure on transparency in supply chains that so many have worked so tirelessly for, for so long. I hope right hon. and hon. Members will not press their amendments to a Division. I look forward to this measure being part of the world-class Bill we all wish to create.

Question put and agreed to.

New clause 11 accordingly read a Second time, and added to the Bill.

New Clause 3

Offence of child exploitation

‘(1) A person commits an offence if they exploit a child.

(2) It shall be such an offence even if there was no threat or use of violence, other forms of coercion, deception or any abuse of a position of vulnerability.

(3) A child may be in a situation of exploitation whether or not—

(a) escape from the situation is practically possible for the child; or

(b) the child has attempted to escape from the situation.

(4) The consent or apparent consent of the child to the exploitation is irrelevant.

(5) “Child Exploitation” includes but is not limited to, the exploitation of the prostitution of others or other forms of sexual exploitation; the exploitation of labour or services including begging or practices similar to slavery, servitude or forced or compulsory labour; the exploitation of or for criminal activities including benefit fraud; the removal of organs; forced or servile marriage or enforced surrogacy; exploitation for unlawful adoption; and exploitation by enforced drugs smuggling, manufacture, production or distribution.”—(Diana Johnson.)

Brought up, and read the First time.

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I beg to move, That the clause be read a Second time.

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With this it will be convenient to discuss the following:

New clause 4—Offence of exploitation—

‘(1) A person commits an offence if they exploit a person by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or abuse of a position of vulnerability, or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person.

(2) A person may be in a situation of exploitation whether or not—

(a) escape from the situation is practically possible for the person; or

(b) the person has attempted to escape from the situation.

(3) The consent or apparent consent of the person of the exploitation is irrelevant where any of the means set forth in section 9(1) has been used.’

New clause 24—Human trafficking—

‘(1) Any person who for the purpose of exploiting a person or persons—

(a) recruits, transports, transfers, harbours or receives a person including by exchange or transfer of control over that or those persons;

(b) by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or abuse of a position of vulnerability, or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person,

commits an offence of human trafficking.

(2) The consent or apparent consent of a person to the acts referred to in subsection 2(1)(a) or to the exploitation shall be irrelevant where any of the means set forth in subsection 2(1)(b) have been used.’

New clause 20—Control of assets related to modern slavery offences—

‘(1) In section 40 (Restraint orders) of the Proceeds of Crime Act 2002 after subsection (9) insert—

“(10) In the case of an investigation or prosecution under the Modern Slavery Act the court shall presume that the alleged offender will dissipate his assets unless restrained.”

(2) The Secretary of State shall within six months of this Act coming into force bring forward regulations to—

(a) presume a freezing order will be granted within 24 hours in respect of assets where the court is satisfied that—

(i) there are reasonable grounds to suspect that some of those assets have been obtained as a result of an offence under this Act, and

(ii) those assets are over and above those reasonably required for living and business expenses.

(b) confer on the police power to issue a notice on financial advisers and institutions placing a duty of care on those institutions in respect of movement of assets that might hinder an investigation into an offence under this Act.

(3) The Chancellor of the Exchequer shall within six months of this Act coming into force bring forward regulations to provide that assets recovered in respect of an offence under this Act shall be paid to one or more of—

(a) the police and/or,

(b) the Gangmasters Licensing Authority, and

(c) the victim or victims of the offence.

(4) The court will require an asset declaration from anyone subject to a restraint order within 24 hours in respect of any financial interests in assets held in whole or in part in the United Kingdom and in overseas territories. In the event of a false declaration, this will be treated as an aggregated factor in the setting of any future penalty.

(5) Regulations under this section shall be made by statutory instrument and shall not be made unless laid before in draft and approved by both Houses of Parliament.’

New clause 21—Civil remedy—

‘(1) An individual who is a victim of an offence under section 1, 2 or 4 may bring a civil action against the perpetrator in the County Court and may recover damages and reasonable legal costs.

(2) For the purposes of subsection (1) “damages” shall include the greater of the gross income or value to the defendant of the victim’s services or labour or the value of the victim’s labour as guaranteed under the national minimum wage guarantees of the National Minimum Wage Act 1998.”

This provision creates a civil remedy for victims of trafficking, to allow victims to pursue a civil claim for compensation directly from the trafficker in the absence of a criminal prosecution.

Amendment 132, in clause 1, page 1, line 12, at end insert—

‘(c) the person exploits another person within the meaning of section 3(4), (5) or (6) of this Act and the circumstances are such that the person knows or ought to know that the other person is being exploited.”

Amendment 135, page 1, line 12, at end insert—

‘(1A) For the purposes of this Act—

(a) it is irrelevant whether a child consents to being held in slavery or servitude; and

(b) a child may be in a condition of slavery, servitude or forced or compulsory labour whether or not—

(i) escape from the condition is practically possible; or

(ii) the child has attempted to escape from the condition.”

Amendment 136, page 1, line 12, at end insert—

‘(1A) For the purposes of this Act—

(a) it is irrelevant whether a person consents to being held in slavery or servitude; and

(b) a person may be in a condition of slavery, servitude or forced or compulsory labour whether or not—

(i) escape from the condition is practically possible; or

(ii) the person has attempted to escape from the condition.”

Amendment 133, page 1, line 17, after “labour”, insert “or is being exploited”

Amendment 143, page 2, line 3, at end add—

‘(5) The consent or apparent consent of a person to the acts referred to in subsections 1(1)(a) or 1(1)(b) shall be irrelevant.”

Amendment 152, page 2, line 4, leave out clause 2.

Amendment 134, page 2, line 30, clause 3, at end insert—

‘(1A) For the purposes of section (1) a person is exploited only if one or more of subsections (4), (5) or (6) of this section apply in relation to the person.”

Amendment 151, in clause 7, page 4, line 30, at end insert—

00 “Proceeds of Crime Act 2002

In section 69, subsection (2) of the Proceeds of Crime Act 2002, after “debt owned by the Crown”, insert—

“(e) in the case of an investigation or prosecution under the Modern Slavery Act the court must presume that the alleged offender will dissipate his assets unless restrained.””

Amendment 138, in clause 41, page 29, line 29, at end add—

‘(9) A child is not guilty of an offence if—

(a) he or she was under the age of 18 when the act which constitutes the offence was done; and

(b) the offence was integral to or consequent on the trafficking, slavery or exploitation of which he or she was a victim.”

This amendment aims to ensure a child victim of trafficking is not obliged to prove they were compelled to commit an offence before being able to access the protection of the statutory defence in line with international standards.

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New clause 3 and new clause 4 seek to introduce specific offences for child and adult exploitation, and I would like to test the opinion of the House at the appropriate time.

The Bill fails to cover cases of severe labour exploitation, and many recent high profile cases show we need specific laws to tackle it. New clause 3 would also help to stop workers being exploited and paid below the minimum wage, which is often a driving force behind local businesses being undercut by unscrupulous employers. The new clause would be a historic measure that would, for the first time, make the exploitation of workers, adults and children an offence. Importantly, it also addresses what has been described as “a lacuna” in the Bill, which fails to recognise the specific nature of exploitation of children in the UK and fails to address the issues that have led to so few successful prosecutions for child trafficking and slavery. This grouping incorporates a series of amendments from all parties with a common aim—to enable more prosecutions for trafficking, slavery or exploitation. This is exactly in line with what the Minister said repeatedly in Committee about getting more prosecutions.

At this stage, the Opposition are focusing specifically on the offences of exploitation, even though in Committee we tabled or supported many of the other amendments that have been tabled today. We support their aims and hope to return to them in the other place.

The Government claim that the Bill will enable more prosecutions. To do so, it transposes existing offences from three pieces of legislation into a single Bill. The Bill maintains the current offence of holding someone in slavery and merges two existing offences of human trafficking into a single offence of human trafficking. To secure a prosecution for human trafficking, it is necessary to show that X was trafficked and that this trafficking was done for the purposes of exploitation. It is important to stress that, because nothing in the Bill deals with the structures of these offences or the very high threshold needed to get convictions. In short, I do not think there is anything here that will enable more prosecutions.

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Is the hon. Lady as surprised as I am that, as far as I am aware, only one person has ever gone to jail for breach of a Gangmasters Licensing Authority offence? Does that speak to the high hurdles to which she alludes?

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The hon. Gentleman makes a very important point. We shall discuss the GLA later, but the hon. Gentleman’s point shows why we need to think again about the offences in the Bill and how we can make them stronger to ensure that we get more prosecutions.

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Does the hon. Lady agree that the offence of exploitation ought to be committed even when the threat of force is against someone other than the person being exploited—against a relative of the person who is being exploited, for example?

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The right hon. Gentleman makes an important point, which should perhaps be debated more fully in the other place. I absolutely agree that this is a strong point that needs to be considered.

Returning to the low number of prosecutions, in 2011-12 there were 15 prosecutions for slavery offences, but no convictions. Since the introduction of the offence, there has shockingly never been a prosecution where the victim was a child. In 2011, there were 150 prosecutions for trafficking offences, but only eight convictions. To put those figures in context, in 2013 the national referral mechanism received 1,746 separate referrals of cases of human trafficking, 432 of them involving minors. The UK Human Trafficking Centre identified 2,744 victims of human trafficking last year, 600 of whom were deemed to be children.

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One problem—not necessarily about the offences per se—is getting the victims to bear witness and testify against those who trafficked them. Victims’ fear is one reason we are not getting successful convictions, and we need to do more for them.

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I absolutely agree with the right hon. Gentleman about the need to ensure that victims feel able to come forward and give evidence against those who have trafficked them, but I still think that we need to get the offences right and ensure that the offences are fit for purpose—an argument that I shall develop.

The new clause in the name of my hon. Friend the Member for Sheffield Central (Paul Blomfield) is designed to address some of the structural problems with the drafting of the trafficking offence, and I want to put it on record that we fully support it. The amendments tabled by the hon. Member for Enfield, Southgate (Mr Burrowes) are designed to clarify the law on slavery to enable more prosecutions. I am sure that he will speak eloquently to those amendments. Again, we support what he is trying to achieve in principle.

What we are trying to establish is the principle that there should be separate offences for exploitation. The Opposition’s view is that this is the most effective way of overcoming the substantial barriers currently in place in getting convictions. I take into account as well what the right hon. Member for Uxbridge and South Ruislip (Sir John Randall) said about victims and giving evidence.

To explain why our approach is needed, I want to turn to the evidence of Lord Judge, who was until recently the Lord Chief Justice and the most senior criminal judge in the country. He said of this Bill:

“We are making provisions for slavery, servitude and compulsory labour in clause 1 of the Bill. In Clause 2, trafficking is the offence. It becomes an offence because you do it with a view to exploitation. You could have an offence of trafficking, full stop, and a separate offence of exploitation. As it stands at the moment, you have a single offence with two parts—here is the trafficking and here it is with a view to exploitation. My own view is that trafficking in people is a dreadful thing to do, trafficking with a view to exploiting them is a more serious thing to do, but exploiting them is also serious. My concern reading Clause 2 and the various subclauses is ‘Is this really what we want?’—a single offence that has two ingredients, rather than two separate offences.”

Lord Judge is not the only senior lawyer to think this is needed, so let me turn to the evidence given to the Committee by Nadine Finch, a barrister specialising in children’s law. She said:

“In terms of child exploitation, in my view, as somebody who represents a lot of child victims, it is a real lacuna. Children are at a huge disadvantage in evidential terms. They very rarely understand they have been trafficked—what trafficking means—or what kind of evidence is needed. They particularly do not understand the movement part of being trafficked to the situation of exploitation; because they may well have been duped by their elders—by their parents. They may well have been too frightened, or not understood the movement. Therefore, children are more likely to be able to tell you about what happened to them when they were exploited than to be able to tell you about what happened to them when they were actually moved, or when travel was involved. That is a really important issue.”

She went on to say:

“Many of my child clients can tell me about what happened when they were exploited in domestic servitude, in a restaurant or in prostitution; but they actually did not understand enough about the links between people who brought them across England, Europe or the world, and therefore they are not able to assist the police or prosecutors in terms of a trafficking offence. They can assist in the matter of exploitation, and I have got quite a few children who have been able to take the police to a house where they have been kept in domestic servitude or sexual exploitation, but they are not able to explain who brought them to that house, and therefore no prosecution happens.”

So, two eminent lawyers, a whole coalition of children’s charities and the Joint Committee on the draft Bill all recommend specific adult and child exploitation offences.

I quoted Nadine Finch’s evidence at length because I think the House really should consider her experiences of these cases, and I think she encapsulates very well the problem with the current drafting. I also think we should consider this in the light of recent UK cases, particularly the sexual exploitation of girls in Rotherham, Rochdale, Oxford and elsewhere. We know that thousands of girls were exploited and abused, but little was done and few prosecutions were attempted. These girls were neither trafficked, nor held in slavery, but they were exploited, and putting specific offences in the Bill would move the legislative framework from one looking at individual sexual acts—who was present, was there consent and so forth—to one in which exerting control over a course of behaviour is more important. It is my view—and that of the charities and lawyers I work with—that this will enable more prosecutions, which we all want to see.

Given what we have learned recently about the scale of exploitation, and particularly in view of the report by my hon. Friend the Member for Stockport (Ann Coffey), I believe that we now have to look again and ask the Government to reconsider their approach to these offences.

New clause 4 is specifically about adults. There is a higher threshold in establishing exploitation but the principle is the same: exploitation should be a separate offence. That is illustrated best with a few case studies. Craig Kinsella was held captive by the Rooke family in Sheffield and forced to work from 7.30 in the morning until midnight for no pay. He slept in a garage. He was starved and beaten with a spade, a crowbar and a pickaxe. He was not trafficked into the country; he was a British national. He had even voluntarily moved in with the family, but was then subjected to appalling abuse and exploitation. There was extensive evidence of this abuse, including from the Rookes’ own CCTV system. The Rookes were convicted, but not of slavery or of trafficking; rather they were convicted of false imprisonment and other lesser offences.

Gheorge Ionas, 35, exploited fellow Romanian migrants. He forced them to live in unheated buildings without sanitation, paid them as little as £100 a week for full-time work and made them scavenge for food from supermarket bins. Mr Ionas was fined just £500 for operating as a gangmaster without a licence.

Police in Kent described a similar situation where they came across 29 Lithuanian chicken catchers. Seventeen of these people gave written evidence and statements, which included beatings, theft of their wages, living with anything up to 12 people in a two-bedroom house, bedbug-ridden mattresses, dogs being set on workers, being held in the back of a Transit van for up to five to six days at a time without any ablutions—no washing or toilet facilities—being driven from job to job and not being paid for their full hours. The police thought this was criminal conduct but the CPS said there was not enough evidence to prosecute. No action was taken.

Following this case the evidence from Detective Inspector Roberts of Kent police to the draft Bill Committee was clear:

“Certainly within Kent, we have had quite considerable difficulty in working out what is criminal exploitation, particularly labour exploitation, where people are working very, very long hours in difficult circumstances. If you asked an average member of the British public whether that person was being exploited, they are, but because of their circumstances they are allowing themselves to be exploited and to remain within circumstances of exploitation.”

With the number of these cases growing, the evidence is now overwhelming that we need specific legislation to stop these people being exploited and to stop British workers being undercut.

In conclusion, the aim of the amendments is to prosecute those who traffick and exploit, but we must also recognise the amendment in this group that seeks to prevent those who have been trafficked from being prosecuted. That is an equally worthy cause and is particularly important in relation to children. It is quite frankly a disgrace that more trafficked children are being prosecuted than their traffickers. Labour welcomed the inclusion in the Bill of a statutory defence, though as was made clear both in evidence