House of Commons
Wednesday 11 October 2017
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Business Before Questions
New Southgate Cemetery Bill [Lords]
Third Reading opposed and deferred until Tuesday 17 October (Standing Order No. 20).
Oral Answers to Questions
The Minister for the Cabinet Office was asked—
Devolved Administrations: Brexit
I met the Deputy First Minister of Scotland and the First Minister of Wales to initiate a full programme of engagement with their respective Administrations. Engagement continues at official level with the Northern Ireland civil service. I look forward to reviewing cross-departmental progress at the forthcoming Joint Ministerial Committee on EU negotiations.
I thank my right hon. Friend for his answer and I welcome the recent announcement of the new civil service hub in Cardiff, which will bring 4,000 civil service jobs from across Wales into one hub. Llandrindod Wells in my constituency was named this morning as the happiest place to live in Wales. Will my right hon. Friend give a commitment to continuing to see the whole of Wales as a target for future civil service collaboration?
I add my congratulations to the people of Llandrindod Wells on selecting an MP who will make them happy, too. My hon. Friend is quite right about the civil service hub in Cardiff. The UK Government have a significant footprint in Wales and the hub will deliver a range of benefits not just to people in Cardiff but across Wales, demonstrating the impact we can make through greater collaboration.
It has to be said that the hon. Member for Brecon and Radnorshire (Chris Davies) always looks a very happy chappie and we are delighted to know it.
Will my right hon. Friend confirm that once we leave the EU we will have total control over our internationally recognised fisheries limits, that fishermen from Scotland, Wales, Northern Ireland and England will benefit from any new management regime, and that this will not be bargained away during any negotiations?
I am happy to assure my hon. Friend that when we leave the EU we will be fully responsible under international law for controlling UK waters and the sustainable management of our fisheries. Through the negotiations we will of course work to achieve the best possible deal for the UK fishing industry as a whole.
Will the First Secretary of State please explain what consultation there was with the Welsh and Scottish Governments before the publication of UK Government papers on Brexit issues, including customs, Northern Ireland and research and development?
The position papers we have published over the past couple of months go to the devolved Administrations before they are published. As I said in my answer to the original question, we have regular consultation—indeed, later today I will be meeting the First Minister of Wales.
We are told that the UK Government are preparing for a no-deal Brexit scenario. Will the First Secretary of State detail the preparations his Government have made for a scenario in which the European Union (Withdrawal) Bill fails to gain the legislative consent of the devolved Administrations?
The Government are, as the hon. Gentleman and the House would expect, preparing for all eventualities. That is the only responsible thing for a Government to do and that is what we are doing. The House will have a considerable amount of time during the Committee stage, which is coming up shortly, to debate the EU (Withdrawal) Bill. I hope, partly through the re-institution of the Joint Ministerial Committee, to make sure that the legislative consent motion will be agreed.
Given that there is no devolved Executive in Northern Ireland at present, how are views from Northern Ireland being fed into this process?
As I said in reply to the original question from my hon. Friend the Member for Brecon and Radnorshire (Chris Davies), at the moment views from Northern Ireland are being fed in through the Northern Ireland civil service, which is currently doing administrative tasks. I am sure my hon. Friend will join me in hoping that we will soon have a Northern Ireland Executive back doing their job.
A lot of us are concerned about the shenanigans going on here and would prefer it if the Government gave a straightforward commitment to transferring relevant powers to the devolved Administrations instead of foutering around. Will the right hon. Gentleman confirm that, when referring to UK-wide arrangements after Brexit, he is talking about co-decision between the UK Government and the devolved Governments—or does he mean that this Government will tell the others what to do?
No, the spirit and letter of the devolution settlement is that there are areas of responsibility for this Parliament and the Westminster Government, and areas of responsibility for the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly. We have said that these have to be UK-wide frameworks. I think the hon. Gentleman’s colleagues in the Scottish Government accept that we do not want to break up the UK single market, but that there are responsibilities that will remain with Scotland.
The Chancellor has written today that the Government must be prepared for every outcome from Brexit, but that he will not make resources available for a no-deal scenario. As well as managing the civil service, the Cabinet Office is responsible for co-ordinating Government policy. Whatever the Chancellor’s views, will the Minister now indicate that there is sufficient civil service resource currently working on the potentially disastrous no-deal Brexit scenario and its impact on the devolved Administrations?
I commend to the hon. Gentleman what the Chancellor actually said. I am happy to reassure the hon. Gentleman and the House that, yes, the Government are preparing for all eventualities, as any responsible Government would.
The truth is there is no contingency planning for a no-deal Brexit, and that explains the breakdown of policy co-ordination, for which the Minister is supposedly responsible, right at the heart of Government. The Government are a shambles and wholly divided. We have a Prime Minister who said that no deal was better than a bad deal, a Chancellor who now says he will not fund a no-deal scenario and a Foreign Secretary who seems perfectly happy with a no-deal arrangement. The stakes could not be higher, but the Government are a shambles. Is it not time they either got their act together—it is the Minister’s job to make sure that they do so—or stood aside and prepared the way for a Government who will act in the national interest?
I am happy again to assure the hon. Gentleman that the appropriate arrangements for all eventualities are being prepared, and of course the Government are working hard to make sure we get the best Brexit deal for this country—one that will ensure the future prosperity of this country for decades to come.
According to the Electoral Commission, the register used for June’s general election was the most accurate for years. The identity of applicants is verified by electoral registration officers using digital services provided by the Cabinet Office and the Department for Work and Pensions, and we have seen record levels of engagement. Recommendations in Sir Eric Pickles’ report have been accepted by the Government and will be used to improve the integrity of electoral processes further.
Given concerns about students having the opportunity to vote twice, will my right hon. Friend consider joining me in supporting the private Member’s Bill presented by my hon. Friend the Member for Wellingborough (Mr Bone)?
Although being registered at more than one address is perfectly legal, voting more than once at a general election is a crime that currently carries an unlimited financial penalty. The Government are reviewing a range of measures to prevent people from voting twice at general elections, and I also understand that the police are investigating allegations in several local authorities on this issue. I remind hon. Members that any evidence that individuals might have voted twice must be reported to the police.
I recognise the fines that my hon. Friend has drawn to the House’s attention, but is it not time to consider custodial sentences for election fraud?
My hon. Friend makes a very good point. At the moment, there is an unlimited fine, but the Government are considering a range of other measures, including in relation to criminal proceedings, in order to move forwards.
The Government are committed to ensuring individual voter registration. A complete register means nothing unless it is underpinned by accuracy, and we have the most accurate register. On electoral fraud, I make the point, as I have done repeatedly before, that it is the perception of fraud that is so corrosive to our democracy. The Electoral Commission’s report published today shows that 38% of people recognise that electoral fraud is an issue at general elections.
The integrity of the electoral register suffers while millions of British citizens are unregistered. What specific measures is the Minister taking to register the millions of young people who remain off the register, and what specific funds has he allocated to that worthy cause?
I am sure the hon. Gentleman will welcome the fact that at the last general election there were more people on the electoral register, and more people voting, than there have been since 1992. We should bear in mind the state of the Labour Government between 2001 and 2005, when there were far more people off the register. We are determined to have a democracy that works for everyone, and we are introducing a range of measures to that end. They include the publication of a democratic engagement strategy later this year, which I hope the hon. Gentleman will read.
Is the Minister aware of the massive change in Northern Ireland constituencies in terms of proxy votes between the 2015 general election and this year’s election, when thousands of people applied for and received proxy votes, which, in some constituencies, resulted in a virtual usurping of the election result? What plans has the Minister to address that?
As the hon. Gentleman will know, electoral policy in Northern Ireland is dealt with by the Northern Ireland Office, but the Cabinet Office is working closely on how individual electoral registration can be introduced in Northern Ireland. I will refer the hon. Gentleman’s point to the Northern Ireland Office, but proof of identity has been required in polling stations in Northern Ireland since 1985, and the Labour Government introduced photo ID in 2003. Northern Ireland has led the way when it comes to ensuring that we can crack down on electoral fraud.
We are committed to providing a clear and secure democracy. Following our manifesto commitment, we are working with four local authorities to pilot voter ID in polling stations, and working with Tower Hamlets to pilot changes in postal voting in 2018, as part of a developing programme to strengthen electoral integrity.
I welcome the fact that the Government are piloting voter ID. I had the privilege of being in Iraqi Kurdistan for the recent independence referendum, when voter ID was used with apparently few difficulties. Which local authority areas are involved in the Government’s pilot, and how can the system be rolled out to further authorities in due course?
I am pleased to be able to confirm that the four local authorities that have agreed to take part in the voter ID pilot are Woking, Gosport, Bromley and Watford; and, as I have said, Tower Hamlets is involved in the postal vote pilot. We had an agreement with Slough as well, but at the last minute Labour councillors voted against joining the pilot, against the advice of their own officials. As we have heard this morning, the Labour party does not seem to take electoral fraud very seriously.
Is it not a fact that in 2015, when more than 50 million votes were cast, the number of convictions for electoral fraud was in the low double figures? Is not the truth that this is a Trojan horse, introducing voter suppression methods to enhance the electoral prospects of the Conservative party?
If the hon. Gentleman wants to be taken seriously on this issue, he should listen to the Electoral Commission, which in 2014 urged the Government to adopt the kind of measures that we are adopting now. He should also persuade Labour councillors, in Slough and elsewhere, to take it seriously. If Labour is seen as the party that is soft on electoral fraud, that will not be a very good look for Labour.
Government Procurement: SMEs
We will shortly publish the latest small and medium-sized enterprises’ spending performance figures. The Government remain committed to a challenging target to ensure that a third of their procurement spending is with small businesses by 2022, and we are continuing to take action to achieve that.
Following a recent report by the Federation of Small Businesses, will the Minister tell the House whether she intends to issue guidance requiring local authorities to increase their use of dynamic purchasing systems so that small businesses are not locked out from lists of potential suppliers to those authorities?
The hon. Lady has always been a doughty champion of the spreading down of procurement practices to local government so that it, too, encourages more SMEs to take part in the process. We have issued guidance to local authorities on how local government can support SMEs, and have legislated to ban burdensome pre-qualification questionnaires for low-value contracts.
The Government are committed to transparency in lobbying. In 2014 we created a statutory register of consultant lobbyists to increase transparency among those seeking to lobby Ministers and permanent secretaries on behalf of third parties. That legislation complements the existing framework of industry-led regulation.
The Minister has restricted trade unions and charities with regard to lobbying; can he tell us when he will properly regulate big business lobbying to Government?
The Government are of the view that the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 increased transparency around the work of consultants and lobbyists and therefore we will not be undertaking any future review. The Act confers powers on the register of lobbyists to remove an organisation from the register if that organisation seeks to undertake any work in future.
The Government have stated in their manifesto a clear commitment to maintain the voting age of 18, so the Government have no plans to lower the voting age in elections.
The Labour Welsh Government are currently making provision in Wales for 16 and 17-year-olds to vote in local and Welsh Government elections. Will the Minister urge his Government and other Conservative Members to support the Bill of my hon. Friend the Member for Oldham West and Royton (Jim McMahon) on 3 November, to prove that this Government do not disregard the views of young people?
As the hon. Gentleman has made clear, this Government have given powers to the devolved Assemblies to make decisions in respect of their local government and regional elections, but the position of the Government remains clear: on the parliamentary franchise, the age will remain at 18. Of course, I look forward to the many contributions that will be made in the debate on that.
The voting age is one thing, but has my hon. Friend given any consideration to the issue of education in schools around electoral fraud—for example, double voting?
The Government are of course determined to engage the many young people in schools in the democratic processes. Recently I established a national democracy week, in which I hope all Members will take part. It is vital for democratic participation that we encourage young people to get involved as early as possible, and to be educated in our democratic processes.
Does the Minister agree that sometimes young people make mistakes, and that it cannot be right that a teenager at the age of 16 can make the mistake of joining the Conservative party and voting in the inevitably upcoming leadership election, yet would be denied a vote at the forthcoming general election?
We have had many debates on the franchise, and I have sat as a Back Bencher through several debates in my parliamentary career so far; I think Parliament has voted three times on the issue and has consistently decided not to introduce votes at 16. We will be having future debates, and I look forward to engaging with the hon. Lady in them in due course.
Relocation of Government Functions
The Government’s industrial strategy will help to create a more balanced economy by moving arm’s length public bodies out of London and the surrounding areas, and into clusters in the regions and devolved nations of the UK. Our hubs programme is also expected to save £1.78 billion over 20 years, as well as providing state of the art buildings from which civil servants can deliver world-class services to our citizens.
I am delighted at the announcement of 6,000 more jobs at a Government hub in Leeds, but does the Minister agree that infrastructure spending is also critical to delivering greater prosperity for the north?
The Leeds hub will be a catalyst for growth in the surrounding region. We continue to do more to connect our communities and drive productivity. The Chancellor recently announced a further £300 million investment for HS2 and £100 million for the road network—significant investments for the northern powerhouse. That will be crucial for driving growth and regeneration in the north and midlands.
Torbay has not only beautiful beaches, but direct rail connections to London, Manchester and Birmingham, improved road links, and sites ready for regeneration. Which of the plans the Minister listed does she believe present the greatest opportunity for relocating jobs to Torbay?
My hon. Friend has, as ever, emphasised the stunning attributes of his constituency. Our commitment to the public bodies relocation programme seeks to move significant numbers of public servants out of London. I assure my hon. Friend that I have heard his advertisement for the English riviera and the potential it certainly brings.
This month we celebrate the first year of our world-leading national cyber security strategy. A major milestone has been successfully establishing the National Cyber Security Centre. [Interruption.] It has shown that it plays a vital role in providing cyber security to keep our country safe. The NCSC responded to 590 significant incidents, more than 30 of which were sufficiently serious to require a cross-government response. Our five-year national cyber strategy is working to defend our people, businesses and assets, deter our adversaries, and develop the skills and capabilities we need. [Interruption.]
Order. There is a very large number of intense private conversations taking place in the Chamber, but the voice of Braintree must be heard. I call Mr James Cleverly.
The vast majority of private sector employment in my constituency of Braintree is in small to medium-sized enterprises. What steps are the Government taking to make it easier for SMEs to bid for and successfully win Government contracts?
My hon. Friend is completely right about the importance of SMEs, which is why we have taken a number of steps to enable them to access Government contracts more easily, including by putting in place the Contracts Finder website and a requirement for all public sector buyers to have 30-day payment terms in their contracts.
That is a perfectly reasonable challenge, and the hon. Gentleman asked about that when I made my statement yesterday. One area where we absolutely need to do better is inside the civil service, and specifically in fast stream recruitment, and we will certainly do that.
We will ensure that Government functions are increasingly spread throughout the UK and not just in the capital. The Government are reviewing the location of all arm’s length bodies to help to drive growth across the nation, and we will ensure that the east midlands is fully considered as a possible location.
I am aware that the hon. Lady—[Interruption.]
Order. I remind the House that we are discussing the contaminated blood scandal, upon which, despite very heavy noise, the hon. Member for Kingston upon Hull North (Diana Johnson) has made her thoughts very clear. We must now hear the Minister. I ask the House to think of the people affected by this scandal, who would expect the House to treat respectfully of it.
Thank you, Mr Speaker.
I am aware that the hon. Lady has played a significant role in the investigation of this terrible scandal. As she said, the consultation on how we proceed ends on 18 October. I know that she and the all-party parliamentary group that she co-chairs have written to my right hon. Friend the Prime Minister on the matter. When we have all the responses to the consultation, we will obviously take a decision as soon as possible.
I call Jeremy Quin. [Hon. Members: “ Hear, hear!”] Order. I am so glad that the hon. Gentleman, who until recently was my constituent, is quite so popular.
I agree that it is an extremely important development. It is a world first to provide this amount of information in that form. It is true that it holds a mirror up to the whole of society, and not just central or indeed local government and public bodies, but all other bodies, including charities, will need to respond positively to some of the disturbing findings exposed in the race disparity audit.
We are working hard with the National Cyber Security Centre to improve competency not only within the civil service and across Government, but among our young people. Our CyberFirst programme, which I visited in Portsmouth this summer, shows that there is a massive range of really enthusiastic young people who are determined to learn the skills that they will need to help us.
I am afraid that my hon. Friend and I will have to agree to disagree on that point. The Government’s position remains as it was in our manifesto: the franchise will be retained at 18. However, I am sure that my hon. Friend will want to participate in future debates on this issue through private Members’ Bills on Fridays.
The Prime Minister was asked—
This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.
The Prime Minister will know that yesterday was World Mental Health Day. Mental health problems affect one in four people, but only £1 out of every £8 in clinical commissioning group budgets is spent on mental health services. Newcastle Gateshead CCG is set to cut its budget by a further 1.1% next year, bringing the total spend for mental health to less than 10% of its entire budget. If parity of esteem for mental health is to be achieved, the Government will have to match their words with more strong and stable, ring-fenced funding. With those cuts and with increasing demand, when will the Prime Minister end the talking and promise to increase and ring fence funding for mental health and specialist psychological services?
The hon. Gentleman is right about the importance that we should attach to mental health. Giving that parity of esteem is an important step that this Government have taken, but we are also doing much more on mental health. In fact, more money overall is going into mental health. More people are able to access NHS talking therapies and receive treatment for their mental ill health, but we also need to look at the issue more widely. That is precisely why I have set up a scheme to train staff in schools to ensure better awareness of mental health problems and to enable them to know how to deal with individuals in schools who are suffering from mental health problems. There is more for us to do, but this Government are putting more money in and are taking more action on mental health than any previous Government.
My hon. Friend raises an important point. He is right that we need to build a bridge from our existing partnership to our future partnership to allow time for practical adjustments to be made. That is exactly what we are doing when we talk about the implementation period, which I set out in my speech in Florence, together with our vision for our future partnership. I am sure that my hon. Friend will know that we published a White Paper on our future trade policy earlier this week, and we will continue to publish papers in the coming months.
I hope that the whole House will join me in paying tribute to the late Rodney Bickerstaffe, the former general secretary of Unison who died last week. He will be remembered for his warmth and the esteem in which he was held throughout the Labour movement and throughout the community. More than that, he, almost more than anyone else, made sure that the national minimum wage happened in this country. Millions of workers are better off due to the great work that Rodney did during his life. Can we say, “Thank you, Rodney, for everything you did in your life”?
The roll-out of universal credit is already causing debt, poverty and homelessness. Does the Prime Minister accept that it would be irresponsible to press on regardless?
Of course we offer our condolences to Rodney Bickerstaffe’s friends and family on his death. He and I would probably never have agreed on very much in politics, but obviously he played his role with commitment and dedication through his life.
The right hon. Gentleman asks about universal credit. It is perhaps worth our recognising why we brought in universal credit in the first place. What we want is a welfare system that provides a safety net for those who need it, and that helps people to get into the workplace, earn more and provide for their families. The system that we inherited from Labour did not do that. It was far too complicated, there were far too many different sorts of payment and, crucially, too many of those who earned more found themselves with less money in their pockets. Under Labour, too many people were better off on benefits. That is not the system that we want. We want universal credit, which is simpler and more straightforward, and makes sure that work always pays.
I wonder which planet the Prime Minister is on. Citizens Advice describes universal credit as
“a disaster waiting to happen”.
It has made that conclusion based on its work assisting tens of thousands of claimants with debt. Housing associations report an increase of up to 50% in the eviction of tenants in rent arrears due to universal credit. Can the Prime Minister and Department for Work and Pensions not wake up to reality and halt this process?
As I have explained, we have very good reasons for changing the system. Yes, the DWP has been—[Interruption.] We have been listening to concerns raised about the way in which universal credit has operated. Changes have been made; performance has improved, for example. At the beginning of this year, only 55% of people were getting their first payment on time. Now that is more than 80%. Of course there is more for us to do, and that is why the Secretary of State and the Department for Work and Pensions continue to monitor this and to ensure that performance improves. Underlying this is a need to ensure that we have a system that ensures that work pays and that people are not better off on benefits.
The Halton Housing Trust reports a 100% year-on-year increase in the number of evictions. Half of all council tenants on universal credit are at least a month in arrears in their rent. This weekend, the former Prime Minister, Sir John Major, described universal credit as
“operationally messy, socially unfair and unforgiving.”
He is right, isn’t he? It is years behind schedule. It is forcing people to food banks, driving up evictions and leaving families in debt. Can the Prime Minister not see it? If the former Prime Minister can understand it, why can’t this one?
In fact, research shows that after four months the number of people on universal credit in rent arrears had fallen by a third. As I said in my previous answer to the right hon. Gentleman, of course we recognise that there have been some issues to address in the rolling out of this benefit, and that is why we have been taking our time doing it. The underlying reason for moving to universal credit is still the right one. We see more people getting into work on universal credit than on jobseeker’s allowance, and there is the possibility for those people who cannot wait for their first payment to ask for an advance if they are in need, and the number of people getting an advance has increased.
At last the Prime Minister recognises that there are problems. The Institute for Public Policy Research and the Child Poverty Action Group estimate that universal credit is going to put another 200,000 children into poverty. Last month, apparently, a dozen Conservative MPs wrote to the Work and Pensions Secretary calling for a pause. Perhaps they should have listened to people like Georgina, who contacted me this week. She says:
“All summer we were left with no money to survive as it just stopped abruptly. We would have lost everything if it weren’t for my family.”
Others cannot rely on family and are facing eviction. I urge the Prime Minister: show some leadership, pause universal credit, and stop driving up poverty, debt and homelessness, because that is what this does.
First, may I say to the right hon. Gentleman that I would be happy to look at the case of Georgina if he would like to send me those details?
As I have just said—once again, I referred to this in my previous answer, had the right hon. Gentleman listened to it—it is possible for those who are in need to get advance payments. The number of those getting advance payments has increased from 35% to just over 50%—the majority. So we are seeing the system being improved and performance improving. But let us just think about the Labour party’s record on this whole issue of welfare. Under the Labour party, 1.4 million people spent most of the last decade trapped on out-of-work benefits. Under the Labour party, the number of households where no—[Interruption.]
Order. The Prime Minister’s response must be heard.
Under the Labour Government, the number of households in which no member had ever worked nearly doubled. The welfare bill went up by 60% in real terms, which cost every household an extra £3,000 a year. That is not the way to run a system; that is the way to have a system that is failing ordinary working people.
The last Labour Government lifted a million children out of poverty. Gloucester City Homes has evicted one in eight of all of its tenants because of universal credit. The Prime Minister talks about helping the poorest, but the reality is a very, very different story. Not only are people being driven into poverty but, absurdly, the universal credit helpline costs claimants 55p per minute for the privilege of trying to get someone to help them claim what they believe they are entitled to. Will the Prime Minister today show some humanity, intervene and make at least the helpline free?
I have made it very clear that we continue to look at how we are dealing with this and ensuring that we get this system out in a way that is actually working for people. The performance is increasing, and it is working because more people are getting into work on universal credit than were doing so on jobseeker’s allowance. [Interruption.] I do want people to be able to find work. I want people to be able to get better jobs, to earn more and to get on without Government support. That is why it is so important that we help businesses to create jobs. Perhaps when the right hon. Gentleman stands up he would like to welcome the fact that 3 million more jobs have been created due to a strong economy under a Conservative Government.
Sadly, universal credit is only one of a string of failures of this Government. Everywhere we look we see a Government in chaos. On the most important issues facing this country it is a shambles: Brexit negotiations that have made no progress; Bombardier and other workers facing redundancy; most working people worse off; young people pushed into record levels of debt; 1 million elderly people not getting essential care; and our NHS at breaking point. This Government are more interested in fighting among themselves than in solving these problems. Is it not the case that if the Prime Minister cannot lead, she should leave?
Let me tell the right hon. Gentleman what the record of this Government is: the deficit is down by more than two thirds; 3 million more people are in jobs; 1.8 million more children are in good or outstanding schools; more people are visiting A&E; more people are getting operations than ever before; there are record levels of funding into the NHS; and there are record levels of funding into our schools. What did we see about the Labour party from its conference? [Interruption.] Wait for it.
Order. Members are becoming very overexcited. The Prime Minister’s response will be heard.
What did we hear from Labour’s conference? What happened at Labour’s conference? First, Shelter said that the Labour party’s housing policy would end up harming people on low incomes; Labour’s flagship Haringey Council rejected another of Labour’s policies; the Equality and Human Rights Commission said that Labour
“needs to…establish that it is not a racist party”;
and the Labour leader of Brighton Council threatened to ban Labour conferences because of freely expressed anti-Semitism. That was all before the shadow Chancellor admitted that a Labour Government would bring a run on the pound and ordinary working people would pay the price.
Hon. Members: “More!”
My hon. Friend makes the important point about the fundamental benefits of universal credit, but she is of course right, and that is why the DWP is continuing to look at the performance of universal credit and how it is operating. I am happy to meet her to look into the issue. She mentioned the advance payments; as she said, it is important that those who need those payments are aware of them, so it is about not only advertising but making sure that jobcentre staff are trained and are being retrained to ensure that they are aware of what they can do to help people. The advance payments can be with people within five days or, in an emergency, on the very same day. I am happy to meet my hon. Friend to discuss them.
If there was another European Union referendum now, I know that I would vote to remain. Why has the Prime Minister not been straightforward about how she would vote?
There is no second referendum. The people of the United Kingdom voted and we will be leaving the European Union in March 2019.
The Prime Minister cannot answer a simple question. [Interruption.] I am quite happy to wait. The reason why the Prime Minister cannot answer a simple question is that she is hamstrung by the parliamentary majority and a divided party of right-wing Brexiteers. This morning—[Interruption.]
Order. Mr Kerr, we are not having any pranksters here.
This morning, Chancellor Philip Hammond admitted that a cloud of uncertainty hangs over the UK economy. The Scottish National party is the only party in this House that is united on the issue. We know that crashing out of the single market and the customs union will cost 80,000 jobs in Scotland and £2,000 per person. Now is the time for leadership. Will the Prime Minister come off the fence and recognise that, if we are to save this economy, we need to stay in the single market and the customs union?
Now is the time for the SNP leadership to accept that, to save jobs in Scotland, it needs Scotland to remain part of the United Kingdom.
My hon. Friend is absolutely right: this is obviously a very worrying time for workers at BAE Systems, including those at Warton in his constituency. He raises two issues. I can reassure him that the Department for Work and Pensions will ensure that people have all the support they need to look for new jobs. That will include the rapid response service, which will help with CVs, training and information about benefits. We will also continue to promote our world-leading defence industry right across the globe, so that companies like BAE Systems can secure contracts for UK-made equipment. Just last month, my right hon. Friend the Defence Secretary signed a statement of intent with Qatar, committing the country to the purchase of 24 Typhoons and six Hawks from BAE. We will continue to promote these first-class products from first-class manufacturers such as those in my hon. Friend’s constituency. We will also ensure that support is given to those who lose their jobs.
I just point out to the hon. Gentleman that I have made no announcement and have no policy on this matter.
The hon. Gentleman is referring to our announcement that we are putting £2 billion extra into our successful affordable housing programme, bringing the amount dedicated entirely to creating affordable homes to more than £9 billion. For every pound the Government put in, housing associations raise a further £6, which means that thousands more families get the homes that they need and can afford every single year over the next five years. This is a good announcement from the Government. It means that more people will get the homes that they need. I would have expected him to welcome it.
My hon. Friend raises a very sensitive issue. As he will be aware, health is a devolved matter in Wales. The NHS in England has strict guidelines regarding the prescriptions of these sorts of medications to young people. They can be prescribed only with the agreement of a specialist team after a careful assessment of the individual, and generally only to patients who are 15 or older. I recognise the concern raised by my hon. Friend.
First, let me re-emphasise—I have said this before in this House—that we value the contribution that EU citizens have made in this country and we want them to stay. That is why we made citizens’ rights one of the key issues, and one of the early issues that is being discussed in the negotiations that are currently taking place. We are working to ensure that we get a good deal. If there is no deal, we will obviously have to have arrangements with other member states regarding not just EU citizens here, but UK citizens in those member states. But we are working for the best deal for the United Kingdom. We are very close to agreement on citizens’ rights. We want EU citizens to stay here in the UK because we value the contribution they are making.
On Monday, my right hon. Friend was clear about her negotiations, saying that it remains the Government’s priority to get a very good free trade arrangement with our European friends and partners before we leave. She also made it clear that, alongside that, we would make plans and all necessary arrangements to depart under World Trade Organisation terms should no such agreement be available. Will she confirm, then, that all moneys necessary will be allocated to this project as and when required?
I am happy to give my right hon. Friend that confirmation. We are preparing for every eventuality. We are committing money to prepare for Brexit, including a no-deal scenario. It might be helpful if I update the House. The Treasury has committed over £250 million of new money to Departments such as the Department for Environment, Food and Rural Affairs, the Home Office, Her Majesty’s Revenue and Customs and the Department for Transport in this financial year for Brexit preparations. In some cases, Departments will need to spend money before the relevant legislation has gone through the House. The Treasury will write to Departments and to the Public Accounts Committee explaining this process shortly. Where money needs to be spent, it will be spent.
The message that I would like the hon. Gentleman to take back to his constituent’s partner is that we offer our condolences at the death of her partner. We are working to ensure that there is greater consistency in the judgments that are originally given on PIP assessments. We introduced PIP in order to ensure that we are able to focus payments on the most vulnerable. I completely understand how she feels about the position she is in. We offer her our deepest condolences.
HS2 Ltd continues to fail my constituents living along the line of route for HS2, with some being offered tens of thousands of pounds less than the true value of their homes. Will the Prime Minister now personally intervene to ensure that my residents living in the affected areas of Erewash do not lose out as a result of this major national infrastructure project?
My hon. Friend has raised an important point, and it is right that she is speaking up on behalf of her constituents. I know that the Department for Transport is looking carefully at these issues and that my hon. Friend the rail Minister is determined to see that fair and comprehensive compensation for those directly affected by the route is paid, and it will be paid as if HS2 did not exist, plus the 10% and reasonable moving costs. We are committed, as ever, to infrastructure investment—we are investing in infrastructure—but it is important with a major infrastructure change such as HS2 that we do ensure that those compensation payments for people are being paid properly. As I say, my hon. Friend the rail Minister is focusing on this issue.
The hon. Lady could not be more wrong. First of all, we are not ramping up a no-deal scenario; we are actively working in negotiations with the European Union to ensure that we get a good deal—the right deal for Britain—for a brighter future for this country, which is what I believe we can and will achieve. It is what I set out in my Florence speech. I recommend the speech to the hon. Lady.
On the second point, I made very clear—perhaps I need just to explain it again to members of the Opposition—that when we leave the European Union in March 2019, we will cease to be full members of the single market and the customs union. That will happen because you cannot be full members of the single market and the customs union without accepting all four pillars—free movement; continued, in perpetuity, European Court of Justice jurisdiction. During the implementation period, we will be looking to get an agreement that we can operate on much the same basis as we operate at the moment—under the same rules and regulations—but that will not be the same as full membership of the customs union and the single market.
Does my right hon. Friend agree that the Royal Marines, supported by a specialist amphibious fleet, have served our country with great distinction for many, many years? Does she share my concern that one of the proposals currently being considered by the Royal Navy is to downsize the amphibious fleet? In an uncertain world, is this not both short-sighted and dangerous, and will she please intervene?
First, I absolutely agree that we can commend and applaud the contribution that the Royal Marines and our amphibious fleet have made to the defence of this country and, indeed, the defence of others. It is absolutely right that, as we look at how threats are changing, we look at how we should best spend the rising defence budget to support our national security. We have committed to spending 2% of GDP on defence every year of this Parliament. We are spending £178 billion between 2016 and 2026 on equipment for our armed forces. Naturally, we do not always discuss the specific operational details, but if I might just say to my hon. Friend, I understand that the claims he has referred to are pure speculation at this stage.
First, of course we send our deep condolences to the families and friends of all those students in the hon. Lady’s constituency who have died as a result of contracting meningitis. The point she raises about raising awareness of meningitis is a very valuable one, and it is something that we do need to continue to do. Very often, when decisions are taken by the Government, such as on the vaccination that is already in place, it is very easy to think that that is a job done, but, actually, we need to continue to look at see how we can ensure that we do not see these deaths from meningitis in the future.
I was shocked the other week to hear the shadow Chancellor predicting a run on the pound if Labour took office. For my constituents that would mean an increase in their household bills and in the cost of their weekly shopping. Does my right hon. Friend agree that the biggest risk to this country would be letting the shadow Chancellor into No. 11 Downing Street?
I absolutely agree; my hon. Friend is right that a run on the pound would mean higher prices and that it would make life much more difficult. It would mean job losses, businesses leaving the country and people being poorer. The one thing that we absolutely must do is ensure that the shadow Chancellor gets nowhere near the Treasury. The Leader of the Opposition asked me earlier what planet I was on. Well, we all know what planet he and his shadow Chancellor are on: Planet Venezuela.
When we leave the European Union, we will be leaving the common fisheries policy. As part of the agreement that we need to enter into for the implementation period, obviously that and other issues will be part of that agreement. But when we leave the European Union, we will leave the common fisheries policy.
It has been assumed that triggering article 50 means that on 29 March 2019 we will come out of the EU if there is no agreement, but is it not the case that the negotiations can be extended if the Government and the EU agree to do that? Will the Prime Minister assure the House that under no circumstances will the negotiations be extended?
My hon. Friend is accurate in his interpretation of the treaty, which does allow for an extension of negotiations. I have been very clear that by March 2019 we want not only for those negotiations to have ended but to have an agreement on the future relationship and on our withdrawal, and we will leave the EU in March 2019.
Of course we want to work to see a positive future for the south Wales economy. That is what the United Kingdom Government are doing across the whole United Kingdom: working for that brighter and more positive future. With regard to the tidal lagoon, we will publish our response to the Hendry review in due course.
I recently visited the Rohingya refugee camps in Bangladesh, which was truly harrowing. It can only be described as a humanitarian disaster. I am immensely proud of the work that the United Kingdom Government are doing through UK aid, but what pressure can my right hon. Friend put on the Myanmar Government to end the persecution, so that the Rohingya people can go home?
My hon. Friend raises a very important point. We remain deeply concerned by what is happening to the Rohingya. We know that there are now over 500,000 refugees in Bangladesh. It is a major humanitarian crisis. We have been providing support through our international development and aid, and we have provided money to the Red Cross in Burma and bilateral donations to support the refugees who have crossed into Bangladesh. We have raised the matter three times at the UN Security Council. The international community has delivered a clear message that the Burmese authorities must stop the violence, allow the safe return of refugees and allow full humanitarian access. We have also suspended any practical defence engagement that we had with Burma because of our concerns.
The hon. Gentleman again raises a very serious case, and our condolences go to the family of his constituent. This is an issue on which, as I have said, we need to raise awareness. He raises the question of the response by medical professionals. This is not just about individuals—about parents—recognising the symptoms, but about ensuring that healthcare professionals are identifying them. I will ask the Health Secretary to meet the hon. Gentleman and people who are anxious about this to hear directly from them their concerns regarding vaccinations.
On Monday, at the start of Baby Loss Awareness Week, this Conservative Government launched 11 pilot projects for a national bereavement care pathway. This groundbreaking pathway will look at support for parents who have lost a child from conception to the age of one. May I ask the Prime Minister to congratulate the parents, the charities and the health professionals who have worked so hard to develop this project, and to make sure that it is rolled out more widely once the lessons from the pilots have been learned?
I am happy to join my hon. Friend in congratulating all who have worked so hard on this issue, which, sadly, brings such distress to too many people—including, I know, Members of this House. I am sure that everybody will want to join me in marking Baby Loss Awareness Week. There was a debate on the matter yesterday, and I pay tribute to Members from across the House who spoke very movingly about their own experiences.
I am happy to welcome, as my hon. Friend has done, the pilot of the national bereavement care pathway this week. The Department of Health is also providing funding to Sands, the stillbirth and neonatal death charity, to work with other baby loss charities and royal colleges to improve the quality of bereavement care in the NHS. We expect the pathway to be rolled out nationally in October 2018. As my hon. Friend says, it is important to conduct a pilot, so that we can learn from it as we come to the national roll-out.
I fully understand the hon. Lady’s concern about her constituent, who is fleeing domestic violence. We do not want anybody in this country to be subjected to domestic violence and abuse. That is why the Government have actually been putting more money into supporting refuges across the country. It is why we have ring-fenced money for domestic violence support across the country, and it is why we have introduced new legislation. But we are also going to look at what more we can do, through a domestic violence Act, to provide the support that is necessary to ensure that we deal with the perpetrators, support survivors and, as all of us across the House should want to do, end domestic violence.
May I commend my right hon. Friend for her pledge to build hundreds of new free schools? Does she agree that they are critical to drive up standards and increase parental choice, and is it not true that we are committed to creating a school system that works for everyone, while the Opposition want to hold everyone back?
My hon. Friend is absolutely right. Free schools have performed a very important function in raising standards in education in this country, and I am pleased that we have so many more children now in good or outstanding schools. Free schools have done something else as well, as I see in my own constituency, where one of the free schools is specifically for children who are on the autistic spectrum. That is very important, and it is a service that was not available previously. Free schools have enabled that to happen. They are providing for people up and down the country, and we should welcome them.
The hon. Gentleman raises an important point. I am obviously not aware of the details of the particular services and of the transfer that he has referred to, but the overall point he makes is that people living in Wales are often seeing that they are getting a less good service from the Labour Government NHS in Wales—[Interruption.] Oh, yes. Yes, this is the case. As the hon. Gentleman says, there are people who will travel from Wales to England to get the service that is available in the NHS in England, and the Labour Government in Wales need to take a hard look at what they are doing to the NHS in Wales.
Higher Education Funding
(Urgent Question): To ask the Secretary of State for Education if she will make a statement on higher education funding.
On 9 October, I made a written ministerial statement to the House setting out changes to the repayment threshold for student loans from April 2018 and confirming the maximum tuition fees for the 2018-19 academic year. The Government’s reforms to higher education funding since 2012 have delivered a 25% increase in university funding per student per degree. University funding per student is today at the highest level it has been at any time in the past 30 years.
As the House is aware, the Government have decided to maintain tuition fees at their current level for the 2018-19 academic year. This means that the maximum level of tuition fees will be £9,250 for the next academic year, 2018-19, which is about £300 less than if the maximum fee had been uprated in line with inflation.
We will also increase the repayment threshold for student loans from its current level of £21,000 to £25,000 for the 2018-19 financial year. Thereafter, we will adjust it annually in line with average earnings. This change applies to those who have taken out or will take out loans for full-time and part-time undergraduate courses in the post-2012 system. It also applies to those who have taken out or will take out an advanced learner loan for a further education course. Increasing the repayment threshold will put more money in the pockets of graduates by lowering their monthly repayments. They will benefit by up to £360 in the 2018-19 financial year. The overall lifetime benefit is greatest for graduates on middle incomes; low earners of course continue to be exempt from repayments.
We have world-class universities, accessed by a record number of young people from disadvantaged backgrounds, and a progressive funding system. We are building on those strengths through our planned reforms, including reforming technical education to provide new routes to skilled employment and strengthening how we hold universities to account for the teaching and outcomes they deliver through the teaching excellence framework.
The changes we are making are considered proposals that reinforce the principles of our student loan system and ensure that costs continue to be split fairly between graduates and the taxpayer. However, we recognise that there is more to do. We have further work under way to offer more choice to students and ensure they get value for money. We want more competition and innovation, including through many two-year courses. As the Prime Minister made clear last week, we will continue to keep the system under careful review to ensure it remains fair and effective. The Government will set out further steps on higher education student financing in due course.
Let me welcome Members back from conference season. We sang “The Red Flag”; the Conservatives waved the white flag. I told our conference that the Government should get on with sorting out student finance. Then the Prime Minister told her conference that they would. I suppose I am cheaper than Lynton Crosby, but the Government’s announcement begs just a few questions: what, who, when, why, how and how much? Apart from that, it is completely clear. What are the details of the review of higher education that the Prime Minister promised? Who will sit on it? When will it start and finish? Who decided that policy, how and when? Is it true that the Minister was unaware until the Prime Minister announced it? Surely he cannot be the least favoured Minister in the Johnson household.
Can the Minister tell us how much these policy changes will cost? How much more will taxpayers contribute and how much interest receivable is lost? Will the reduced income be replaced by additional funding? Can the Government explain why they have changed their mind since we last asked for these measures to be taken and they refused? Are they still considering capping interest rates below the 6% some graduates are being charged? What is their policy on grants? “Senior sources” have briefed that the Education Secretary wants them back. Will the Minister now match our commitment to restore maintenance support?
Just what is the Government’s policy on tuition fees? They boast about freezing fees for one year, but we all know that that is simply because they do not have a majority in this House for any rise, so what will they do after that? Will they finally accept that this House voted against their most recent rise, and revoke that too?
The Prime Minister said that the Government have listened and learned. Will they listen to this House, and when will they learn that actions mean more than words?
I will answer some of the hon. Lady’s questions—in fact, all the questions. The normal, cross-Government processes were followed in the run-up to the announcements. The Department for Education worked closely with the Prime Minister’s team to develop those announcements. We are delighted to be able to announce the changes that she set out. I set out in the ministerial statement that I published on Monday the full details that the hon. Lady has just asked for. However, to recap, the threshold will rise to £25,000 from £21,000. That will put a further £360 in the pockets of graduates. We have taken stock of the views of parents, students and Parliament itself in coming to our decision to freeze tuition fees for the coming academic year. Therefore, we are listening and, where appropriate, we are taking action to ensure that our student finance system is getting the balance of interests right between those of students and those of the general taxpayer.
That is the core principle of our student finance system, which must achieve three goals. First, it must support access for the most disadvantaged, and it is achieving that with great success. Someone from a disadvantaged background is more than 50% more likely to go to a highly selective university than when the Labour party left office, and more than 43% more likely to go to university overall. Students are less likely to drop out, whether they are from BME, disadvantaged, mature or part-time backgrounds, than they were when the Labour party left office. This system is delivering participation and access in a way that alternative student finance systems never have.
Secondly, the system is working for universities. Our universities are 25% better funded per student and per degree than they were under the old student finance system, before the 2011 reforms. That is of fundamental importance. Does the Labour party really want our universities not to have the resources they need to do excellent teaching and to deliver great research? That is what it is proposing. It is proposing a return to the system that we saw in the run-up to the Dearing report in 1998, a system that saw a real-terms decline in university funding of almost 50%. Those are the changes that the Labour party will deliver if it has a chance to get into office.
Thirdly, our system is fair to the taxpayer. We keep the balance of funding under careful review. As the Prime Minister made clear in her party conference speech and in announcements in Manchester last week, we will announce further steps in that regard in due course.
I strongly welcome the measures that my hon. Friend has set out because we have to be fair to students and fair to the taxpayer, too. In the review, will he look at the high interest rate and at lowering the interest rate for students? On a wider issue, the Government announced a big boost to degree apprenticeships. Does he agree that we should be incentivising and putting all financial incentives into degree apprenticeships because the students earn while they learn, there is no debt, they get a job at the end and such apprenticeships help to meet our country’s skills deficit?
We continue to keep all aspects of our student funding system under careful review to ensure that it remains fair and effective, and that we are getting the balance right between the interests of individual students, who go on to have far higher lifetime earnings, and the interests of general taxpayers, whose voices must also be heard in this debate. The interest rate that my right hon. Friend mentioned will be among the things that we will continue to keep under careful watch in the weeks and months to come. Degree apprenticeships are a very promising way of combining the best of higher education and further education. We want them to develop and grow, and we want more providers in the system to offer them. They have huge potential.
Raising the repayment threshold is a positive step and I am delighted that the UK Government are following the Scottish Government’s lead on that matter, but we have to be clear: it is not the panacea that this Government would have us believe. Average student debt on graduation is now more than £50,000, so the announcement needs to be part of a wider reform of student support and funding, which must include bursaries, grants and the abolition of tuition fees—indeed, everything we are doing in Scotland, which is ensuring that our students have the lowest student debt and the best level of support in the UK. We also have more students from deprived backgrounds accessing HE than ever before.
What further steps will this Government take both to increase student support and to reduce student debt? Will the Minister now commit to reducing or better still abolishing fees and reinstating the maintenance grant for those in most need as part of a realistic student support package? Will he guarantee that he will look at reducing the interest on student loans in England, which is keeping young people locked into long-term debt?
No, I certainly will not commit to abolishing tuition fees. They are a strong policy success in many ways and an unsung one. They have enabled us to allow more people from disadvantaged backgrounds to go to university than at any point before. They have enabled us to lift student number controls. That is a critical argument for holding on to a system that shares the cost of funding fairly between the individual student, who goes on to have far higher lifetime earnings, and the general taxpayer.
We keep the system under careful review. As the Prime Minister set out in Manchester, we will make further announcements in due course about the rest of the student funding system.
I congratulate the Minister on the steps he has taken to try to get the balance right and welcome what he said about keeping this rather startling interest rate under review. I urge him to continue to resist the inevitable populist pressures to sweep away the whole system, which play very well to today’s students but would create great problems. In hindsight, I was lucky enough to have people in low-paid jobs paying taxes to maintain me to meet my living costs when I was studying and being trained to be a reasonably successful barrister when I emerged from university. Therefore, will he resist claims that taxpayers at all levels of income should pay for the costs, which would never be repaid by some of the students, although others will go on to achieve very considerable incomes?
I can certainly assure my right hon. and learned Friend that we will continue to bear in mind carefully the taxpayer interest. It is critical to remember that the Labour party’s proposals, were they to be funded out of income taxation, would add about 2.5p to the basic rate of income tax, so it is vital that we bear taxpayers’ interests in mind and we will continue to do so. He mentioned the interest rate, which we of course keep under careful review. It is worth remembering that this is a heavily subsidised loan product overall. The Government write off about 30% to 40% of the student loan book. That is a deliberate investment in the skills base of this country, not a symptom of a broken student finance system. The interest rate cannot be looked at in isolation.
Surely the Minister needs to go back to the Dearing principles. Dearing believed that the expansion of higher education should be based on the student who benefits paying the community through the taxpayer, society and the employer. Can we go back to those principles? I am worried that the Minister and the Prime Minister have already made up their minds about the review they are suggesting. The fact of the matter is that we cannot have a higher education system that is created entirely on a pile of student debt. It is time, cross-party, to think about a radical alternative to what we have at the moment.
The Labour party helped to introduce the system we have today and this Government have been building on it since 2010. It is extraordinarily successful at enabling more people from disadvantaged backgrounds to get a chance to benefit from higher education. I am startled that the Labour party wants to roll back all that progress. Why would they want to reverse the changes that have enabled more than 50% more students from disadvantaged backgrounds to get into higher education? That is what the hon. Gentleman’s proposals would end up achieving.
I congratulate the shadow Secretary of State on continuing the fine tradition of women carrying on with speeches in the face of adversity. As someone who represents a university, was it not the case, when we made the decision in 2010 to put up fees, that it was a very simple calculation that if fees were not raised, we would have had to cut the number of young people able to go to university, because otherwise the public purse would not have been able to afford the system we have now? Universities are now well financed: we are not having the debate about university financing that we are having about other areas of public spending.
My right hon. Friend is absolutely right. It was the increase in tuition fees that enabled us to take the limit off student numbers and release student number controls. That change is what has driven the sharp increase in participation in higher education by people from lower socioeconomic deciles. It has driven a huge expansion of people from disadvantaged backgrounds getting a chance to go through university and higher education. The Labour party’s policies would reverse all that progress.
It is right that the Government have frozen tuition fees, but I wonder whether I could nudge the Minister to go a bit further and get rid of this unsustainable fees system altogether. When is he going to guarantee that universities and their funding will not be adversely affected in any way by the changes the Government are proposing?
Universities are well funded. As I said in my opening remarks, funding per student per degree is up by 25% since the reforms the Government introduced in the previous Parliament. We are confident, having assessed the financial position of our institutions, that they can sustain a freeze in the level of fees for this coming financial year and that is the policy the Government set out.
Value for money is key and far too many degrees are unnecessarily long. What efforts are being made to offer shorter, more intensive degrees to reduce the final tuition fee bill?
There are excellent examples of two-year programmes across our higher education system, such as those offered by the University of Buckingham. It is not alone—there are others. We want many more providers, including high-tariff, highly selective institutions, to start to offer two-year programmes. They have huge potential to access students who have been hard to reach by the higher education system. We will come forward with proposals very shortly to enable the rapid expansion of two-year degrees throughout our system.
The Minister’s replies this afternoon reveal the utter shambles at the heart of the Government’s higher education policy. We told them not to lift the cap on tuition fees. They did not listen and now they have had to U-turn. We told them not to freeze the repayment threshold. They did not listen and now they have had to U-turn. We now find that the Prime Minister has announced a review of student finance and higher education funding with absolutely no idea who is going to lead it, what the scope will be, or what the desired outcome will be. They are making it up as they go along.
I urge the Minister, given that he has not listened to advice in the past year or two, to look at the biggest issue facing students as part of the review, which is not so much the tuition fee system itself, but student finance and the money in their pockets when they are at university, so that, finally, we can have a higher education student finance system that means that, wherever students are from and whatever their background, they have the money they need to succeed throughout the lifetime of their course and beyond.
We look carefully at the student finance system all the time. It is constantly under review and we have taken account of the views of colleagues in Parliament, parents and students in coming to the conclusion that we wanted to make the changes we announced last week in Manchester, so it would be unfair to say we are not listening and not responding appropriately. We always keep the system under review to ensure it remains fair and effective, and balances the interests of students and taxpayers appropriately. We will continue to do so in the weeks ahead.
I very much welcome the increase in the threshold, but in all this focus on finance is there a danger that we forget the whole purpose of going to university, which is to obtain a high-quality education? Will my hon. Friend assure me that whatever reforms he undertakes will not undermine the ability of universities to provide the highest-quality education possible, but that, on the contrary, they will drive universities on to deliver even higher standards?
My hon. Friend is absolutely right. The more interesting part of this debate is about ensuring universities deliver value for money, great teaching and fantastic research with the resources the Government make available to them. In the autumn statement, we increased research spending in our system by the largest amount in 40 years. We should celebrate that fact. We have increased per student per degree funding by 25% since 2010-11. We should be celebrating that fact, because it is enabling our universities to do the great job we need them to do. Through the teaching excellence framework, we are holding them to account more tightly than ever before for the value for money we need them to deliver.
It is true that universities are better funded, but the Campaign for Science and Engineering, as well as universities, tell me that the definition of which subjects receive the top-up payment from the Government are out of date and too narrow. To ensure that we maintain funding, especially in science, technology, engineering and maths subjects, can the Minister confirm that the list will be looked at again as part of the review to help universities to fill the skills gap that his own Department is trying fill?
I thank the hon. Lady for her suggestion. We continue to keep that aspect of the system under watch. Clearly, it is important that courses that are more expensive to deliver receive appropriate support from the Government. Obviously funds are not unlimited and we have to be careful in terms of promising further resources to all subjects, but we keep it under review.
The right hon. Member for Twickenham (Sir Vince Cable) described the current regime as having all the advantages of a graduate tax with none of the disadvantages. Is that not still the case, and would we not want to avoid the ridiculous situation at the University of St Andrews, where Scottish student numbers are capped at 20%?
My right hon. Friend puts it very well. Our system has enabled us to release student number controls, an option that has not been available to the Scottish Government precisely because they have not got the balance right between the individual student and the general taxpayer. I entirely agree with him.
May I urge the Minister to remember that most students become taxpayers, so it is completely pointless to try to set up a false divide between students and taxpayers? May I also urge him to look at the interest rate repayment? The retail prices index, which is used for student loans, is an outdated measure. It is not the Government’s measure of choice and it makes our students’ debts even more extortionate. We should be looking at the consumer prices index, not the RPI.
As I said to my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), we keep interest rates under view, along with other aspects of the system. RPI has historically been the measure of inflation for the student finance system and in some ways is more appropriate than CPI, as it takes account of, among other things, mortgage interest payments and council tax, which are typical expenses for graduates not included in the calculation of CPI.
It is exciting that record funding is now going into higher education, and it is absolutely right, of course, as the Minister said, that we get value for money from our universities. Does he share my concern, therefore, that the number of senior university figures being paid salaries in excess of that of the Prime Minister seems to be spiralling out of control?
My hon. Friend is right that there are examples of institutions where senior pay has accelerated very rapidly. It is a matter of concern and great public interest. The new regulator, the Office for Students, will take steps to ensure much greater transparency and accountability in how pay is set, particularly the very high salaries we have seen in parts of the sector.
The Minister will be aware that students are leaving university with debts on average of over £50,000. How on earth can this burden be a sensible way to equip the next generation to meet the challenges they and society will face?
I say to the hon. Lady what I should also have said to my right hon. Friend the Member for New Forest West (Sir Desmond Swayne): this should best be seen as a graduate contribution, rather than a debt pile. Graduates do not have to repay until they are earning over £25,000, which is a world away from the world of commercial debts, and their debts are written off after 30 years. No commercial loan offers such terms. This is a time-limited and income-linked graduate contribution. We should start to move away from this conception of it as a debt and loan.
I am grateful to my hon. Friend for reminding the House that we now have record numbers of disadvantaged pupils going to university.
It’s not true.
Is it not unacceptable that the shadow Education Secretary went on Question Time the other night and claimed the opposite?
I agree with my hon. Friend, and I find it alarming that the hon. Member for Blackpool South (Gordon Marsden) is chuntering away saying, “It’s not true.” It is true. The proportion of people from disadvantage backgrounds now going to university has increased. It is undeniably true. It is in the statistics from the Higher Education Statistics Agency and the Office for Fair Access. The number is 43% higher than it was in 2009-10. A young person is 52% more likely to go to a highly selective university than they were in 2009-10. It is extraordinary that the hon. Gentleman wants to deny it.
Order. I was happy to indulge the Minister and to listen to his mellifluous tones, but as he will quickly discover as part of his apprenticeship in this place, the Minister is not responsible for the observations on “Question Time” or elsewhere of the shadow Secretary of State on this or any other matter.
The Minister talks about the expansion in student numbers. How often does he have conversations with the local government and housing Ministers about the impact on housing pressures in cities such as Bristol and on council finances, given that students do not pay council tax and developers do not pay the community infrastructure levy? Although those students are welcome, it does come at a cost.
The hon. Lady makes an important point. Our university students bring enormous economic benefits to cities up and down the country, which is why our universities are such important economic actors across the country. Clearly, local authorities have an important role to play in managing the pressures that students bodies can sometimes put on the provision of public services, and I work closely with colleagues in the Department for Communities and Local Government to keep abreast of the pressures she mentioned, but there is no doubt that our towns and cities are immeasurably the better for having universities within them. They are anchor institutions that are steadfast and have longevity in a way that many other economic entities do not, and we should wholeheartedly welcome their presence.
Building on the point from my hon. Friend the Member for Kettering (Mr Hollobone), will the Minister explore making university finances much more transparent to ensure not only value for money for students but that the money is spent effectively and efficiently to enhance our fantastic institutions?
Yes, we feel it is important that there is greater transparency in the sources and uses of university income. In the regulatory framework consultation in the coming weeks, we expect the Office for Students to make great progress in this area, so that we can boost student confidence that their tuition fee income will be spent clearly, well and for the purposes they want.
The Minister has said a few times now that he wishes to keep the system fair and effective. I remind him and the Government that further education is also a part of higher education and that, while additional sums have been going into HE, FE has been cut and restricted remorselessly. Would he say that what the Government do with FE is equally fair and effective? I can tell him it is not.
Of course, excellent higher education is being delivered in our further education system, and the teaching excellence framework results in June highlighted the excellence in HE found in FE providers. On the hon. Gentleman’s question about funding, the Government made available an additional £500 million to support the evolution and development of T-levels, a transformational qualification that will help us to achieve parity of esteem for technical and further education in our system.
I apologise for being late, Mr Speaker.
The Minister has said two or three times now that student debt should not be considered real debt because it will be written off in 25 to 30 years. Will he or his colleagues in the Treasury publish their forecast of the cost to the public purse in 25 to 30 years of the loans written off as a result of students not meeting their repayments in their entirety? Given that he is raising the threshold for repayments, and so potentially increasing the level of debt, presumably that figure will grow, so he is actually stacking up a burden for a future Chancellor.
As the hon. Gentleman probably knows, we regularly publish assessments of the amount the Government write off at the end of a 30-year period to reflect the fact that they want to make higher education free at the point of access to students. It is called the resource and accounting budgetary charge. Prior to the changes we announced at the party conference, the proportion of the loan book to be written off over that period was approximately 30%, but it will have risen as a result of the changes announced, and we will make the new amount public in due course.
I sympathise with the Labour Front-Bench team’s position on this matter. Basing higher education funding on billions of pounds of student debt that might never be repaid is neither morally right nor operationally pragmatic, so I urge the Minister to commit to a wide-ranging review of higher education funding that encompasses not only tuition fees but maintenance grants and the sustainability of funding for higher education students.
If I may be so bold, Mr Speaker, I also urge the Labour Front-Bench team to enter into a discussion on this matter with their colleagues in Wales. The only Administration now committed to raising tuition fees is the Labour Welsh Government—
Order. I am inordinately grateful to the hon. Gentleman, but it is procedurally improper for him to veer off the centre of the fairway, which he previously inhabited. Questions must be to the Government about the policy of the Government, not general exhortations to other Opposition parties, but I am sure if he wants to have a cup of tea in the Tea Room with the Labour Front-Bench spokesperson, there might be such an opportunity.
I am grateful to the hon. Gentleman for making that point. It is true, of course, that the Labour Government in Wales have recently increased fees beyond the fee cap in England.
Nuclear Safeguards Bill
Presentation and First Reading (Standing Order No. 57)
Secretary Greg Clark, supported by the Prime Minister, the Chancellor of the Exchequer, Secretary David Gauke, Secretary Boris Johnson, Secretary Liam Fox and Secretary David Davis, presented a Bill to make provision about nuclear safeguards; and for connected purposes.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 109) with explanatory notes (Bill 109-EN).
Fetal Dopplers (Regulation)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to regulate the sale and use of fetal dopplers; and for connected purposes.
It is an honour to introduce the Bill, which aims to improve standards of monitoring babies’ health as we look to reduce significantly our country’s relatively high neonatal and stillborn death rate. The United Kingdom is ranked 114th out of 164 countries in terms of progress made in reducing the number of stillbirths, and serious concerns have been raised about the use of foetal dopplers. In the next few minutes, I will outline those concerns and the case for regulating the sale of such devices.
Since being elected in 2015, I have looked closely at policies relating to baby health, particularly through the all-party parliamentary group on baby loss, which I set up alongside my hon. Friend the Member for Colchester (Will Quince). Discussion of the issue is timely, as this is Baby Loss Awareness Week. I pay tribute to all Members for their contributions to yesterday’s debate on baby loss; I also thank the Government for their energy and determination in reducing baby loss, and especially for their target of halving the number of stillbirths and neonatal deaths by 2030. We must continue to work on a cross-party basis, as a great deal of progress has been made and a great deal is still to be made. It is in that spirit that I thank the Members on both sides of the House who have sponsored the Bill.
As I said during yesterday’s debate, the Government’s support in reducing baby loss has meant that progress has been made. That includes funding for the raising of standards in, for instance, perinatal mental health services, and for improvements in equipment and the physical environment of maternity units. However, we are languishing behind other developed countries when it comes to our stillbirth rates, and that must change.
It is in this context that I hope to secure the House’s support for regulation of the sale of home dopplers, devices that allow pregnant mothers to listen to the heartbeat of their babies. There are serious concerns about the use of those devices. I have heard some consumers speak in favour of dopplers, and I am not suggesting that they have no use, but there is evidence that they can falsely reassure people about the health of their babies. We must place that responsibility in the hands of medical professionals, and encourage mothers to respond to changes in the movements of their babies rather than using devices that can be bought over the counter for £30.
Foetal dopplers send ultrasound waves into the womb, and then simulate a sound. That sound may or may not be the baby’s heartbeat; it is a simulation of the ultrasound waves bouncing off moving blood vessels. While I absolutely understand the attraction for parents wanting to hear their baby’s heartbeat, the sale of the devices is on the rise despite warnings from medical professionals. Even if home dopplers could flawlessly detect a baby’s heartbeat, that would still not be a sufficient measure of the baby’s health. A heart can continue beating despite other serious issues being present.
There is already a wealth of advice online—including advice from the NHS and expert organisations—warning against the use of home dopplers, and comprehensive advice is also provided with the instructions on the box. However, that advice is not deterring people from purchasing the devices, and their use is on the rise. Kicks Count, a campaign group that is calling for the banning of home dopplers, has been trying to raise awareness of their dangers for five years, but has not been able to change public attitudes and preconceptions. Its petition has attracted more than 12,000 signatures.
The NHS Choices website says that home foetal heart monitors
“are potentially dangerous to the mother and baby’s health”.
The Royal College of Midwives has also urged mothers not to use home dopplers. Its website says:
“Expectant mothers have been warned against the use of home fetal Doppler devices over fears that they may give false reassurances to mothers about the health of their baby.”
Guidelines issued by the National Institute for Health and Care Excellence state that dopplers are
“unlikely to have any predictive value and routine listening is therefore not recommended.”
The problem with these devices is that anything that moves inside the abdomen, whether it be the baby kicking, air moving in the mother’s intestines or blood flowing in the arteries, is translated into a sound. It requires training to be able to detect a baby’s heartbeat, yet the sale of dopplers is not restricted to medical professionals; they are available over the counter. Given that the expert medical advice that I have mentioned highlights their dangers, I suggest to the Minister that the Department of Health needs to consider how regulation could improve the monitoring of babies’ health and restrict the sale of the devices.
The question that we must ask ourselves is this: if midwives are not using dopplers to identify foetal wellbeing, why are we allowing pregnant women to reassure themselves at home, when seeking medical advice would be the sensible and safe option? According to the instruction manual for a home doppler kit,
“It is intended to be used by care professionals, including practical nurses, midwives, relative technicians and physician assistants”.
Dopplers were never originally intended for such widespread sale on the open market.
I understand that people may feel that regulation is not necessary, and that as long as people know the risks we do not need to legislate. However, Kicks Count has been raising awareness of the issue for years through, for instance, a national media campaign. The guidelines tucked away in the doppler information booklet are often ignored. We cannot have a situation in which a product that can falsely reassure mothers about their babies’ health is being sold at an expanding rate.
I praise Mothercare for its welcome announcement earlier this year that once current stocks ran out, they would not sell any more foetal dopplers. That company recognises the concerns of healthcare professionals, and I hope that other businesses will follow suit, but in this age of Amazon, we cannot rely on the replication of such responsible behaviour by every single seller of dopplers. That is why there is a case for regulation.
The BBC spoke to the manufacturers of the product, and was told that dopplers should not be used as a substitute for professional medical care; nor should they be relied upon as an indicator of foetal health. It is potentially fatal to do so. In practice, the Bill would introduce a licensing system in England and Wales to ensure that medical professionals were responsible for monitoring foetal health. With such verification, we could remove dopplers from high street shelves and encourage more responsible practice and use of the devices. It would be for the Department of Health to oversee the process as part of our wider ambition to reduce stillbirth rates.
Baby loss is an issue that is thankfully gaining much more attention in Parliament, and we must improve the outcomes for mothers and babies in the UK. The current figures show that our standards are below those of other developed countries, and I know that the Department of Health is working hard in trying to change that. I am not suggesting that the Bill will solve all our problems, but I believe that it will go some way towards improving the monitoring of babies’ health.
Let me end by paying tribute to Kicks Count, and in particular to Elizabeth Hutton, who has put an enormous amount of energy into this campaign and who is here today. Babies and mothers deserve the very best care, and foetal dopplers pose a risk to the high standards for which we strive.
Question put and agreed to.
That Antoinette Sandbach, Stephen Hammond, Maria Caulfield, John Howell, Tulip Siddiq, Tim Loughton, Diana Johnson, Sir David Amess, Vernon Coaker, David Hanson, Mr Clive Betts and Kelvin Hopkins present the Bill.
Antoinette Sandbach accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 19 January 2018, and to be printed (Bill 110).
(Clauses 5, 15 and 25, and related new clauses)
Considered in Committee
[Dame Rosie Winterton in the Chair]
Termination payments etc: amounts chargeable on employment income
I beg to move amendment 1, page 12, leave out lines 8 to 12.
This amendment removes the power for the Treasury to amend the meaning of “basic pay” for the purposes of calculating “post-employment notice pay” by regulations.
With this it will be convenient to discuss the following:
Amendment 12, page 13, line 27, at end insert—
“402F Review of impact of termination payments on low income workers
(1) Within two months of Royal Assent being given to the Finance (No. 2) Act 2017, the Chancellor of the Exchequer shall commission a review of the impact of the provisions of sections 402A to 402E on low income workers.
(2) A report of this review must be laid before the House of Commons before the start of the tax year 2018–19.”
This amendment requires the Chancellor of the Exchequer to carry out a review of how the changes to termination payments will affect low income workers before these provisions come into effect.
Amendment 2, page 14, line 15, leave out “different” and insert “higher”.
This amendment removes the power for the Treasury to reduce the £30,000 threshold in connection with the taxation of termination payments by regulations.
Amendment 3, page 14, leave out lines 20 to 23.
This amendment is consequential upon Amendment 2.
Amendment 4, page 14, leave out lines 27 and 28 and insert—
‘(2) “Injury” in subsection (1) includes—
(a) psychiatric injury, and
(b) injured feelings.””
This amendment explicitly includes (rather than excludes) injured feelings within the definition of “injury” for the purposes of payments which are excluded from the provisions of Chapter 3 of Part 6 of the Income Tax (Earnings and Pensions) Act 2003 (payments and benefits on termination of employment).
Clause stand part.
To be fired from a job is perhaps one of the most difficult experiences for an employee. There are very few people in this Chamber, let alone in the country, who have never had to go through the awkward, bitterly disappointing and scary experience of losing, or potentially losing, a job. This is the daily reality for thousands of people, and it goes to the heart of clause 5.
I ask the Committee to imagine how thousands of people across the country at BAE are feeling at this moment after yesterday’s announcement of job losses. How are those workers feeling in Warton, Samlesbury, Portsmouth, Guildford and RAF Leeming, and in the Chief Secretary’s own county of Norfolk at RAF Marham? Added to the worry, concern, anxiety and hopelessness of redundancy now comes a potential tax bill to pay for the Government’s hapless management of the economy. Will the writ of clause 5 stretch across the Irish sea? What about the threat to the jobs of those at Bombardier in Northern Ireland, and the thousands of other associated jobs over there?
The hon. Gentleman rightly points out the devastating consequences for people who lose their jobs—he refers to particular instances at the moment—but does he also recognise that this Government have created 3 million more jobs, which is helping our economy and those people?
This is not relevant to the debate, but a significant number of those jobs are incredibly low paid, and people have not had pay rises for many years. What the hon. and learned Lady says might well be the case, but the reality is that it is not about the quantity; it is about the quality—[Interruption.] Of course it is.
How insensitive and out of touch must this Government be to put clause 5 before Members today of all days? The Prime Minister has vowed that she will do anything and everything she can to help those affected at Bombardier and BAE, so perhaps the Minister would like to withdraw this provision here and now and put the Prime Minister’s warm words into action.
I agree with the hon. Gentleman about the concerns that those workers will be facing, but he knows perfectly well that the Government’s proposals in this Bill are designed to deal with abuse. He knows that there are no plans to change the rules in a way that would affect people on lower incomes who are not doing anything wrong, and the Minister made that clear on Second Reading. The hon. Gentleman’s scaremongering is making the concerns of those workers worse, rather than reassuring them, which is what he ought to be doing in this House of Commons.
The only people who are scaremongering are this Government who are threatening to tax people’s redundancy payments—that is the scaremongering in this House.
Perhaps the Minister would like to withdraw this proposal. I will happily give way to him if he wants to reconsider his decision—he might have discussed it with the Prime Minister. In some instances, a job loss can be even worse if individuals lose their employment because of base and nasty discrimination, whether because of their age, gender, race, religion or sexuality.
The amendments speak directly to the question of how much money an employee who has lost their job should receive in tax-free redundancy pay, and how much an employee who is discriminated against should receive in tax-free compensation from an employment tribunal.
Is the hon. Gentleman not aware that when a tribunal has granted an award on the grounds of discrimination, that is automatically exempt from tax, despite what this clause may or may not be doing?
I agree with that particular point.
We know the Government’s overall stated aim is to crack down on what they say is significant avoidance related to non-contractual payments in lieu of notice. To do this, there is a complex set of formulas to mandate what will be considered as notice pay, even when that is not actually given in lieu of notice. Amendment 1 addresses our concern that the Government are giving themselves the power to change the meaning of basic pay for the purpose of calculating notice pay. That could significantly change the basis of the calculations, so the Minister should set out more clearly the intention of this measure.
I agree with everything my hon. Friend says, of course. Does he agree that a lump sum on termination of employment could be considered as potential income over a period of years, and should not be considered just as a lump sum to be taxed within one year?
Again, that goes to the heart of the issue. The Government are trying to focus on a particular moment in time, rather than taking into account the fact that a person might be out of employment for a long time.
We see a running theme of this Government in this Bill and so many of their other actions: they are removing powers from Parliament and giving them to Ministers. But other elements have been tacked on to the clause that are seemingly unconnected to the stated aims about payments in lieu of notice. It is clear that the Government are laying the ground so that workers who have already lost their jobs should pay tax on more of their termination payments. Is that the message that the Government are now sending to the likes of the BAE workers? Is it the message they want to send to the victims of redundancy? There can be no other explanation for this clause. It gives the Treasury powers through delegated legislation to raise or lower the tax-free threshold.
Changes to the tax-free allowance for termination payments were first mooted by the Office of Tax Simplification in 2013 when it cited such payments as an employee benefit that would merit further study. I find it rather peculiar that a payment to an employee who has just lost their job is considered as an employee benefit—how bizarre. It is as though a termination payment were some sort of added extra and a huge inconvenience for employers, when in fact that worker has just lost their job and this may well be the last payslip they receive for a long time. The Government have promised not to reduce the threshold, so it comes as a bitter pill that the Bill will allow them to do just that.
If there is no intention to reduce the threshold, Conservative Members should have no hesitation in voting for amendment 2, which would allow the threshold only to be increased through delegated legislation, removing the power to decrease the amount. I wait with bated breath for the Minister to keep the Government’s word and accept our amendment.
In the previous debate, the Minister went to great lengths to claim that the Government’s plans to give themselves the power to water down the tax-free threshold on termination payments, and to exclude injury to feelings from tax-free compensation payments, had nothing to do with attacks on those who have just lost their jobs. No, instead that is apparently part of some ambitious strategy that the Government have to tackle tax avoidance.
The Minister is so concerned about tax avoidance that he has claimed that
“when the Government find tax avoidance, we will clamp down on it.”—[Official Report, 6 September 2017; Vol. 628, c. 253.]
Such a bold assertion makes me wonder if the Minister has even read his own Finance Bill. Has he read clause 15, which we will debate later, through which his Government are loosening the rules to allow more non-doms to receive tax breaks if they use money from offshore tax havens to invest in the UK?
Is the hon. Gentleman not aware that clause 15 will bring more money into this country, which is presumably a good thing, and something we can all agree on?
We will deal with that a little later. The hon. Gentleman may want to pay attention to my hon. Friend the Member for Oxford East (Anneliese Dodds), who will expose that fallacy.
Is it not the case that the Government are squeezing money out of people who cannot escape from taxation—namely, less well-off people who lose their jobs—rather than chasing the big money people who evade and avoid taxes?
My hon. Friend, as ever, puts it in a nutshell. That is the case.
Has the Minister read clauses 29 to 32 and schedules 8 and 9? With those measures, the Government are deliberately signposting a loophole to ensure that non-doms can set up offshore trusts that are exempt from planned changes to non-domiciled status. That exemption completely undermines the Government’s planned changes. The fact is that this Government are not interested in tackling the scourge of tax avoidance and evasion, which costs the UK economy billions every year. They have no interest in ensuring that those who invest foreign money in the UK do so in a transparent and open manner.
Does the hon. Gentleman accept that under this Government we have made the largest strides to close the tax gap that we have seen in recent years, which means that we are collecting more from rich people and tax avoiders than ever before?
That will be dealt with later, but it is not the case for many multinationals. The papers are strewn with examples of the Government’s sweetheart deals with multinationals, so the hon. Lady cannot tell me that that is the case.
I thank the hon. Gentleman for generously giving way. The latest figure for the tax gap is 6.5%, which he will know is lower than that in any year under the last Labour Government. It was over 8% in the financial year 2005. He will also know that our record on avoidance and evasion is that we have raised £160 billion since 2010. What amount did his party achieve by clamping down on avoidance, evasion and non-compliance when it was in office?
It does not include profit shifting from multinationals. I am quite happy to defend the record of the last Labour Government, but I am more interested in this Government and what the next Labour Government will do in this regard.
The Government are only interested in doing what they have always been interested in since the party was founded: dramatically curbing the rights of workers and transferring their money to those who least need it. That is, outrageously, what clause 5 will do. Why else would the Government give themselves the power to lower the tax-free threshold for statutory redundancy payment? Why else would the Government feel the need to further harm discrimination victims? If, as they say, there is a need for clarity in the definition of “injury”, why do they not accept amendment 4, which would make it clear that victims of discrimination should not have compensation for harm taxed as if it were earnings? We only need to look at the comments of the Chief Secretary to the Treasury, who wrote an astounding report in 2012 comparing the work practices of Germany and the United Kingdom.
The hon. Gentleman is being very generous in taking interventions. He suggests that the Conservative party is not looking after those on lower incomes. Does he not accept that it was our party that increased the tax threshold for lower income workers and also introduced the living wage?
When we take into account cuts to working tax credits and changes to benefits, that does not stack up, I am afraid. The hon. and learned Lady should know that.
In 2012, the Chief Secretary set out how some employers in Germany were exempt from pesky regulations, such as on unfair dismissal, or social security contributions, and opined that the UK Government should follow suit. She argued that the best way to fight unemployment, particularly among the over-60s and the under-20s, was by encouraging more shift work, work on Sundays and late-night work and, yet again, getting rid of protection against unfair dismissal. Is it any wonder that this Government are hellbent on giving themselves the power to cut the amount that a worker can receive tax-free after they are dismissed?
Why is the hon. Gentleman discussing removing the power of unfair dismissal when that is neither covered by the Bill nor proposed by the Government?
Because it goes to the heart of this Government’s attitude—[Interruption.] Narrative; that is a very good word. Should anyone in the Chamber be surprised that the same Government brought in the illegal and deeply unfair employment tribunal fees? It is part of the theme and the narrative. They are now set, once again, to try to limit the amount that workers who are discriminated against in the workplace can receive. The clause is simply another step that this Government have taken in the past seven years to distort and debase hard-won employment rights. If it remains in the Bill unamended, it will give the Government even more power to wreak havoc and misery on the lives of some of the most vulnerable people in our society.
In the light of yesterday’s announcement of BAE job losses, what message does the clause send to workers such as those at BAE? It says, “You’ve lost your job—a well-skilled job at the forefront of our defence industry—and you may lose your tax-free redundancy sum or have it reduced.”
The Prime Minister was handed a fake P45 last week. That was a joke. Many sacked workers get a real P45, and now, under these proposals, they may also get a big tax bill to accompany it. That is no joke—[Interruption.] Conservative Members may snigger and laugh, but it is no laughing matter. I ask the Minister once again to withdraw this proposal.
I will deal with the amendments and some of the issues introduced by the hon. Member for Bootle (Peter Dowd).
Let me cover first the jobs position. The only criticism I have of my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), who raised this matter, is that, of course, jobs are created not by the Government but by businesses operating under the conditions that are created by the Government. It is important we remember that, because we should not take it for granted. The jobs performance of many countries in the European Union has been pitiful by comparison. Not that long ago, this country created more jobs than the rest of the European Union put together. That is not a trivial point; it makes a difference to millions of people across the country.
The hon. Member for Bootle ought not to sneer at the number of jobs. He is also wrong about the quality of those jobs. Figures from the Office for National Statistics clearly show that most of the jobs that have been created are permanent, full-time and skilled managerial or professional jobs. They are not rubbish jobs, as he calls them in that slightly sneering way. They are good-quality jobs and are providing good livelihoods for people across our country.
The right hon. Gentleman suggests that Governments effectively have no role in creating jobs. The reality is that macroeconomic policies have an enormous effect on the creation of jobs. Those countries that have chosen foolishly to join the euro and now have a massively overvalued currency, in effect, have lost millions of jobs in some cases. We have fortunately not been part of the euro, and currency flexibility is a crucial part of that; that is Government policy.
I completely agree, but the hon. Gentleman misquotes me. I did not say that Government have no role. I said that Government do not create the jobs, but I explicitly said that Government create the conditions within which businesses operate and can create jobs. He is absolutely right about that, and I do not necessarily demur from what he said. The euro and the straitjacket of monetary policy across Europe has led to appalling situations in some countries where unemployment rates are very high, which I do not think is sustainable. That is why our economic performance is incredibly strong. We should not throw that away.
Could the right hon. Gentleman explain how, when he was Chief Whip, Thames Water failed to pay taxation between 2010 and 2014?
I have not got any idea. I was not Chief Whip between 2010 and 2014. Individual taxpayer matters are for Her Majesty’s Revenue and Customs, and Ministers do not get involved in individual taxpayer decisions. As the Financial Secretary to the Treasury and several other hon. Members have pointed out, we have reduced the scope for businesses to avoid and evade paying taxes. We have closed that gap and are collecting more revenue that we can spend on our important public services, which I want to turn to.
The hon. Member for Bootle mentioned multinationals. He will know that there is nothing we can do unilaterally to collect money from multinationals that operate in different countries. That has to be part of an international process. He will know that David Cameron’s Conservative Government led that process and set up the initiatives. It is not very exciting, Mrs Winterton, but we are part of what I think is called the base erosion and profit-shifting programme. I am a non-practising chartered accountant, and I am afraid that we talk about such exciting things over coffee, but it is important because it relates to a set of international rules for treating where companies earn income consistently so that we tax them where they are genuinely doing their economic work. This Government cannot do that unilaterally; we have to co-operate. This Government have been leading and shaping that work across the world, not following others or trying to avoid it. Not only do we not have anything to be ashamed of, we have a lot to be proud of, which is shown in the revenue that we have been collecting.
Moving on to the substance of clause 5 and the amendments, I want to return to the point I made when intervening on the hon. Member for Bootle. There is nothing in the proposals that should alarm anybody—particularly those on lower incomes—who is playing by the rules. That issue came up when there were votes on the Ways and Means motions, and the Minister made the Government’s intentions clear and they are not what the hon. Gentleman suggested. Anybody worrying about their job at Bombardier, BAE Systems, about which we heard yesterday, or any other company should know that the Government have not proposed to alter the £30,000 tax-free limit at all. If the Government were to bring forward such a proposal, it would be governed by a statutory instrument under the affirmative procedure, meaning that the matter would come to the House and that Ministers would have to make the case at the Dispatch Box and persuade the House to back a change. There is no such proposal. The hon. Gentleman knows that it is not true and in saying that it is he is scaremongering and worrying people when they have no reason to be worried. He should be ashamed of himself.
As the Minister set out on Second Reading, clause 5 is necessary because the rules are unclear and complex and there is some abuse. Some 85% of termination payments are below the £30,000 threshold and will not be affected, but we must make sure that people do not abuse rules that are there for a good reason: to ensure that employees who lose their jobs are properly compensated and have some money to help them as they look for another job. There is no proposal to change that; this is about dealing with abuse.
On amendment 4 and “injured feelings”, there is a clear reason why it is foolish. Were it agreed to, it would introduce a large loophole into the process that would absolutely be abused. If someone wanted to offer some tax-free payments on loss of office, the payment could be labelled as “injured feelings”, rather than as something in the contract, and they could avoid paying tax and national insurance on it. The Minister should be congratulated on thinking things through and ensuring that people cannot dream up loopholes. Dealing with tax evasion is not just about acting after it has happened; it is about smartly drafting legislation so that loopholes are not left open in the first place.
My right hon. Friend is making an incredibly powerful argument. I was just considering his remarks on tax avoidance, loopholes and, indeed, Thames Water, which was mentioned by the hon. Member for Hornsey and Wood Green (Catherine West), and it is important to remember that industrial-scale tax avoidance arose under the previous Labour Government, who did nothing at all to stop this egregious practice. This Government have been passionate, trenchant and active in righting that wrong.
My hon. Friend is right. We hear a lot from the Opposition about clamping down on evasion and aggressive tax avoidance, and I give them credit for talking about it a lot. Unfortunately, they did not do anything about it when they were in government. The Minister and this Government talk about it a little bit, but we spend most of our time dealing with it and collecting the money, which is the right balance.
The list definitely dates from 2010—if I am not mistaken, that was when the Tory Government came to power—and includes Google, the Vodafone sweetheart deal, and Amazon. Government Members should concede that, despite some gradual improvements, we are still not where we ought to be and that this group of amendments includes things that taxpayers would like to see this House take much more seriously.
There are a couple of things in what the hon. Lady says. She is absolutely right that we need to do more to ensure that multinational companies pay tax in the appropriate jurisdiction, but we cannot do that unilaterally. We have to work with other countries, because we need international agreement on where a company’s profits are earned. The media sometimes does not understand this, but companies pay tax on profits, not revenues, so the whole argument is about where the profits land and that has to be addressed internationally. This Government are leading that international work, not following it—[Interruption.] It is no good the hon. Member for Oxford East (Anneliese Dodds) shaking her head. UK tax professionals have been leading this work and continue to drive it forward. We have a proud record.
I have seen some of this from the inside, within the European Union. For example, I have seen measures against trusts and measures to introduce country-by-country reporting blocked by Conservative MEPs, and I frequently saw measures to attempt to introduce international co-ordination blocked by Conservative-related politicians.
No. First, it cannot just be done at European Union level—[Interruption.] No, we have to do it globally, because many of the companies involved are US companies. The base erosion—[Interruption.] I do not know why the Opposition Front-Bench team are laughing. The base erosion and profit sharing programme comes from the OECD.
Will the right hon. Gentleman give way?
I cannot take an intervention when I am still dealing with the first one. The base erosion and profit sharing programme is a global initiative, and we are leading on that work.
As for the point of the hon. Member for Oxford East about the EU, if I remember rightly, the reason why the Government blocked the French-driven proposals for country-by-country reporting was that they were part of an EU plan to try to drive up the total amount of tax that we take from business, not to ensure that companies pay tax in the right way. We are not an anti-tax country. That move was part of an EU plan to avoid countries being able to have competitive tax regimes and to avoid businesses locating in the United Kingdom. The French wanted to stop that because many of their businesses and smartest people now work in London or other parts of the UK, but the change was not in our national interest and I believe that that was why we blocked it. However, we need to continue the international work, and I am pleased that we have been leading on it.
My final point is about workers’ rights. I understand that the hon. Member for Bootle has to do this stuff to please people on his side, but he is absolutely wrong. This Government have absolutely no agenda of the sort that he mentioned. When talking about our leaving the European Union, my right hon. Friend the Prime Minister has made it clear that we want to protect workers’ rights. We stand four-square behind the rights that are in place, and we will be legislating for them in the European Union (Withdrawal) Bill, which I am sure will provide many hours of joy and fun in Committee. You may even be in the Chair, Dame Rosie, to listen to some of those exciting debates. We are going to protect workers’ rights, and there is nothing at all in the proposals to concern somebody who is worried about losing their job. This is about cracking down on people who have been abusing the provisions that protect legitimate workers who lose their jobs, using them as an excuse to get tax-free cash out of the system and cheat the taxpayer. That is what the proposals are about and that is why I hope that the Committee rejects all the amendments and supports clause 5.
It is good to be back in the House after a bit of a recess and to be here again talking about the Finance Bill. It is our second such Bill this year—our second of three—so we are here for the long haul. I want to discuss termination payments and the relevant amendments tabled by the Scottish National party and Labour. The Government have been clear that they are just closing a loophole, but the Budget suggested that the measure will generate an extra £430 million a year. That is £430 million a year that these workers will not be getting when they receive their termination payments. However the Government want to dress it up, this is additional tax on these people who are losing their jobs and receiving termination payments. These people are in a vulnerable situation, as they are receiving a termination payment and are no longer in employment and they will be taxed more as a result.
Like the Labour party, the Scottish National party has concerns about the impact of that measure on low-income workers, and we have made that clear in our amendments. I understand that the Government are saying that 85% of those who get these termination payments and will be affected by this change are not low-income workers, but the other 15% are, and my concern is for them. If someone finds themselves out of a job, an amount of money is needed to allow them to get back on their feet and to ensure that they do not have a significant knock to their confidence, so that they can get back to the workplace after a relatively short time.
The right hon. Member for Forest of Dean (Mr Harper) used the phrase “we have closed the gap”. I am not sure that it is quite closed yet. There is still a gap as regards non-payment of tax. Fair enough, measures have been taken to move towards ensuring that tax is paid by the rich in the way it should be, but the gap has not yet closed.
The hon. Lady may remember that the tax expert Richard Murphy calculated at one point that the genuine tax gap—not the one that the Government give us—was £119 billion a year. That has no doubt come down slightly, but there is a long way to go before we collect that tax. That figure overwhelms the amount of money that the Government will squeeze out of workers who are losing their jobs.
I absolutely agree and I think that the tax gap is probably significantly larger than the Government are suggesting. On that note, small countries are very good at having a very small tax gap—a wee plug for Scottish independence there.
We have a couple of other specific concerns about termination payments. We are still not clear about people who have faced termination as a result of injury, injury to feelings or psychiatric injury. We do not want them to receive less as a result of this change. I heard what the Minister said about those people who have been involved in discrimination cases when the decision has been in their favour, but we want to ensure that people who are trying to move on from a situation after termination but who have been injured or have suffered an injury to feelings or a psychiatric injury are not disadvantaged by this change in the rules.
I will not speak for much longer, but let me say one more thing. The Government’s explanatory notes say that the Government are looking to ensure that all payments in lieu of notice, not just contractual payments in lieu of notice, are taxable earnings. That way of putting it is what most concerns me, because it is clear that workers will be impacted by this change when it comes in. I expect that this change will be proposed by the Government and accepted, so I would very much like a commitment from the Minister that, if it comes in in the next tax year, the Treasury will do an impact assessment one or two years in to see the specific impact on that group of low-income workers who the Government suggest are in the minority. I would like to see its impact, and if it proves to be particularly negative, I want the Treasury to take mitigating steps to change it.
“The narrative”—those were the words used by the Opposition Front-Bench spokesman in response to the measure. We should remind ourselves that the narrative is that we are discussing employment-related tax treatments against a backdrop of a significant increase in employment and a significant decrease in unemployment. That goes to the heart of this whole debate. Employment is something that we all want to see expanding through the UK economy. Having started and run a small business and having recruited people to that business, I know that no employer recruits someone with the intention of kicking them out. I hope that that goes without saying, but I have said it nevertheless.
Does my hon. Friend agree that a small business owner with just a couple of staff has to go through a lot of stress in the whole process of making someone redundant? We should not forget that small business owners are people as well, often quite low paid because they are sacrificing salary. That can lead to mental health issues, stress and anxiety.
My hon. Friend is absolutely right. I will respond to her point in a few moments, but it is a very important one and we must not overlook it.
We have had a jobs boom over the past few years, in stark contrast to many other developed economies around the world and across Europe, which has struggled. In particular, in the UK, which is dominated by small and medium-sized enterprises and, indeed, microbusinesses, which often have only one or two principals and one or two employees, it is important that we continue to give confidence to those businesses, many of which do not have a large administrative back-office function. That is often the case, as it was in the business that I started. I was doing the client interaction and sales, and a colleague of mine was doing the journalism side of the business, but we were also the accountants and the HR department. To give confidence to small and microbusinesses that they can employ people, it is incredibly important that everything to do with employment is as simple and transparent as possible.
At the moment, the tax treatments around severance payments are very competitive. Depending on the combination of events, the payment can be taxed any one of a number of ways. Although I did not speak about this set of clauses on Second Reading, I did welcome the Bill, and I welcome this general move to simplify, to clarify and to give small businesses in particular—although of course this affects businesses of all kinds—the confidence to employ people, knowing that the HR and financial treatment around that employment will be as simple as possible.
The Opposition spokesman kept talking as though severance payments were not taxed at the moment, and of course they are. They are taxed—
Above the £30,000 threshold, there are tax treatments. Through the Bill, the Government are seeking to make the treatment of the figure above £30,000 most important and straightforward—[Interruption.] I absolutely welcome that.
Yes, but at the moment it is £30,000, and that is what it says here—[Interruption.]
Order. There are too many sedentary interventions, and it makes it rather difficult for the Hansard writers, as well as everyone else.
I am happy to take interventions, but I have never been a particularly good lip reader, so the Opposition will have to help me out on that one.
The Opposition suggested that somehow there would be some terrible Government sleight of hand to try to diddle people out of their money at a point at which they have lost their job, but it has been made absolutely clear by the Minister and in the speech made by my right hon. Friend the Member for Forest of Dean (Mr Harper) that there will be transparency in any changes. None are proposed, but if they were, they would follow the affirmative procedure, which would mean a Minister at the Dispatch Box, in front of the House, being quizzed and questioned by the House. They would have to be voted on by the House. So the idea that there would be some sort of back-office sleight of hand in this is inaccurate.
At a time when we have, unfortunately, heard news of proposed job losses in one of our key businesses, the Opposition’s approach is unwise. I understand why their Front Benchers have done this—they want to attack the Bill—and I am sure that if I were in their shoes, I would find whatever means I could to try to criticise the Bill. The simple truth is that there are no such proposals and nothing in the Bill to imply that there would be, but it is right that the Government maintain the opportunity to be flexible in the future.
Does the hon. Gentleman agree that in the light of the shake-up in these organisations and the dreadful stress that these people are under, introducing this clause at this time is completely inappropriate and heartless? The Government can bring it back another time if they wish.
The hon. Gentleman will be unsurprised to hear that I do not agree with him. The Bill is where the proposal is and the passage of the Bill has been timetabled in the way that it has. The idea that we delay changing the tax treatments of severance payments to a point in time when no one in British society is in the process of losing their job is farcical, as I am sure that, on reflection, he will recognise.
As has been said, the £30,000 threshold means that 85% of termination payments are completely unaffected. I am sure we have all heard anecdotes about businesses seeking to manipulate the definitions of the various elements of severance payments specifically to avoid the tax that is owed. Surely, Opposition Members would wish to make sure, as Government Members would, that tax is applied fairly, dispassionately and transparently, and that it affects all people equally. Once again, a disproportionate burden would otherwise fall on small businesses, which do not have that administrative back-office function and cannot play manipulative games to avoid tax. They are the ones that have to pay the full tax, as is right.
Some companies may have clever back-office accountants looking at ways in which to massage the definitions of the various elements of a severance payment to minimise the tax—tax that is due to the Treasury and that we want and need to fund public services. Surely, the Labour party is not suggesting we should turn a blind eye when a clever set of accountants can massage figures, making sure that the burden falls wholly and solely on small businesses, which do not have the opportunity to employ people to do that kind of smoke-and-mirrors work? I cannot imagine that is what Labour would want to do.
Amendment 4 proposes including the words “injured feelings”. Again, I am sure that this is being proposed with the best intentions, but the Labour party must realise that putting into a Bill a definition that is so vague and open to abuse is just inviting unscrupulous businesses to use it as a means of avoiding the tax that should be fairly paid upon a severance.
I am guessing that the hon. Gentleman is unaware—perhaps he is not—that “injury to feelings” is a legal term. It is used within that profession, and it is recognised and understood. Therefore, it is completely reasonable to include it in an amendment.
I thank the hon. Lady for informing me of that. I am more than happy to look in more detail at that definition, because I do not have it at my fingertips, but putting it in the Bill would present to unscrupulous employers something that looks like an invitation to use this as a back-door route to avoid the tax that should rightly be paid upon severance. It would be unwise for that to go through, because it would send exactly the opposite signal to what we are trying to achieve with the relevant clauses elsewhere in the Bill, which is to say, “If you play by the rules, fine.” The vast majority of people who receive severance pay have no need to concern themselves and neither do the vast majority of businesses. The only individuals who should be a little distressed by what is going through in the Bill are the very small number of companies that have abused the severance payment structures to avoid paying the tax that is fair. I have little sympathy for those companies. If they play by the rules, we are on their side. If they seek to bend or break the rules, I have no sympathy whatsoever.
I am seeking to ensure my hon. Friend understands that this does not benefit the companies; this is of benefit to individuals who take advantage. There is no tax benefit to the companies because it is income tax that is payable. [Interruption.] Well, there is national insurance—employers’ NI.
I thank my hon. Friend for that intervention. There is little direct financial benefit to the company—
Although, as I am reminded, there is an NI implication. Again, I have heard a number of anecdotes about conversations with departing employees from not the most honourable of companies in which things have been said such as, “If this complaint were to gently disappear, I am sure we can squeeze a little more money into your severance payment, using this route or that one.” This is one of the areas where simplicity and clarity are important, because companies may be using massaging methods to try to get a bit more money into the pocket of a departing employee, so that employee does not to have recourse to the law where inappropriate behaviour has taken place. Dangling some cash in front of them may be being used as an enticement not to take a constructive dismissal case, for example, and that is exactly the kind of thing we want to avoid.
In conclusion, I will be generous in spirit and assume that these amendments are just poorly thought through, rather than anything that is attempting to be more damaging. They would undermine the core direction of travel of the Bill, so I will not support them.
I am grateful for the opportunity to speak in this debate. Before entering this place, I was an employment rights lawyer for more than a decade, so this issue is very important to me. I represented dismissed and discriminated against employees for many years, and saw at first hand the devastating effect that the way they had been treated had on their lives. The Bill clearly seeks to narrow the scope of termination payments. Of course tax avoidance should be clamped down on, but the Government’s own consultation did not reveal evidence of widespread abuse. The hon. Member for Dover (Charlie Elphicke) said that there was tax avoidance on an industrial scale in this area, but that simply is not borne out by the evidence or indeed my experiences as an employment rights lawyer.
The hon. Lady is a making a strong and passionate case. My concern was industrial-scale tax avoidance, because big corporates were allowed to game the tax system without any action being taken to stop them doing that, largely because of the Brownite prawn cocktail circuit that was pursued in the early 2000s. In the last Parliament, I fought a campaign to get a lot of the law in this area tightened, and I am glad to say that a lot of that was taken forward.
This is not about big corporates; I am talking about adequately compensating people who have been sacked or discriminated against at work. In my experience, a sacked worker’s priority is to receive a fair settlement, not to avoid tax. It seems to me to be another example of the Government hounding people when they are at their most vulnerable, when instead they should be helping and supporting them.
The introduction of measures that will allow the Government to reduce the £30,000 tax-free threshold via the backdoor of delegated legislation could lead to profound effects on people’s lives without there being any proper scrutiny in Parliament. That is even more important given the fact that the threshold has not been increased since 1988; had it risen in line with prices, it would be £71,000 today. Amendment 2 would mean the threshold could only be increased, not decreased.
Does my hon. Friend agree that it is curious that, between 2010 and 2014, such a large company as Thames Water paid zero corporation tax, yet here we are talking about sums of £30,000? It is estimated that there is £6 trillion in tax havens, yet we are quibbling the amounts that go to individuals who have had a difficult time in the workplace.
I absolutely agree. The clause will penalise people who have lost their jobs and people who have been discriminated against—
Will the hon. Lady give way?
May I deal with the intervention I am currently dealing with first?
People who have lost their jobs and been discriminated against often get small amounts of money in the wider scheme of things, but it makes a huge difference to their lives while they are looking for another job, getting back on their feet and getting their confidence back after the treatment they have been through.
The hon. Lady is talking about people who have lost their jobs who have been discriminated against. All our hearts would go out to someone in that situation, but is she aware that the tax-free threshold for people who have been discriminated against is not affected by the provisions in the Bill? Such awards will be wholly tax-free under the Bill, so does she agree that discrimination is not relevant to the debate?
Discrimination is relevant to the debate, because the Bill would introduce legislation that would tax injury-to-feeling awards on termination. Discrimination can of course have a devastating effect on a worker’s life and career, yet the Government seem to treat victims of discrimination as a way to top up the Government coffers.
Will the hon. Lady give way?
I have already given way several times; I wish to make some progress.
Consider the example of a mother who has been discriminated against and dismissed for taking maternity leave. Rather than enjoying her time at home with her baby, she feels stressed and anxious about the future and her capacity to provide for her family.
The hon. Lady is being extremely generous in giving way. I just wish to put on the record that discrimination awards will not be affected by the Bill. I have a copy of the Bill here: there is full exemption for compensation awarded by an employment tribunal relating to discrimination awards. She is talking about a case of a mother who is discriminated against, and none of us would wish to see that—I am a mother myself and I have employed mothers—but that is not what the Bill is about.
The hon. Lady is talking about discrimination awards in employment tribunals; I am talking about discrimination awards as part of termination payments. They are two distinct things. As I understand it, the Bill would tax as earnings discrimination awards as part of termination settlements. For example, were someone to settle with their employer rather than go to tribunal, any injury-to-feelings element of the settlement that was above the £30,000 threshold would be taxed. That is a significant change for people who suffer discrimination. It might affect the mum who settles with her employer following her dismissal after having a child, or the disabled worker whose employer would rather sack them and make a termination payment than make adjustments for them. Such people will be worse off because that element of their award will be taxable.
It cannot be right that, rather than supporting victims of discrimination, the Government seem to want to use them as a source of revenue. These people need protections, not to be used to provide a revenue stream, so I urge all Members to vote for the Labour amendments.
The shadow Minister said that the measures in the Bill are part of a wider pattern of Government behaviour. Indeed they are: they follow in the footsteps of the 75 different measures we have already taken to clamp down on tax avoidance and the £160 billion we have already raised for our public services by doing so. They follow in the footsteps of the changes we have made to capital gains tax, which have increased the amount we have raised and ended the disgraceful situation in which hedge fund bosses were famously paying less tax than their cleaners. They follow in the footsteps of the changes we have made to corporation tax to prevent international avoidance—the so-called Google tax. They follow the changes we have made to the taxation of non-doms to create more balance and end the situation whereby people could be here for 25 years and still claim to be non-doms. So the Bill is part of a wider pattern of behaviour: it is part of an ongoing war on tax avoidance that the Government are waging.
On the specifics of the amendments, it seems to me that the Opposition are incredibly well intentioned. We all want the same things—we all want to drive down tax avoidance—but the problem with amendment 1 is that, in the real world, the Treasury is constantly engaged in a war of attrition with people who are constantly trying to create new loopholes and ways to avoid tax. As quickly as the Treasury closes one loophole, there are people trying to create others.
I shall make some progress.
Realistically, we cannot will the end of reducing tax avoidance without willing the means. The idea that, every time the Treasury needs to make a small change to a definition to clamp down on a new form of avoidance, we should have to come back with not just new statutory instruments but new primary legislation would really put sand in the wheels of the war on tax evasion and slow down our ability to tackle this serious problem.
Amendment 4 brings a more serious problem. If it is accepted, there will be people in the tax-avoidance industry rubbing their little hands together because the Opposition will have created, completely unwittingly, a huge new loophole, which will be used to abuse the system and avoid tax.
I am just about to conclude.
The measures in clause 5 are good, and they are part of a wider pattern of behaviour: a war on tax avoidance that we have waged in order to get more money for schools, hospitals and police in my constituency and others. They are part of a wider economic policy that has delivered not just record employment—the highest since 1975—and record tax cuts for those at the bottom end, but a record increase in the national living wage that will give us one of the highest living wages in the entire developed world. It is a pattern of behaviour that sees us making those who need to pay their tax pay it, so that we can have an economy that works for everybody.
I will speak only very briefly in support of the Labour amendments as most of what I would say has been said by my hon. Friends. The reality is that, in this country, we have a revenue problem, not an expenditure problem. The Government are constantly imposing austerity measures on ordinary people and on public services, and we see the result of that in the health service, local government and education. We need to get more money into the Treasury, which means dealing with tax avoidance and tax evasion among the corporates—the big money people—not squeezing the relatively small amounts of income given to people who lose their jobs.
Does my hon. Friend agree that it is a pity that, since the start of the new Government, Mr Pickles, who was formerly a Member in this House and is now in the other place—[Interruption.] To the best of my knowledge, he has not been replaced as the anti-corruption tsar. Indeed, unless the House has been informed otherwise, that particular thread of Government policy seems to be lost.
My hon. Friend makes an interesting point.
The reality is that many Government Members have close associations with the City and with big money. I do not want to accuse anyone individually, but that is the reality. Many have been in hedge funds and wherever. The biggest scandal of all took place within Her Majesty’s Revenue and Customs. A few years ago, Dave Hartnett, who was the boss of HMRC, was involved in sweetheart deals with the corporates, losing countless billions for the Treasury. He was not doing anything illegal, but cosy deals with corporates is not exactly public service. When he finally left HMRC, he set himself up as a consultant, advising the same corporates on how to avoid taxes. That is an absolute scandal. We should be stopping such practices.
Tax officers should be public servants who are driven by the public service ethos. At the grassroots level, the ordinary members of staff are driven in that way. Many of them are members of the Public and Commercial Services Union, with which I am associated. The PCS has argued for many years that we should have more tax officers, and that they should be better paid and better appreciated for the work that they do. I would like to think that, instead of closing tax offices and squeezing the number of tax officials, this Government would increase their number. PCS has told me on many occasions that every tax officer collects many times their own salary, so every time we appoint another tax officer, we get more than their salary coming back. That is what we should be doing. It has been a scandal for many years. Even before this dreadful Conservative Government, we were not collecting sufficient tax. We were allowing tax evasion and tax avoidance to go unchallenged. I want to see a world in which people, particularly those with plenty of money, pay their taxes at the highest level. I am not talking about ordinary working people.
Finally, it was recently suggested that quantitative easing, which is not strictly relevant to this amendment, is benefiting the better-off and not the ordinary people. It would be good if some of that QE could find its way into the Treasury coffers and help the spend on public services. That would be a better way of generating more jobs, more demand and better services in our economy.
This is indeed an important Bill. I look forward to serving on the Public Bill Committee and to helping it to become law.
We have heard a number of things about narrative and the tone from the Opposition. I say to the hon. Member for Luton North (Kelvin Hopkins) that I have nothing to do with hedge funds or with rich people in the City—unless we are talking about the city of Birmingham and about my friends who are rich in happiness and goodwill, if not money.
There is always a fine balance to strike when seeking to legislate on these matters. Generally speaking, we have a good regime of employment law in this country, notwithstanding some of the questions about the gig economy, which we are currently examining in the Business, Energy and Industrial Strategy Committee. Although the gig economy is outside the scope of this debate, it does need further scrutiny.
I am worried about Labour’s amendments. This Bill provides protections. It protects the public purse against those who seek to avoid and evade tax. The Opposition have raised some examples, and they were right to do so. This Bill does not condone those people or support their actions at all.
We know that, in most cases, the British taxpayer agrees with the system of taxation, but when that system is seen as unfair, it does lose the consent of ordinary workers. It is usually people with deep pockets and the resources to take advantage of the loopholes who cause deep anxiety among the British public. Therefore, I welcome the measures that we have set out in the Bill as they will end such practice.
The Opposition’s answer to the issue of taxation and revenue is to raise taxes on everyone. That is not the Conservative view. We prefer to keep taxes on the low paid and on small businesses low—that is what we have done already—and, at the same time, to crack down on the tax avoiders. Ultimately, that brings in more tax, and underpins a thriving economy.
There are measures in this Bill that will end some exploitative practices of big businesses and of a minority of individuals in this country. That will help the Government to collect the tax that is due to them from big businesses as well as from overseas investors and rich non-doms. We cannot allow a minority of businesses to tarnish the reputation of UK plc and our small and medium-sized businesses. However, we must remember that 99% of businesses in this country are SMEs. They are not this caricature of rich, greedy hedge fund people which, frankly, I do not recognise, but we hear about from the Opposition. They are ordinary men and women up and down this country, advancing their dream of a better life by setting up a small business. In so doing, they are creating jobs for other people. I worry about the tone of this debate as it sends out a message from this Chamber. We need to send out a message that encourages people to take that risk and start businesses. That is why we need to strike the right balance.
I speak from experience. Before I entered this House, I spent 25 years working in small businesses. I ran my own business and I was a human resources director in other businesses. I have worked for some small midlands manufacturing companies, advising them on employment issues. I have seen the stress and worry that employers go through when they are dealing with a termination. Of course, termination has an impact on the employee, but let us not forget that these employers are trying to do their best under difficult circumstances. Without doubt, there are some unscrupulous employers, but I have seen small business owners lose sleep and suffer from stress and anxiety. Sometimes, despite the best efforts of management, a job does not work out. We are dealing with a trust relationship after all. We are talking about the vagaries of human nature, and, as my hon. Friend the Member for Braintree (James Cleverly) observed, small businesses often do not have access to qualified HR advice and employment lawyers as they are too expensive and beyond their budget.
Some of Labour’s amendments, particularly those on the injury-to-feelings issue, cloud the whole legislative landscape for small business owners, making it extremely difficult for them to know what to do in a stressful situation. That is why I do not support these amendments. The provisions are purely about preventing the manipulation of the rules.
Just on that point about small businesses, I agree with the hon. Lady that they are immensely valuable to the economy and we must support them. However, would the Government not do better to stop banks such as RBS squeezing the life out of small businesses by very, very unfair financial practices, which has certainly happened to businesses in my constituency?
I thank the hon. Gentleman for his intervention. I am sure that members of the Treasury team are doing everything they can on those points, and I welcome the work that they are doing in that regard. I have also seen small businesses in my constituency being affected by such practices. I do not condone them at all. We all want a country where good work is rewarded, and where employers and employees can work together. No system of legislation is perfect, but this Bill does strike the right balance. It is sensible and well thought out and we will continue to scrutinise it in Committee. Therefore, I will not vote for Labour’s amendments.
I often think, when I get to my feet in the Chamber, that my job is not really to talk to the people in the Chamber. I am sure that there are many clever people in here—far better educated than me—who know all the complex details of the Bill and the nuances of the financial implications. But my job is to represent the people of Willenhall and Bloxwich in Walsall North. If they were to tune into the Parliament channel at the moment, they might be slightly perplexed as to what was going on, so I thought I would try to assist them by considering amendment 1 particularly.
I would tell my constituents that £30,000 of a termination payment is currently untaxed and this Government have no plans to change that. Opposition Members might say, “Come on—what are you playing at? You’re putting something in here so you can do something sneaky in the future.” My answer is that there is actually a statutory instrument that requires an affirmative procedure. The people of Walsall would say, “What the hell is that?” And I would tell them it means that if the Minister wants to do something in future, he needs to come back to the Chamber to get the approval of this House and he also needs the approval of the House of Lords.
My constituents would then say, “That sounds pretty reasonable, but can we trust you? Surely you’re looking to take more tax off us in the future.” I would say, “Are you kidding? Look at this party. What have we done for you? We have increased the level above which you will pay tax from £6,500 to £11,500—almost doubling it. This country has the highest level of employment it has ever had and there are more women in jobs than ever before. And which party gave you the minimum wage? Not only was it the Conservative party”—[Interruption.] My apologies—small technical problem. Okay, I would say, “Which party subsequently increased the minimum wage to the level that we are at now—a massive increase on the original introduction level?” [Hon. Members: “Ah!”] And I would tell my constituents that this party has the aspiration to increase the minimum wage even further in the future.
Was it not the hon. Gentleman’s party that voted against the minimum wage?
I think I remember the hon. Gentleman saying, “Let’s not talk about the past. Let’s talk about what this Labour Government might do for you in the future.” Well, there is not going to be a Labour Government. There is going to be a Conservative Government who will continue to increase the minimum wage. If my constituents are going to trust anybody in the House, it should be the Conservatives. We have no intention of taking more tax off people. If we did, we would have to come back to the House to get approval anyway.
Thank you Madam Deputy Speaker—sorry, I mean Dame Rosie. I have just been thrown by that magnificent speech by my hon. Friend the Member for Walsall North (Eddie Hughes). His constituents must be very proud of him.
Let us ground ourselves for a moment. I am proud of this Government’s record on tax avoidance. Since 2010, our policies clamping down on tax avoidance and evasion have collected more than £140 billion, ensuring that our tax system is just and that everyone pays their fair share. Clause 5 makes the tax system fairer, which should be the ambition of all responsible political parties. A fairer tax system means that we can fund our vital public services without increasing taxes or passing more debt on to future generations. It is not rocket science; these are the basic rules for responsible government. To that end, I welcome the clauses we are discussing today, especially clause 5. They tighten the rules and close loopholes that have been exploited for too long, denying the Treasury what it is owed and short-changing the vast majority of individuals and small and medium-sized enterprises that pay their fair share.
I cannot be the only Member of Parliament who represents a constituency whose jobs, prosperity and opportunities are dependent on small businesses thriving, and I take every opportunity to stand up in the Chamber and back small businesses across Wealden. But back to clause 5. The tax rules on termination payments are currently unclear and confusing. Clause 5 tightens and clarifies the rules governing the tax due on these payments. The changes make the rules fairer, minimising the potential for manipulation by some larger employers, which often give the most generous pay-offs.
The oil downturn has had an enormous effect in my constituency and that of the hon. Member for Aberdeen North (Kirsty Blackman). Like my hon. Friend the Member for Redditch (Rachel Maclean), I am a business owner. There are already too many barriers to employment. The Bill seeks to give clarity and the amendment would add to the complexity of employment. We do not want further barriers to employment. Does my hon. Friend the Member for Wealden (Ms Ghani) agree that we want clarity, which will ultimately help employment and small businesses?
My hon. Friend is spot on. We want absolute clarity. As I continue with my speech, the Committee will realise that the changes in clause 5 will barely have an impact on most people in our constituencies.
The changes are not asking someone who has been made redundant to pay more tax. The first £30,000 of the termination payment remains exempt from tax as well as national insurance contributions. As a result, the changes in clause 5 will not have an impact on 85% of people who receive termination payments. If we have constituencies where 90% of businesses are SMEs, our figure will probably be even higher than 85%. On average, 25% receive a payment of more than £54,000, so they are not exactly the least well-off in society. Those who are not following the rules and are not manipulating the loopholes will pay no additional tax. It is simply about clarifying the fine details.
I was disappointed that Labour tabled amendment 4. The whole point of clause 5 is to close loopholes, preventing tax avoidance and ensuring that everyone pays their way. Amendment 4 will open up more wriggle room. If we accept it, what is to stop larger companies routinely reclassifying termination payments on account of injury to feelings with the sole aim of paying less tax? It is a naive amendment that would create new loopholes. The public will see this as political point scoring by the Opposition. Not only did Labour not close loopholes when it was in power; it is trying to open new ones when it is in opposition.
The changes in clause 5 will bring in £430 million a year by 2022. They clarify and tighten the regulations, but I urge the Committee to reject all Opposition amendments to ensure that the changes are as effective as they can be. The Finance Bill is about addressing imbalances in the system and making important changes to the tax regime system to ensure that the rules do not unfairly benefit large companies. It will build on the hard work of the Government since 2010 that has seen tax payments increase by £1 billion. The tax gap, which has been mentioned so often this afternoon, has fallen to one of the lowest in the world at just 6.5%, down from 10% under Labour, so let us just stick with the facts. I welcome clause 5, which will add to that record and ensure the tax system works for everyone.
What a pleasure it is to serve under your chairmanship, Dame Rosie, and to respond to the first of what I am sure will be a series of lively and exciting debates on the Finance Bill. Before I respond to some of the more detailed points raised, as well as the amendments, let me remind the Committee of the overall purpose of clause 5.
The clause is designed to tighten and clarify the tax treatment of termination payments to make the rules fairer and to prevent manipulation. Our tax treatment of termination payments is one of the most generous in the world. That is something of which we can be proud and something that this clause does not change, but the current rules can also be unclear and complicated, as many hon. Members have suggested. Some payments are taxed as earnings, others are taxed only above £30,000 and others are completely exempt from income tax and national insurance contributions. Most employers use the rules as intended, but the complexity in the system leaves it open to manipulation. Indeed, a small minority of individuals and employers, particularly those with the most generous pay-offs—this is an important point—have thought to manipulate the rules by categorising large pay-offs as termination payments, rather than earnings.
My hon. Friend the Member for Lewisham West and Penge (Ellie Reeves) made the point that the tax-free amount has not been indexed for many years. Had it been indexed properly, it would now be £71,000, not £30,000. Would not that be a way of avoiding any of these difficulties, as the lump sum would be so much bigger?
This is one of the most generous thresholds in the world. In fact, there is no threshold at all in Germany and the United States of America, because none of these payments is treated as being tax-exempt.
Such categorisation means that payments qualify for the £30,000 tax exemption and an unlimited employer national insurance contributions exemption. The situation is clearly unfair for the vast majority of employees, who are unable to manipulate their payments in this way. Clause 5 makes changes to prevent such manipulation in the future, while still ensuring that the vast majority pay no income tax on their payment. The first £30,000 of all termination payments will remain exempt from tax.
The hon. Member for Bootle (Peter Dowd) made a general point about the Conservative party’s treatment of workers, and I make no apologies for the way this Government have stood up for workers up and down our country. We are committed to enhancing workers’ rights. We introduced the national living wage, and we doubled fines for firms that break the rules in that respect. We appointed the first director of labour market enforcement, and we are committed, as we have constantly said, and as our Prime Minister has made clear, to protecting workers’ rights as we leave the European Union.
Nearly 85% of payments are below £30,000, so retaining the threshold will ensure that the vast majority of people going through the difficult experience of being made redundant will still pay no tax whatever. That means that the UK continues to have one of the most generous tax exemptions for termination payments, and I have mentioned Germany and the United States having no tax exemption at all.
Clause 5 tightens the tax rules for termination payments to prevent manipulation—a point made by my right hon. Friend the Member for Forest of Dean (Mr Harper) in an excellent contribution. He highlighted our overall record on bringing in taxes where attempts are made to avoid tax, and I referred to the £160 billion raised since 2010. He referred to our being at the forefront of the OECD base erosion and profit shifting project, and we have also brought in the diverted profits tax to clamp down on the kind of behaviour he referred to.
Let us not lose sight of the purpose of bringing in tax, which is to raise public finances so that we can employ doctors, nurses, paramedics, police and soldiers and pay for all those great public services that all of us hold so dear. That is why I am so proud of this Government’s record on clamping down on tax avoidance more generally.
The Office of Tax Simplification has said:
“the well-advised can often end up better off than the unadvised, as they are more able to structure their employment contract (or, indeed, their termination payment) to achieve the better tax treatment.”
The hon. Member for Bootle said in this House only last month:
“If there is genuine evidence of the abuse of payments in lieu of notice, that needs to be acted on”—[Official Report, 6 September 2017; Vol. 628, c. 206.]
It is fair to say that, while the hon. Gentleman is a very amiable fellow, he is not right about everything, but on this point he is actually very right. This clause is to deal with the very abuse about which he has previously expressed concern. We will prevent employers from categorising large pay-offs as tax-free payments, rather than earnings. Instead, employers will now be required to tax what the employee would have earned if they had worked their notice period in full. All payments in lieu of notice will now also be taxable as earnings to equalise the treatment of those with and without a contractual right to such a payment.
Finally, clause 5 clarifies that there is a total tax exemption for payments on account of injury or disability of an employee. In 2014, the Office of Tax Simplification raised the possibility of removing this exemption. It recognised that that would be a draconian approach, but it noted that interpretation is
“often a problem area for employers and their advisers.”
However, we have not pursued that approach. Instead, we have provided certainty by confirming the current position established by case law in statute. The total exemption relates to termination payments provided on account of a physical or psychiatric injury that prevents the employee from carrying on the duties of the employment, which hopefully addresses the point raised by the hon. Member for Aberdeen North (Kirsty Blackman). Therefore, employees with evidence of an identified medical condition will pay no tax on related termination payments.
Some Members raised concerns in previous debates that the Government would be taxing compensation paid to employees where it is proven that they have been discriminated against. Once again, I am happy to reassure them. All compensation for awards for proven discrimination during work will continue to remain completely exempt from tax. There was an interesting interaction between my hon. Friend the Member for Reddich (Rachel Maclean) and the hon. Member for Lewisham West and Penge (Ellie Reeves) on this point. We accept that, where there is a tribunal award in respect of injury to feelings, it is treated in exactly the same way as when an employer accepts that discrimination has actually occurred. All the clause seeks is to confirm the long-standing position that genuine compensation payments are tax exempt, while ensuring there is no loophole that can be used to reduce the tax that is owed.
Let me now turn to the amendments. As the hon. Member for Bootle set out, amendment 1 would remove the power to amend the meaning of basic pay for the purposes of calculating post-employment notice pay by regulation. When we consulted on this measure, we listened to responses that asked us to make the basic pay definition more simple. It now excludes overtime, bonuses, commission and tips. However, we introduced this power to allow the Government to act quickly and to remain flexible if there is manipulation in the future. Any amendment to the meaning of basic pay would be subject to a statutory instrument under the affirmative procedure, so the House would have to expressly approve any change to the meaning. I therefore urge the House to resist the amendment.
Amendment 2 and consequential amendment 3, also tabled by the Labour party, would remove the power to reduce the £30,000 threshold by regulation. Some Members have raised concerns during the debate that the Government intend to reduce this tax-free amount. We have no intention to do so. If we were to do so, we would, as my hon. Friend the Member for Braintree (James Cleverly) pointed out in his excellent speech, be required to do so by an affirmative statutory instrument. However, I repeat that we have no intention of reducing this tax-free amount. I therefore urge the House to resist the amendment.
Amendment 4 would include injured feelings within the definition of injury. As I outlined earlier, clause 5 confirms that termination payments provided on account of physical or psychiatric injury will be completely tax exempt—an important point raised by the hon. Member for Aberdeen North. However, the clause also confirms the established position that injury to feelings is not covered by this definition. The reason for this restriction is clear: without it, there would be a large loophole—as identified by my hon. Friend the Member for Braintree and my right hon. Friend the Member for Forest of Dean—allowing payments to be routinely reclassified on account of injury to feelings, and without medical evidence, simply in order for people to pay no tax. These things are hard to prove or disprove, and would be difficult for HMRC to police. However, it remains the case that payments on account of an injury to feelings, like any normal termination payment, will qualify for the £30,000 tax exemption. I therefore likewise urge the House to resist the amendment.
The Minister is concerned that some people might be exploiting a loophole, but as a result he has decided to disadvantage everybody who is subject to termination as a result of injury to feelings, rather than giving them the benefit of the doubt, which seems pretty unfair to me.
The problem is that one cannot escape the possibility that the employer and the employee, who could both gain from reduced tax, will work together to suggest that there has been an injury to feelings, even when in fact there has not been. How does one prove whether or not there has been an injury to feelings? That is why there is a loophole.
Amendment 12, tabled by the hon. Member for Aberdeen North, would require a review of how these changes will affect low-income workers. That is unnecessary because only 85% of the payments are below £30,000. As I have explained, the provisions do not affect awards for discrimination at work, for example. We have also maintained the £30,000 income tax exemption. We have considered the impact on low-income workers throughout, and we will continue to do so.
In conclusion, the Government recognise that losing a job is a challenging time, but we must remain vigilant to opportunities for the tax rules to be manipulated. That is why clause 5 sets out a fair and proportionate set of changes that will continue to protect the vast majority of employees. The first £30,000 of a termination payment will remain tax-free, as will the whole of the compensation payment for discrimination during employment. However, where there were opportunities for manipulation, the loopholes must be closed, and they now will be. I therefore urge hon. Members to reject the amendments and agree to clause 5.