Wednesday 24 January 2018
[Ms Nadine Dorries in the Chair]
British Armed Forces: Size and Strength
[Relevant Documents: Eighth Report of the Defence Committee, SDSR 2015 and the Army, Session 2016-17, HC 108, and the Government response, HC 311, and oral evidence taken before the Defence Committee on 14 November 2017, on National Security Capability Review, HC 556.]
I beg to move,
That this House has considered the size and strength of the British armed forces.
It is a pleasure to serve under your chairmanship, Ms Dorries. I am pleased to have secured this important debate. I will speak briefly to allow colleagues the maximum opportunity to speak and intervene. It does not take the brains of an archbishop, a Royal Military Academy Sandhurst graduate or a Mons Officer Cadet School graduate to work out that the world is an increasingly dangerous place. We are dealing with not only the threat of transnational, cross-border terrorism, but the rise of cyber-conflict, possible nuclear conflict in the Korean peninsula and a resurgent Russia probing the eastern flank of NATO. The very direct threat posed by Russia in a state-on-state approach was starkly laid out by the Chief of the General Staff in an eloquent speech at the Royal United Services Institute on Monday.
After 15 years or so of engaging in expeditionary counter-insurgency operations—wars of choice—we have to reconcile ourselves to the fact that we have to have the capacity to deal with state-on-state conflict. That is a shift in attitude and approach that we have to grapple with. We are moving from an era of wars of choice to an era of wars of necessity. In terms of capability, we need to work back from that threat.
The hon. Gentleman has made the case well for having sufficient capacity available to us. Does he therefore agree that we cannot have a situation where Army numbers remain below 80,000? Quite simply, we need a larger Army.
I entirely agree with the hon. Gentleman. We need hard power on a large scale. We need to be able to project hard military capability globally. Part of that is about having a large body of men and women. When I was serving in the Army 10 years ago, we had north of 100,000 soldiers. We need a large pool not only to have a critical mass, but to draw special forces and other critical capabilities.
Just on a technical point, an army by definition is meant to have more than 100,000 people. Below 100,000, it is more like a self-defence force.
I am grateful to my hon. and gallant Friend for that intervention. I agree entirely with his point, and I am sure the Minister will be pleased to offer reassurance about the critical mass of the British Army in terms of incorporating reservists.
Many of us are calling for greater numbers of British troops and a greater frequency of rotational deployment of those troops to our key strategic NATO partners, especially Poland. I pay tribute to those British troops who have been sent to the Suwalki gap. Those things are not cheap, and that is why we need more spending on our defence budget.
I entirely agree with my hon. Friend. Some of what we have been discussing, such as the fundamental requirement for hard power that we can project around the world—the doctrine and force plan—was contained in the strategic defence and security review laid out in 2015. The concept of joint force 2025 was sound. It laid out that we need a war-fighting division of 50,000 soldiers, carrier-enabled power projection and a significant air group, including Typhoon and F-35. As a concept and a plan, it was sound. The problems with the SDSR 2015 were on two fronts. First, there were significant funding problems. The budget for SDSR 2015 was predicated to a degree on significant internal savings of £11 billion that had to be made by the Ministry of Defence. When that is done by cutting inefficiencies and waste, that is good, but when things such as training and the defence estate are cut, it is probably not so good.
On the issue of the defence estate, Imphal barracks is due to close in 2031, yet it is the jewel in the crown for those coming to York and in particular for their families. Is there not an impact on recruitment and retention from the closure of barracks such as Imphal?
I am sympathetic to the hon. Lady’s point, and I know the Minister is particularly well positioned to respond to it. The other difficulty with SDSR 2015 was the depreciation of sterling and the ongoing fluctuation of Trident within the MOD budget, which have caused considerable problems. Taken in the round, that means that the MOD budget has a black hole of £2 billion or thereabouts. That is why we are here today. That black hole has been driving the discussion about possible cuts. I would like to lay it clearly on record that I think all of us in the Chamber agree that any form of capability cuts is an entirely untenable prospect that we should resist.
I congratulate my hon. Friend on securing this important debate at this critical time. On resources, does he agree that given the recent stark warning from the Chief of the General Staff on a resurgent Russia, we in this House have a role in deterrence, and that includes deterring the pinstripe warriors of the Treasury from leaving us without sufficient resources to fund our defence adequately?
I entirely agree with my right hon. Friend. It is our duty to make it clear to the Treasury that there is a large cohort of Members of Parliament who are absolutely determined to ensure that the Ministry of Defence has a sound financial settlement and is properly resourced.
Does the hon. Gentleman agree that in articulating his argument, it is important to stress that he has the support of all Members?
I absolutely acknowledge that. Defence is not really a party political issue; it is an issue of national security, and I am heartened by the fact that Members from all parts of the House are here engaging in this debate.
The second set of problems with the plan laid out in SDSR 2015 relates to timing. As the name implies, joint force 2025 is some years away. We have a capability gap, and delivering that capability is some years off. It is also important to remember that this is not the generation of a new capability. The force laid out in SDSR 2015 is essentially making up for ground lost in 2010, when the MOD suffered a 8% reduction in budget and our fighting power was reduced by about 25%. We have to put things in context: having a deployable war-fighting division as laid out in SDSR 2015 is nothing new. We deployed a division of 45,000 soldiers to Iraq in 2003 and a division of 53,000 men in Operation Granby at the Gulf war in 1991. We are essentially making up for ground that we lost in 2010, and it is important to bear that in mind. It is also important to bear in mind that with joint force 2025, there is not much fat in the system—it is quite a bare-bones approach.
We have to reconcile ourselves to the situation we find ourselves in today, and I would be interested in the Minister’s comments. My judgment is that we cannot credibly claim to be able to deploy a war-fighting division within six months. That is some years off. We also lack the air defence that is particularly important to protect our enhanced force presence in Estonia. The Minister will perhaps mention that.
I thank my hon. Friend for giving way and congratulate him on this timely debate. I am grateful to him for mentioning air defence. He will appreciate that the Typhoon force will not be able to operate effectively without the tanker force that is based at Brize Norton in my constituency. He mentioned the Russian threat, which almost weekly we now see, as we did in the 1980s, probing our air defences. Does he agree that it is essential to make a cool, dispassionate assessment of that threat and make sure that our capacity and capability match it, rather than to reduce the threat to match available resources?
I absolutely agree. The response has to be threat-based, and the review must not be a sticking plaster. We need a large-scale solution for what is a large-scale problem.
To conclude my remarks on the SDSR 2015, there is also a gap in the extent to which we have the capability to co-ordinate artillery fire with cutting-edge technology, which was mentioned by CGS on Monday. The Russians have done that very effectively by co-ordinating long-range artillery fire with unmanned aerial vehicles. Furthermore, one of our big current gaps is that we do not exercise on any scale whatever. In their Zapad exercises, the Russians exercise north of 70,000 troops, whereas we in this country and across the NATO alliance are nowhere near that. That is a critical capability gap that we need to resolve.
A lot of what I have mentioned is tied up in CGS’s stark warnings on Monday. I look forward to the Minister offering reassurance on some of the points, particularly with regard to our forward presence in Estonia.
So where do we stand now? It is good news that the review that is under way has been restructured. We expect an announcement today from the Secretary of State for Defence to indicate that the defence component of the review will be extracted and given a little longer to run. That is a good development. In my judgment, the review that was under way, led by the National Security Adviser, was essentially misconceived. It was supposed to be initiated because of an increase in threat, but at the same time it was supposed to be fiscally neutral, so it was inherently problematic from the very start, and I am glad that that restructuring has developed.
I am also pleased that the former Secretary of State, my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon), has indicated his support for an increased overall defence budget moving up to 2.5%. We have to see this slightly longer review, which I think will run into the summer, as an opportunity for a wholesale refunding of defence and the achievement of a proper long-term financial settlement for our military. I am confident that our Secretary of State gets that. I hope the Minister will reassure us that that is the case, and that Ministers see this as an opportunity for a long-term solution.
It is important that MPs, like all of us in this Chamber, make it clear to the Treasury that we insist on the proper resourcing of defence. That is important for a number of reasons, not least because I, like every Conservative Member, stood on a manifesto that committed us to maintaining the size of our military. Page 41 of the Conservative party manifesto commits us to maintaining the size of our armed forces. Apart from the politics, it is a national duty to achieve that.
We have to get the politics right. We cannot simply demand more money for the Ministry of Defence. We have to continue to insist on the MOD achieving efficiencies and best practice, including things such as competitive procurement. I am encouraged by the detail in the national shipbuilding strategy that sets upper limits on expenditure. Also, we need to consider seriously the removal of expenditure on Trident from the MOD budget.
In simple terms, we must reconcile ourselves to the fact that a world-class military cannot be bought cheaply. I conclude by saying that we should see this as investment, not spending. This is not money that just gets spent to no consequence. Spending on our military is an investment in our national profile globally. A strong national military does not simply defend us militarily domestically and internationally. It secures our global reputation. It is a fundamental enabler of our foreign policy, our humanitarian effort around the world and our passing global trade, so we get a phenomenal return on that investment. Members who have travelled around the world in connection with the military know that the British armed forces have, without doubt, a phenomenal global reputation for higher standards of excellence. We should recognise that as an asset, not just a cost.
I finish by repeating a quote from Trotsky that was mentioned by CGS. I am not given to quoting Trotsky in this place, but Trotsky rightly said:
“You may not be interested in war, but war is interested in you.”
A properly resourced military is not a luxury; it is an absolute necessity. Given our heritage and our history, I am confident that we can rise to the challenge.
Seven people wish to speak and wind-ups need to begin at 10.30 am. I will leave you to work out the maths for yourselves. If anybody takes too long, I will have to impose a time limit on the remaining speakers.
I congratulate the hon. Member for Aldershot (Leo Docherty) on securing this debate, especially with such fortuitous timing. There have been many debates on defence in the past couple of weeks and Members of all parties who believe that our military is best served by having a strong and adequately funded force have made an extraordinary effort. I will be brief today because yesterday I spoke at length about the national shipbuilding strategy, frigates, the Royal Fleet Auxiliaries and the future of our sovereign defence capability. There is no appetite anywhere in the House for further defence cuts. I am pleased that that sentiment seems to have infected the Ministry of Defence in its funding battle with the Treasury.
The Defence Committee’s excellent “Shifting the goalposts?” report showed that the previous Labour Government spent on average 2.5% of GDP on defence, not falling below 2.3%. Lots of Labour Members, and indeed Conservative Members, would like to see a return to that level of spending relatively swiftly. It is important that we match the funding for defence to the threats that we face, rather than match the spreadsheets to the number of ships. That is an important distinction and the argument has been made many times.
The fiscally neutral element of the national security capability review is an anchor that has dragged this debate down, but it has enabled Members on both sides of the Chamber to share the valid concerns of the defence communities about the potential for cuts, be they speculation or actual potential. We must not fall into that trap of spreading fear because morale is already suffering in our armed forces. It is important that we support those people who are serving now and who want to serve, so they understand that a role and a future in our armed forces is a career to be proud of, and that their service is recognised and valued.
The potential postponement of the cuts is welcome news. I welcome the chance that the hon. Member for Aldershot mentioned for further consideration of the future shape, role and capabilities of our armed forces. This is a moment for us to regroup and refocus our efforts to provide a clear challenge and direction for Ministers to take forward in their discussions with the Treasury, and to be clear about the role we want the armed forces to play in future. How will we support them through adequate training and resources and, importantly, how will we support them after their time in uniform has come to an end?
Plymouth has been at the centre of much of the speculation. I am grateful to the Minister for taking the time to listen to the concerns from Plymouth about our amphibious ships, Albion and Bulwark, which are due to come out of service in 2033 and 2034—I hope those dates remain. He also knows about the importance of ensuring that we have an adequate number of capable frigates base-ported in Devonport, and of looking carefully at the capability of our helicopter carriers. HMS Ocean has now come out of service. Members from across the House will recognise that she served with distinction over her career, most recently in response to the hurricanes in the Caribbean. That was a fitting last deployment, showing the real value of that ship and her crew to the Royal Navy and to our friends and allies abroad.
It is also right to pay tribute to all those people who are not elected—members of the public, armed forces and veterans—who have used their voices loudly and proudly in the last couple of months to speak up for our armed forces. If more of our communities raised defence on the doorstep, as they have done over the last few weeks when I have been canvassing in Plymouth, the debate over the last couple of years would have been very different. The Plymouth Herald and the cross-party Plymouth City Council campaign to fly the flag for Devonport has been one such example. There are many other examples from around the country of local communities galvanising and coming together to say that the armed forces are important, not just for jobs, but for heritage, feel, community and identity. We should shout loudly and proudly, especially in my part of the world in Plymouth, about the contribution of the Royal Navy and the Royal Marines.
The Minister might give us good news towards the end of the debate, and the Secretary of State might do the same later, but I am encouraged that there has been such a strong outpouring of support for the armed forces. I hope that that will continue as we regroup and refocus to make sure that the tussle with the Treasury produces better funding for defence.
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Aldershot (Leo Docherty). There can be no one with a more appropriate seat to discuss the size and strength of the British armed forces, and I congratulate him on his very knowledgeable and excellent speech.
I want to say a few words about recruiting, which is of course the lifeblood of our armed forces, and most especially about recruiting to the Army. It is not an idle boast that the British Army is, man for man, probably the best fighting force in the world. In the Falklands, the Gulf, Bosnia, Kosovo, Sierra Leone and, most recently, Iraq and Afghanistan, both our enemies and their allies have been deeply impressed by the fitness, determination, courage, professionalism and, most especially, humanity of our armed forces.
The answer is simple and not, I suspect, much understood outside the armed forces and those who have been lucky enough to serve in them. In no other army in the world can a soldier depend on the men around him in the way that he can in the British Army. From Waterloo to Alamein, from Goose Green to the Euphrates, from Bosnia to Basra and Helmand, British soldiers and commandos have proved time again that they can face tremendous odds and triumph. A soldier will likely say that the key to that confidence is their discipline and training. It is therefore a matter of the first importance that the system that produces young men and women of that calibre must not be altered in such a way that it will produce only pale imitations of what is required.
So far the Army has held the line, but only just. It is a constant battle for all three services to fight off politically correct notions that are, rightly, anathema to the ethos of the armed forces. They require a very high standard of personal conduct, respect for the law, teamwork, cohesion, trust, and a highly developed sense of duty. After training, these men and women are no ordinary people, and they may well be asked to do extraordinary things. For the soldiers of today and tomorrow, as for their forebears, warfare will continue to represent the ultimate physical and moral challenge. They may have to take part in a terrifying contest of wills that inevitably leads to death, terror, bloodshed and destruction. They will encounter extreme danger, in rapidly changing circumstances, amid conditions of chaos and uncertainty. Their skills and the quality of their leadership, weapons and equipment will be severely tested.
Such operations can be sustained only by highly trained men and women, motivated by a service ethos and absolute confidence in their training, by pride in their traditions and institutions, by comradeship and an exceptional level of team spirit, by the emotional, intellectual and moral qualities that lead people to put their lives on the line, and of course by loyalty, patriotism, and an enduring belief in essentially British values and an unshakeable determination to defend them.
I remind the Minister of what Lord Wavell said in his famous lecture on generalship. His words are very apposite. He said that:
“in the last resort, the end of all military training, the settling of all policy, the ordering of all weaponry and all that goes into the makings of the armed forces is that the deciding factor in battle will always be this: That sooner or later, private so-and-so will, of his own free will and in the face of great danger, uncertainty and chaos have to advance to his front in the face of the enemy.”
If all that goes wrong, after all the training, intensive preparation, provision of equipment and vast expenditure, the system has failed. So far it has not failed. The armed forces have never let us down, but the Prime Minister, the Chancellor of the Exchequer and the House must see to it that the state does not let them down by failing to resource them adequately for the hugely demanding tasks that are placed upon them. Although I am all for the Army adapting its recruiting to some vaguely woolly notions if it really feels it has to, it is important that we continue to get the outstanding young men and women whom we are so lucky to have in our armed forces, and that the training does indeed prepare them for what might come.
The Ministry of Defence made a huge mistake when it let the contract for recruiting to Capita, which has made a real pig’s ear of it. It was done much better and much more efficiently when the Ministry of Defence retained recruiting offices all over the country. They had vast local knowledge and were staffed by officers and senior non-commissioned officers, who were all highly experienced. They took the greatest possible trouble with the selection of recruits and were better able to guide those recruits towards well-thought-out careers. It is much more effective for the armed forces to leave recruiting to the military staff who actually know what is wanted.
I conclude by saying this: I do not mean to sound like a stick in the mud, but touchy-feely political correctness has absolutely no role whatever in the British Army. The services have so much to offer young men and women, many of whom join up to acquire very valuable skills, but all of whom, in their basic training and beyond, require courage, toughness, resilience and skill at arms. They are truly some of our very finest young men and women. I accept that the Army must do what it thinks it needs to do to get people to join, but I think it ought to be extremely cautious about the message that it sends outside.
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Aldershot (Leo Docherty) on securing the debate. It seems that we are getting used to seeing the same faces in debates on defence, calling on the Government to do the same thing time and again. This matter has to be taken seriously—we are at tipping point.
Any organisation that is struggling to recruit and retain staff must consider what is going on. We are seeing the effects of austerity across many areas, including health, education and defence. It has an impact on the equipment, the service that can be delivered, and ultimately the people. Despite the cuts, we want the same good outcomes. We want our population to have good health services, excellent education, and well-organised defence with critical capabilities.
We have not reduced the demands on the armed forces. We still want to deploy overseas. The right hon. Member for Mid Sussex (Sir Nicholas Soames) talked about our well-trained personnel. Of course we want them to remain the best-trained personnel in the world, but operational stretch in the armed forces means that, although our expectations remain high, with fewer personnel, the demands on those still serving are increasing year after year.
I thank the hon. Lady for giving way, and congratulate my hon. Friend the Member for Aldershot on securing this debate. It is not only the men and women of our armed services who suffer from operational stretch, but also their families. That might very well be a deterrent to many of the young men and women choosing a career in the armed forces.
Mine was one of those families who experienced operational stretch and know first hand the impact it has. Many people serving in the armed forces have to make the decision to leave simply because remaining is no longer sustainable for their personal life. We know from the continuous attitude survey that the retention crisis is not simply about pay. Although that does contribute, the crisis is about the value we place on our armed forces personnel. Housing, family life, leave entitlement and so on all contribute to the retention problems.
Scotland faces eight base closures. What message is that giving to those who are stationed there? Are they feeling valued? Is their service being recognised? As the crisis deepens, more and more personnel will leave. These are highly trained individuals and have skills that are in such high demand in civilian life. There are many companies just waiting to snap them up when they walk out.
We have called on a number of occasions for an armed forces representative body on a statutory footing, which is the norm for many countries, such as Ireland, Scandinavian countries, the Netherlands and Germany. Recognised representation is a key way for the UK Government to better understand the needs and requirements of our armed forces, their families and the wider armed forces communities. A representative body like the Police Federation would be a voice for both personnel and veterans. It would tell them that their concerns are being taken seriously and that they are valued, and would give them a means of liaising with the Government.
The Tory party bills itself as the champion of the armed forces, but the chronic underinvestment simply does not match those claims. The Scottish National party is currently organising a commission, talking to members of the armed forces and finding out what it is they require and what terms and conditions would make a difference to them. I hope that, when we publish the findings, the UK Government will act on the recommendations.
Ultimately, glossy adverts cannot solve this problem. Serious investment is required. A complete overhaul of the terms and conditions of members of the armed forces has to be considered, including pay and housing, and the impact on the family and children’s education. It is commendable that so many Tory Members are in the Chamber—I know they champion the cause—but unless the defence budget becomes serious and the Chancellor opens up his purse, there will be no improvement. The hon. Member for Aldershot suggested—we have heard the suggestion many times—that Trident should be removed from the defence budget. I would say it is better still to just remove Trident from any budget, and we can start looking at serious defence that continues to have critical capabilities.
It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate the hon. Member for Aldershot (Leo Docherty) on a very well informed speech, although I am not faintly surprised, as he was a serving officer in the Scots Guards. As I always do, I remind all present, for the record, that my daughter is a serving officer in the armed forces.
I come from a family not unconnected with the military. My brother-in-law served in the Scots Guards, possibly with the hon. Member for Aldershot. My father served in the 14th Army, led by Field Marshal Slim, a man for whom he lost no admiration to his dying day. In recent years, I discovered to my utter astonishment that my mother worked not unadjacent to Alan Turing. That was a secret she kept until very late in her life.
I am a great believer that we learn from history, and I make no apologies for going into history again. It is something I do increasingly frequently in this place. I live in Easter Ross, up in the Highlands north of Inverness. In Easter Ross, there is a cluster of four aerodromes or air bases, call them what you will: Tain, Alness, Evanton and Fearn. One might say that it was the grandfather of the right hon. Member for Mid Sussex (Sir Nicholas Soames) who led the charge to see off the threat that was rapidly developing from Nazi Germany—it is quite true. One might say that it was late in the day that those bases were built, but they were, and they were built in time to defend this country. Today, going there, it is clear just how big an undertaking it was to put the bases in place, and one can see the commitment and courage behind the decisions taken in the 1930s. If we had not done that there and in other parts of the UK, we know what would have happened: we would be speaking a very odd dialect of English today in this place.
I shall ignore the comment from the hon. and gallant Gentleman.
With your forbearance, Ms Dorries, I would like to tell an anecdote. On 5 May 1945, Dönitz gave orders for the German U-boats and surface fleet to surrender. The U-boats were ordered to fly black flags to indicate their surrender. On 8 May, three days after that order, U-534 was on the surface off the coast of Denmark and was attacked by two Liberator bombers. U-534 shot down E for Edward from 547 Squadron, Leuchars, but G for George got that U-boat and sank her. G for George from 86 Squadron was from RAF Tain, near my home town of Tain. That is a fact that even local people at home do not know. It is worth putting on the record.
We have heard in previous weeks and today about the threat from Russia. It is absolutely obvious what is going on there. We know that China is building bases and developing its forces; Members have mentioned that. As I mentioned in the main Chamber two weeks ago, and as others have said—I am sure that the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) will touch on this—our Navy was mostly tied up over Christmas. What a tragic contrast to the great days of the Royal Navy! We know that we have to spend the money. Members in all parts of the Chamber plead for that money to be spent. As I have said before, it is a great honour to associate my party with that sentiment.
I close with a point I have made before in this place. The great British general public are not stupid. They know perfectly well what is going on. They take great pride in their armed forces. Everyone in my home town is extremely proud of everyone who has served in the colours, be that the Royal Air Force, the Royal Navy or the Army. They know and recognise the necessity of spending the money. As and when the Chancellor reaches deep into his purse and comes out with the extra millions we so badly need—it is more than millions; it is verging on the billions—he will have the support of the British public, and he will have praise and his place in history.
It is a pleasure to serve under your chairmanship, Ms Dorries, and to be called to speak in this debate. I begin by congratulating the hon. Member for Aldershot (Leo Docherty) on securing this timely debate. He walks in the footsteps of many of his predecessors in being a stout defender of our armed forces. I have very happy memories of my own service, starting in his constituency in New Normandy barracks and Normandy barracks with 2 Para and 1 Para. He has done us a great service today in providing an opportunity for an important debate about the size and structure of our armed forces.
It is also, as always, a great pleasure to see the Minister in his place. I know that he takes these matters incredibly seriously. It is a reality of parliamentary procedure that questions and debates relating to defence are responded to by Ministers from the Ministry of Defence. Perhaps we could employ our collective nous to see whether at some point in the not-too-distant future we can find a way of gathering like-minded colleagues together to make some of these points and put some of these concerns to the Minister’s colleagues in other Departments, namely the Treasury and the Cabinet Office.
Like all hon. Members present, I am constantly inspired by the skill and commitment of our servicemen and women, who serve our country often in the most difficult circumstances. My concern, though—and this takes us to the nub of the debate—is that very soon there may not be enough of them to do what is required, and not only will they suffer from being over-exposed and overstretched but, as a result of having fewer personnel in our armed forces, the UK will be less secure.
With that in mind and with an eye to the forthcoming defence review, I want to draw attention to a few of the reasons why, in recent years, the importance of numbers has been downplayed. First, there is a misunderstanding about the threat environment. In recent years and months, the eyes of Westminster and Whitehall have been focused on cyber-threats and the broader concepts of soft power and security. It is important to look at such emerging threats, but we run the risk of that focus coming at the expense of a focus on the conventional threats that we still face. At a time when the UK is under greater threat than at any point since the cold war, that focus has resulted in the Government considering reducing the personnel in our armed forces to an historic low.
As hon. Members are aware, the risk associated with those low numbers is often hidden behind the term “capability”. Every time people voice a concern about size, what tends to follow is a response about technology, structures or training, and someone telling them that in the 21st century, less in fact means more. The truth, however, is that even in the 21st century, less still means less, and quantity still has a quality all of its own. I am certainly not denying that new equipment and structures can mitigate the loss of numbers, and it is of course true that technology is a force multiplier, and that well trained troops are better than poorly trained ones, but it is equally true that there is an irreducible number of people that a credible Army cannot go below.
My greater concern, however, is focused on why those misunderstandings of both threat and capability occur, and why they are allowed to take root. In my view, the answer is threefold: poor processes, a lack of expertise and undue emphasis on money. For too long, we have allowed the loud whispers of Whitehall generalists, often in the Cabinet Office and the Treasury, to drown out the voices of subject matter experts, be they civilian or military. That must stop.
Due respect must be given to those who understand hard power, hard security and the application of conventional force. Similarly, any review process must be done correctly, beginning with analysis of the world in which we live, including the threats posed by it and the role we want in it—not with a list of the savings that must be made, and where the Cabinet Office and Treasury think they should come from.
As such, I very much hope that the Minister and his Department use any forthcoming review to re-emphasise to those in Whitehall the importance of both strategy and of specialists. If they do not, I fear that we run the risk that any review may be no more than a fig leaf for yet another round of Treasury-inspired cuts.
I thank my hon. Friend for giving way and the hon. Member for Aldershot (Leo Docherty), my colleague on the Select Committee, for securing this debate. Does my hon. Friend agree that the potential defence review is an appalling added pressure on our armed forces, because they simply do not know what will happen to them in the weeks and months ahead? That is simply unfair, and the Government need to get on with it and tell us what will happen.
My hon. Friend makes an important point. She and all hon. Members will be most welcome to join me later today when we play host to soldiers from the Yorkshire Regiment. That will be a good opportunity to listen to the concerns of soldiers. She is right, however, that there is significant uncertainty about the future of our armed forces.
I understand that the Defence Secretary will make a statement in the House today; from the recent debate in the main Chamber he will know the strength of feeling across the House. There is a challenge for all of us who believe that the size and structure of our armed forces are such that they should not be reduced further, and he should understand—I hope the Minister will take this away—the significant support from Members throughout the House for the position that we want the Secretary of State to take: hold firm to the line that we cannot reduce our manpower.
I am sorry for making another intervention, and I thank my hon. Friend for taking it. I believe that the Secretary of State has decided not to make a statement to the House this afternoon.
I am sorry to hear that, if it is the case. We will hear about that from the Minister later.
To conclude, emerging cyber and information threats have not and will not result in the decline of conventional threats; the opening up of new fronts does not mean the closing down of old ones; and threat mitigation is not a zero-sum game. As such, I very much hope that the Government will ensure that we do not further reduce the number of men and women who serve in our armed forces with such distinction. I very much look forward to working with Members across the House to ensure that the Government do not make any further cuts, specifically to the size and structure of our armed forces.
It is a pleasure to serve under your chairmanship, Ms Dorries.
With yesterday’s shipbuilding strategy debate and the expected statement from the Secretary of State, which is now in doubt, this week is turning into a bit of a defence-fest. This is an important debate at a time when defence is very much in the headlines, and I thank the hon. Member for Aldershot (Leo Docherty) for introducing it.
The situation is complex, but the bottom line is the significant drop in the size of the armed forces since this Administration came to power in 2010. There are many ways in which the figures and numbers can be played around with, but the broad, overall figures suggest that, on 1 April 2010, the full-time trained and untrained total strength of the UK armed forces was 197,820, and that by 1 April 2017, that total stood at 157,247, which is a drop of 21%. The number of full-time trained and untrained personnel serving in the Royal Navy was 39,310 in 2010 and 33,230 in 2017, which represents a drop of 16%. The figures for the Army and the Royal Air Force are equally depressing.
According to the most recent figures, which cover the past 12 months, the net outflow from all three services has been 2,740 personnel. If numbers across all three services are even to remain neutral, we need to attract some 15,000 new recruits every year just to stand still. That is a tall order and has to be achieved against a background of increasing cuts. Between 2010 and 2015, we had a real-terms cut of £8 billion, or 18% of the overall budget. Although this Administration are trying to reverse that trend, a lot of the damage has already been done and has been made worse by slow, delayed decision making, cloudy strategic thinking and poor value for our tax pound in some procurement projects. The very fact that we will hopefully get a statement today—according to The Times, another defence review will be pushed into the long grass for perhaps another six months—tells its own story about this Administration and the legacy they are grappling with. It is a legacy of their own making.
That does not have a positive impact on recruitment and retention at a time when skilled engineers and technicians can find that there is more money and a more stable family life in industry and commerce rather than in serving in the armed forces. A recent report from the pay review body highlighted that people were joining up not for a career, but to be trained to a high standard before moving on to industry. They may be “made in the Royal Navy”, but they are progressing their career and enjoying family life in civvy street.
It was a very good-natured debate, but the Scottish National party can never resist. What assessment has the hon. Gentleman made of retention given that 45% of service personnel in Scotland will be paying a higher rate of tax than their equivalents in England?
I will be happy to answer that when I come to that point in my speech. The armed forces continuous attitude survey of 2016 reported that the morale of “self, Unit and Service” has also decreased, with 61% of serving personnel thinking that morale was low, and 9% perceiving that it was high. Members on both sides of the House have mentioned that. Ensuring that retention is high up the Government’s agenda is a serious matter.
Housing for serving personnel is a long-running sore. The Minister is honest in his desire for improvements in housing quality and repairs. Will he give assurances that the collapse of Carillion changes nothing for forces families in the short term, but that it will change everything to do with build quality and the maintenance of homes in the long term?
I will surprise the Minister by ending on three positive points. We invite the Government to scrap the public sector pay cap and to follow the Scottish Government’s lead by introducing a pay rise of up to 3% for public sector workers. That would include all armed forces personnel and would have a positive impact on retention and morale. In Scotland, many lower-paid personnel will also receive a tax cut, as Scotland becomes the lowest taxed part of the UK after April this year. I recommend that the Minister look very seriously at the commission headed up my hon. Friend the Member for Glasgow North West (Carol Monaghan) about pay conditions and a better family life for serving personnel.
Finally, the small nation of Denmark decided last week to increase her military spend by some 20%, to help to meet new threats and to continue her international obligations. If a small, independent country of 5 million people can increase its defence spend by that amount, why cannot the UK?
It is good to see you in the Chair, Ms Dorries. I congratulate the hon. Member for Aldershot (Leo Docherty), who is a fellow member of the Defence Committee, on bringing this debate to Westminster Hall, and on being a doughty fighter in the Docherty clan and not being feart in pulling his punches when necessary in this type of debate.
Yesterday’s announcement about the security review seemed slightly inevitable, although I should put on the record my pleasure that the Government seem to have finally caved in to what I assume is cross-party pressure for a proper look at the defence and security budget. I noticed from his speech this week that that position was shared by the Chief of the General Staff.
Of the range of possibilities next year, one of the main issues we should be very careful about is what we wish for, crucially in respect of Brexit and its impact on the Treasury accounts. It seems incredible to me that most of the doughty champions of the armed forces want the UK to push ahead with a form of Brexit that is damaging to the economy, and therefore to the Treasury’s receipts that sustain the armed forces. The recent Defence Committee report on defence acquisition and procurement showed that financial headwinds, particularly the dollar exchange rate, have caused many problems in sustaining sovereign capability—the hon. Member for Aldershot alluded to that.
As ever, the men and women of our armed forces bear the brunt. Despite widespread support in the Chamber to lift the public sector pay cap, the Government have kept it—my hon. Friend the Member for Dunfermline and West Fife (Douglas Chapman) mentioned that a moment ago. That has meant that those in uniform have taken a real-terms wage cut. Most of the projections leaked to the press for future adjustments would make yet more cuts to the Army of the kind not seen since Napoleon was a lad. The Government will find allies across the entire House if they lift the public sector pay cap.
One part of the defence budget—the deterrent—usually does not dare to speak its name, although taking it out of the Ministry of Defence was mentioned. Many of us agree that it should probably be taken out of the defence budget, but that would not suddenly make £205 billion appear in the equipment plan, just as Brexit did not mean that £350 million a week appeared for the national health service. Politics on the most basic level is about choices. I find it increasingly difficult to hear Members across the House call for preserving the size of our armed forces, argue for preserving certain capabilities and beseech the Government to put more in the pot, without even acknowledging that there is one part of the budget that is uncapped and, as the hon. Member for Aldershot said, out of control.
The Minister for Defence Procurement confirmed to the hon. Member for Cardiff Central (Jo Stevens) in a parliamentary question in November that any review is off the table. Whatever it is called, a modernising defence review will have to find money to pay for a procurement pipeline that includes Astute submarines, F-35 fighters, Type 26 frigates and Ajax vehicles. It will find its bandwidth considerably squeezed the more the budget keeps rising. I challenge any of us to read last year’s National Audit Office report on the equipment plan and dispute those facts. The continuous at-sea deterrent that supposedly keeps us safe every day is failing if it makes us less capable in so many other defence areas.
May I point out to the hon. Gentleman that those of us who were in Germany for many years took great succour from the fact that we had a nuclear deterrent? People like me and other Members who possibly would have had to fight the Warsaw pact or the Russians were much comforted by the fact that they might not dare to fight us because of the nuclear deterrent, and therefore that our lives would be preserved. That is the link between the nuclear deterrent and conventional forces.
I have much respect for the hon. Gentleman but we disagree on the deterrent. The point I am trying to make is that a decision must be made about the type of investment that we require in the armed forces. This is a debate about armed forces personnel. On this position I disagree with him.
The “National Security Strategy and Strategic Defence and Security Review 2015” said:
“The Royal Navy delivers our nuclear deterrent, projects our maritime power and provides world-class amphibious forces.”
It would be unrealistic of us to expect the Queen Elizabeth class carriers to be withdrawn from service. The current First Sea Lord has been presented with a scenario that his predecessor described as
“a choice between having his left arm cut off or his right arm cut off”,
when he spoke to the Committee last year.
As we entertain the scenario of downgrading the status of an iconic capability such as the Royal Marines, whether by merging it with the Parachute Regiment or by removing its ability to conduct contested landings, we need to ask ourselves whether it is really worth preserving the deterrent. I do not expect most Members to change their minds overnight or at all, but the lack of practical debate—Government Members do not say in public what I know many of them say in private—does not bode well for honesty in the formation of defence policy.
Let me end on what I hope is a point of consensus. I acknowledge that there is not one person here who does not have the best interests of the armed forces at heart. I have an armed forces family. I praise in particular my colleagues on the Defence Committee, who have followed those interests doggedly whenever possible and pursued the MOD for its failings, without fear or favour. I am glad to say that, if there is one positive about yesterday’s announcement from Main Building, it is that the Defence Committee’s work seems to be working for a change.
It is a pleasure to welcome you to one of our weekly defence debates, Ms Dorries. I see the usual faces around the Chamber. I sincerely congratulate the hon. Member for Aldershot (Leo Docherty) on securing the debate.
We have heard Members adumbrate the drop in the size of the armed forces. An axe is being taken to capability left, right and centre. The National Audit Office reports that mismanagement of the procurement budget has led to a black hole of up to £20 billion. The Government are failing in their obligations to people at home and to allies abroad. I say to the Minister that Scottish National party Members approach these near-weekly debates constructively—I see lots of Conservative heads nodding in agreement with what we say—but we make no apology whatsoever for providing robust opposition to what we see as a folly.
Let us look at the numbers. In their manifesto, the Conservatives committed to an Army of 82,000. In Scotland, on 15 April 2014, the then Defence Secretary, who is now Chancellor, promised that
“we will actually be increasing the size of our defence presence in Scotland…from a Regular force of some 11,000 personnel today, to 12,500 by 2020.”
Let us fast-forward to 1 October 2017, when the Regular force in Scotland stood at 9,970. The Government fail on their own promises, and we make no apology for pointing that out. Of course, that comes on the back of a 20% cut to the MOD footprint in Scotland, which is another area in which we were told there would be investment.
I am not going to take an intervention from the Minister because he will have the chance to sum up. I want to address something he said earlier about terms and conditions affecting recruitment and retention. Let us look at where the evidence lies, starting with armed forces pay. We know that pay is an issue for members of the armed forces because the evidence tells us that. The Armed Forces Pay Review Body noted:
“In general, we heard about the lack of trust in the employer to maintain the offer in future, and an increasing feeling that people were not joining the services for a career, but to obtain training and skills before moving on to alternative (and possibly better paid) employment elsewhere.”
That is compounded by the public sector pay freeze, which, when inflation is taken into account, is a cut. Army privates who, on a salary of £21,000, are among the lowest-paid members of the armed forces, have had a cut of £400 per year. The Minister should look at the evidence in front of him—this is well documented and well researched—rather than simply pluck evidence out of thin air.
Will the hon. Gentleman give way?
No, I am going to finish my point. The Minister’s comments on tax were not based on any research or evidence. They were not based on anything beyond what he seems to think the issue might be. He is willing to ignore all the evidence, including the evidence I have just cited. That is before we even get to the appalling state of military housing, the risible pension increases that the Government have offered to members of the armed forces and their families, and the dreadful roll-out of the armed forces covenant in some parts of the country.
SNP Members make no apology for the fact that those who earn tens and tens of thousands of pounds—way beyond the average salary—may pay a bit more tax. Frontline squaddies in Scotland, who make up the vast majority of those serving in Scotland, will pay less tax than their counterparts in the rest of the United Kingdom. I am happy with my Government’s policy of putting more money into the pockets of people in the armed forces, while the Minister’s Government continue to rob them day in, day out.
The Minister will have 10 minutes to sum up, so I am not going to take an intervention from him.
Let me end with this. I am dismayed that we will not have a statement today on the splitting up of the security capability review, about which there has been one of the most unedifying public spats I have ever seen in politics. This country seriously needs to look at how it finances and budgets for defence. It has to look at countries such as Denmark, which budgets on a five-year basis so that its Defence Ministers are not continuously chasing their tails. I think there is a political consensus. I make no apology for being robust in opposition, but I believe there is much on which we can work together.
It is a pleasure to serve under your chairmanship, Ms Dorries. I warmly congratulate the hon. Member for Aldershot (Leo Docherty) on securing the debate and on the way he presented his arguments. I also thank Members on both sides of the Chamber for contributing to the debate, which, by and large, has been consensual. I think there is a unity of purpose among the Members who expressed their views.
Our starting point has to be the personnel deficits of 3.5% in the Royal Navy, 6.3% in the Army and 5.8% in the Royal Air Force. That must be a cause for concern for us all. There are problems with recruitment, as the right hon. Member for Mid Sussex (Sir Nicholas Soames) said—I share his views about Capita entirely—and there is concern about retention in the armed forces. We all know about the problems with accommodation and pay. Those concerns must be addressed.
We are also worried about the gaping black hole of between £20 billion and £30 billion in the Ministry of Defence budget over the next decade. We all know why that has happened: there has been a lack of coherent management in the MOD and we have bought a huge amount off the shelf from the United States of America while the pound has depreciated. We all know, too, that it is completely unrealistic for the MOD to call for yet more efficiency savings that cannot be achieved. That is all happening at a time when this country is increasingly under threat from terrorism and, as the Chief of the General Staff said in his speech at the Royal United Services Institute last week, from an assertive Russia.
There is a widespread view that defence expenditure must therefore increase. Many peers in the other place have expressed that view, and it has been forcefully expressed by the military. Earlier this week, the former Defence Secretary, the right hon. Member for Sevenoaks (Sir Michael Fallon), called for our military expenditure to increase by £7.7 billion to 2.5% of GDP. He issued a chilling warning:
“Our security is at stake.”
My view is that defence expenditure should be increased to at least the level achieved by the last Labour Government, yet we are seeing more and more cuts. Earlier this month, it was leaked that the MOD is considering three options. The first involves a personnel cut of 14,250. Under that option, marines would be cut by about 2,000 and the RAF would lose 1,250 personnel. Fifty-nine cap badges would be lost. There would be cuts to the Navy, to the Air Force and to the equipment of the Army. The other two options are no better.
Those figures may well be true, but the hon. Gentleman has to deal with the fact that, regularly, 50% of Army personnel leave before they reach the age of 30. How does he propose to deal with that problem?
A whole host of measures need to be put in place. Recruitment is an important issue, but so is retention. Pay, accommodation, respect for the armed forces and people’s prospects after they leave all have a material bearing on retention. The right hon. Gentleman is correct to raise that point.
The Defence Secretary said that the proposed cuts are unacceptable, and he is correct. As we know, he is having a battle with the Treasury for money, and Labour will be firmly on his side in that battle. We are also aware that the Under-Secretary of State for Defence (Mr Ellwood) has threatened to resign if these cuts are imposed. I support and respect that. If the Minister decides to issue a similar statement, we would support that as well.
Finally, we were led to believe that there would be a separation of the cyber capability and defence aspects of the national security and capability review, and that the Defence Secretary would make an announcement on that today. We have since been told that that will not happen. Will the Minister say when that statement will be made to the House, because it is of tremendous importance? When it was established, the national security and capability review was to be conducted on the basis of fiscal neutrality. The suspicion, therefore, is that moneys could be taken from Peter, the defence budget, to pay Paul, the cyber capability budget, which is totally unacceptable. We believe that there should be an increase in capabilities all round. This has been a good debate in both content and tone, and I hope that the Ministry of Defence will stand firm in its battle with the Treasury. If it fights for extra resources, the Opposition will be on its side, together with many Conservative Back Benchers and Members across the House.
It is a great pleasure to serve under your chairmanship, Ms Dorries, and I declare an interest as a serving member of the Army Reserve. I confirm that I have no intention of resigning from the Army Reserve, as that would not help numbers at all.
I congratulate my hon. Friend the Member for Aldershot (Leo Docherty) on securing this important and timely debate. It follows a number of other debates on similar themes in recent months in Westminster Hall, the main Chamber, and another place. The Government welcome every opportunity to emphasise their strong commitment to the armed forces and the defence of our country, and I am pleased to do that again today.
I also thank my hon. Friend for his insightful observations. As a former officer in the British Army with many years of distinguished service, including in operations in Iraq and Afghanistan, he has brought a wealth of knowledge and personal experience to the Chamber this morning. Other right hon. and hon. Members have also made contributions, and it is a privilege to respond to a debate of such quality. We have heard from my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames), and the hon. Members for Plymouth, Sutton and Devonport (Luke Pollard), for Glasgow North West (Carol Monaghan), for Caithness, Sutherland and Easter Ross (Jamie Stone), for Barnsley Central (Dan Jarvis)—I was particularly impressed by that speech and will return to it—for Dunfermline and West Fife (Douglas Chapman) and for West Dunbartonshire (Martin Docherty-Hughes).
I also enjoyed the speech by the hon. Member for Glasgow South (Stewart Malcolm McDonald), but may I gently say that, in my limited experience after 12 years in this House, this is supposed to be a debate? I was simply going to make a helpful comment, which I will return to, and the House tends to appreciate it if we can have a debate, rather than Members simply standing up and having a bit of a rant. I admire his passion for the subject, but Members get a bit more respect in this place when they are prepared to have a debate. I am gently chiding him.
This debate has been about the size and strength of our armed forces, so in a major sense it is about our people. I therefore pay tribute to the many tens of thousands of servicemen and women whose selfless service keeps our country and people safe. We must do everything we can to persuade our young people that the armed forces remain a great place to work with many development opportunities, both professional and personal. We accept, however, that recruitment remains a challenge—that point was raised by my right hon. Friend the Member for Mid Sussex.
Record youth employment and a diminishing number of 16 to 24-year-olds entering the workforce over the next few years means that there will always be strong competition for new people. We are responding with a range of short and long-term initiatives to ensure that the offer of a career in the armed forces remains competitive. The services are recruiting though active and targeted campaigns, and increasing engagement and activity in communities where recruitment has been low. We are also working on recruiting and retaining specialist skills. There are some encouraging signs. The number of applications to join the Navy and the Army has increased compared with the same point last year, and outflow from the regular armed forces in the past 12 months has reduced. The reserves are a success and continue to increase in number.
British society is changing, and young infantry soldiers who come from our traditional recruiting grounds in the north-east and north-west now represent a much smaller proportion of our society. That is why we have set ourselves challenging targets to recruit from the black, Asian and minority ethnic community, and to get a better gender balance in the armed forces. There are signs that we are beginning to make progress in those areas, but it is difficult, not least because we must ensure that the right role models in our armed forces can inspire other people to join.
Being a bottom-fed organisation, it is sometimes difficult to get those role models in the right place at the right rank. Hopefully, the Armed Forces (Flexible Working) Bill, which is proceeding through the House, will give us greater latitude in how we bring people into the armed forces, and potentially allow people to take career breaks, or—perhaps at an important point of their career—to work part-time or job share. No one suggests that that will be a silver bullet that will solve the problems, but hopefully it will make serving in the armed forces a little more compatible with the challenging pattern of modern life. I am pleased that in general there has been support for the Bill.
On recruitment, does the Minister accept that the approach of Capita leaves a lot to be desired? Will the MOD look carefully and critically at how it is fulfilling its contract?
The hon. Gentleman makes a perfectly reasonable point. There have clearly been challenges, and to suggest otherwise would be entirely wrong. I am particularly interested in recruitment, and I think that this package of measures will be the right thing. I firmly take on board what was said by my right hon. Friend the Member for Mid Sussex, and we should try to move toward a blend of measures. I would not want to tie up enormous numbers of members of the armed forces solely in recruiting, but there is an important place for young role models who can inspire young people to join. Many of the back-room functions of the process can be done through Capita and others. We need a balance, and I am not sure that we have quite got that right at the moment.
Let me return to the theme of size and strength. It seems to be a day for Communist quotes, because I think it was Stalin who said:
“Quantity has a quality all of its own”,
which is a reasonable point. The worth of an armed force is ultimately determined by what it can do: the military power it can bring to bear, the readiness with which it can respond, and the effects it can achieve in the different circumstances in which it may be asked to achieve them.
The hon. Member for Barnsley Central will expect me to say that new technology and new capabilities tend to reduce the service requirement for manpower overall, but I do not for one second say that that justifies a continued reduction in the size of the armed forces. It does not, but there is a balance to be found between embracing those new technologies and maintaining that Stalinist thought about quantity having a quality of its own.
Although fully trained, regular service personnel will continue to make up the majority of the military workforce, particular requirements can be met equally well by reserve forces, including the sponsored reserve. Our aim must be to make the best use of all the talent and ability that the country has to offer, including from those who can bring to the armed forces valuable skills acquired in civilian life. I have already mentioned the more flexible approach to military workforce planning—what we called the “total armed force”—which we are looking at along with the service chiefs. I hope to update the House on exactly what that means and how we intend to move this forward. It is an attempt to embrace all the talent we can find.
We often talk about the number in the armed forces as if, magically, the whole force could be deployed in the field tomorrow. It cannot: no military can deploy its entire force in the field in one day. The true strength of an armed force is a combination of its total manpower—be that regular, reserve, or regular reserve—and the readiness with which it can be deployed.
Historically, we have deployed divisions; we should be fiercely proud of that, as few countries can deploy a division—the first size of armed force that has the full orchestra, so to speak, of capabilities to be deployed—but a division cannot be deployed tomorrow. It takes time; there is a readiness cycle for its deployment in the field. However, I am confident about answering the point raised by my hon. Friend the Member for Aldershot about our having a deployable division at readiness. We hold different forces at different periods of readiness, on a graduated scale. It would be wrong to go into detail about exactly what is held at what level of readiness, what is quickly deployable and what larger forces can be deployed over a period.
We often talk about threat. In my basic military training, threat had two components: capability and intent. A true threat exists when someone has capability and intends to use it. To go back to the speech of the hon. Member for Barnsley Central, there is an argument that the biggest threat we face now, based on capability and intent, is probably in cyberspace. There are threats to the nation every day there. However, that is not to dismiss other threats such as the Russian threat, clearly articulated this week by the Chief of the General Staff. In that case, there is definitely capability, but at the moment probably no intent to use it. However, I am very mindful that capabilities can take a long time to build up, while intents can change relatively quickly. We need to be mindful of and careful about that.
The national security capability review was touched on, and Members are no doubt aware that the National Security Council sat yesterday and that the NSCR was on the agenda. It was agreed that an NSCR report would be published in late spring 2018. More importantly for the purposes of this debate, the result of the NSC meeting was that a further separate programme of work to modernise defence will now happen. That will be called the modernising defence programme.
The Defence Secretary will make a statement. It will not be today; there is a negotiation by the usual channels. I assure right hon. and hon. Members that they should not read anything into that. The right date is being sought to maximise attendance. Let us be honest: probably the last thing we want is a statement when most people have plans to go home or be elsewhere. The statement will happen soon, on a day—Members can guess which day—of maximum attendance in the House, for maximum scrutiny of the Defence Secretary. I offer my apologies that it is not today, but ask Members please not to read anything into that.
I thank the Minister; but can we have an assurance that the statement will not be made in the evening?
That was one of the issues, to be fair. There is a genuine feeling that on a matter of such importance the statement should be made at the right time on the right day, when there will be maximum opportunity for hon. Members to quiz the Secretary of State; but nothing should be read into the timing. The hon. Gentleman has alluded to one of the potential problems, and that is the nature of business today.
Will the Minister give way?
Should I give way? Well goodness me, I am a generous soul. I hope that will be a lesson to the hon. Gentleman.
The regular faces will know it is not my normal MO not to allow an intervention. I was perhaps unnecessarily wound up at the time. As to the splitting, with defence coming later, will that part of the review still be tasked with being fiscally neutral?
It is not for me to offer a lesson in the development of grand strategy, but in my training it was always all about ends, ways and means. We are attempting to establish the ends: what are we seeking to do? Clearly we seek to counter the threats that the UK faces. As to means, effectively people always focus on the capabilities that we have. That has been one of the challenges that we have faced in the wider debate, where individual capabilities have been plucked out that hon. Members feel must be saved at all costs, without their necessarily looking at the wider context of how the means and capabilities fit together. Equally, part of the capability is the finance—the ability to buy it. Means therefore include both physical capability and money. Ways are how we use those means. The piece of work in question will grow on the NSCR, and as it continues, clearly, if factors emerge and investment in certain capabilities is needed, that will be a negotiation with the Treasury.
Does not what the Minister said imply that his answer is yes, it will be fiscally neutral?
That is not what I am saying at all. To be fair to my boss, the Secretary of State, he has made a strong case for greater investment in defence; and that negotiation will continue. However, before I get into lots of trouble by pre-empting what he will say in the statement shortly, I ask right hon. and hon. Members to indulge me with their patience. They will have the opportunity to ask all those questions shortly, during the statement.
Will the Minister deal with the point made by the hon. Member for Barnsley Central, which is key to the point that the Minister correctly made about divisional size and operation, and the bringing together of the whole military orchestra in one place, which is that quantity has to matter?
Certainly, a division, by definition, because of the orchestra of capabilities that it brings to the battlefield, and its ability to fight at various geographical locations, must be of a certain size. To correct a comment that was made earlier, the Conservative manifesto commitment was to maintain armed forces at their current size, and be able to field a division. That is our commitment, to which we are working.
On the question of spending, the Government remain determined to ensure that our armed forces have the people, equipment and training to defend the United Kingdom at home and overseas against the growing and diversifying threat to our security. That means that our armed forces will continue to be world-leading, with the ability to project power globally in a way that few other nations can match. It also means that we will deepen our relationships with allied powers and work to strengthen alliances such as NATO. My hon. Friend the Member for Aldershot mentioned concerns about the ability to train. He is quite right: Zapad 2017 was the major Russian exercise in Russia’s western area. In 2017 we had several NATO exercises, because working with our allies is crucial. We had Joint Warrior, which was a joint expeditionary force exercise, Noble Jump 2, which was a very high readiness joint taskforce exercise, and Swift Response. Looking forward to this year, there will be several major international exercises. We will have Saif Sareea 3, which will be the biggest UK-Omani exercise to be held for nearly 15 years; and Trident Juncture, which is the NATO exercise held every three years. I take my hon. Friend’s point that it is crucial that, to counter the threat, we work continually with our NATO allies, and exercise accordingly. Collective training is important.
Another certainty is that we are increasing spending on defence and will continue to do so. With a defence budget of some £36 billion this year, the UK is undoubtedly a major defence power. The hon. Member for Dunfermline and West Fife talked about the Danish defence budget; but actually it will not get to 2%. Its defence budget will be 1.3% of GDP by 2023, which is up from 1.2%. That is a welcome rise, but it still does not reach the 2% target.
I am proud that the Government have committed to increasing the defence budget further, by at least 0.5% above inflation every year of this Parliament. I am mindful that I should allow my hon. Friend the Member for Aldershot a minute to sum up, so I shall leave my remarks there, but I shall write to hon. Members on any questions I have not answered.
As the Member of Parliament for Aldershot, the home of the British Army, I am delighted to have been able to call this debate today. I am grateful to all the colleagues who have come and contributed so positively, and to the Minister for his remarks. It has been a productive debate.
We are at a critical time for defence. I hope that the Ministry of Defence will see the extended review as an opportunity to lay out a positive vision and that the Treasury will find the money to pay for it. I, like all Conservatives, stood for election on a manifesto of maintaining the size of the armed forces, and it is our duty to the British public and the men and women of the armed forces to ensure that we do that.
Question put and agreed to.
That this House has considered the size and strength of the British armed forces.
Public Transport: Boxing Day 2018
I beg to move,
That this House has considered public transport on Boxing Day 2018.
Christmas 2017 is already a distant memory for most of us, with all the joys of Christmas and some of the minor irritations such as our football team losing, which happened to me in the case of Bradford City, or the turkey going in slightly late, which happened at my family gathering. But there were also other irritations, such as the absence of Boxing day rail transport in our country.
In my campaigns on this—I have represented various marginal constituencies in Yorkshire for about 15 years—I have always made the mistake of trying to draw attention to it in the month of December. People are concerned at that point and are making their travel plans. Social media on 26 December is full of people realising they cannot get out and do what they wanted to do. I thought I would try a different tactic this year and draw attention to the issue before January ebbs away, so that we can begin to make plans for Boxing day 2018. There is hope, particularly in the north of England, in God’s own county of Yorkshire, that this year there may be the first trains running on Boxing day since 1980.
Why on earth does that matter, and why is it worth the attention of the House? There are three or four reasons. I was very pleased last week to see the Prime Minister appoint a Minister for Loneliness. A 60-hour shutdown for our major national rail network is just too long. For people who are isolated over that period, getting out and about is massively important. I have referred to Bradford City’s home fixture this year, but football fans up and down the land look forward to the Boxing day fixtures. There are great horse-racing meetings—the King George VI Chase at Kempton grabs the attention of at least part of the nation—various rugby matches and so on, and people should not need a car to attend those events. In an age when the environment matters, that is even more important.
There is also retail activity on Boxing day. For many of our shopping centres, both in town and out of town, it is an important trading day. This year, a lot of retailers experienced declines in sales on Boxing day. It does not help if people cannot get to the shops and the sales to spend their money. There are a number of reasons. Quite frankly, a lot of people have to be back at work at their desks, in their offices or in their restaurants on 27 December if not on 26 December. They cannot travel any distance to go home for Christmas if they have to be back at work on 27 December at eight o’clock in the morning. It affects people’s family Christmases.
Is there demand? I think there is. I draw attention to bus transport, since this debate is titled “Public Transport” and not just “Railways”. In London, I understand that buses have run on Boxing day for many decades, but outside London, the various big conurbations and cities across England have experimented over the last 10 or 15 years with running not a full service, but a service aimed at the shopping centres, football matches and so on. They have done that with some success.
Since 2007 in west Yorkshire, my area, the passenger transport authority, which has subsequently become the combined authority, has been running a service initially based in Leeds and Wakefield—it reached my Keighley constituency in the last three years. It is very well patronised. They have had to put extra buses on between Leeds and Bradford, because in some years they were completely full. There is an element of subsidy involved in west Yorkshire, but I was told that 65,000 passengers went on west Yorkshire buses on Boxing day 2016. They have not yet got the figures for 2017, but the experiment has worked well.
I had a letter from Mike Scott, the head of buses at Nexus, the passenger transport element of the combined authority in the north-east of England. He said that several of the bus services that it initially subsidised
“are now provided by commercial operators at no cost”,
because as people have got used to seeing public transport on Boxing day, they have used it more. Others, such as the Metro centre and Newcastle United, have on occasion subsidised buses because they see their commercial interest in getting people into Newcastle and letting them get home from football matches.
It has worked in the case of buses, but we have not seen a comprehensive train service on Boxing day in our country since 1980. In 1975, under the then Labour Government, the service began to ebb away. In 1975, no provision was made, but it came back in 1976. Members at the time raised concerns about the effect on people without access to a car who had to work on Boxing day, or who would not be able to visit friends and family. It was interesting that in reply, the then Minister Gordon Oakes commented:
“I believe it is essential that in our debate today we should not give the impression that there will be no public transport on Boxing Day. On the contrary, London Transport will run both its underground and bus services on 26th December.”—[Official Report, 21 November 1975; Vol. 901, c. 456.]
The emphasis is: if it is okay in London and London is all right, the rest of the country can make do.
It is interesting that, once the rail was privatised, the great airports of Heathrow and Gatwick had it put in their franchises that they should have a service on Boxing day, no doubt under the influence of London-based civil servants. Those were the only franchises in which that was specified. Of course, it is important that the great airports are connected on Boxing day, but there is also a great airport at Manchester in the north of England—Boxing day is its busiest day of the year. I will offer some hope before the end of my remarks, but until now there has been no service there.
Most of the time since 1980 outside Heathrow, Gatwick and Scotland, which has run a service as it is not a public holiday on Boxing day, there has been very little provision. There have been some services between Marylebone and Oxford on the Chiltern lines in recent years, which I think have been well used, but 90%-odd of the network has been closed down. It is interesting that no one in the rest of Europe closes down their network for that length of time. I am not suggesting services on Christmas day, but a lot of continental Europe runs a Sunday service throughout the holiday period. Somehow, they seem to get round the problem of engineering works. Where there is a will, there is a way.
Will the hon. Gentleman give way?
It gives me great pleasure to give way to the chair of the all-party rail group, no less.
It is in that capacity that I wanted to say that the hon. Gentleman is very welcome to come along to the group next time we have a meeting of the train operating companies to put the question directly to them. At the moment, unless it is in their franchise, very few of them provide a service. They ought to be more enterprising—we need more competition in the rail network.
I accept that the spirit of enterprise should be there, and I have some good news for the hon. Gentleman before I sit down. I will certainly take up his invitation—it will be one of the highlights of my parliamentary year to come to such an august body.
I do not want to adopt a particularly party political approach, but I would make a gentle reflection to both Front Benchers—it is a great pleasure to see the shadow Minister for Rail, my fellow Yorkshire MP and hon. Friend the Member for York Central (Rachael Maskell) in the debate, and I am glad she is taking an interest. There has been a tendency, as we might expect, that when parties are in opposition, they draw attention to this problem. I spoke to the office of the hon. Member for Wimbledon (Stephen Hammond) earlier today and pointed out that I would gently draw attention to his quote from 2008, where he said:
“Thousands of families travel the length and breadth of the country to visit relatives and loved ones on Boxing Day. But yet again this year the railways will grind to a halt, forcing people onto gridlocked motorways… Labour just do not get how important the railway is to people at Christmas-time.”
My hon. Friend the Member for Middlesbrough (Andy McDonald) has rightly mentioned that quote every Boxing day since he has been in office, and rightly asks for progress. However, I have not yet seen either Front-Bench team say that we definitely will make progress. However the railways are owned, and whether or not the major franchises come back into public ownership under a Labour Government, I hope a commitment can be made to Boxing day transport. I hope both parties can commit themselves to that.
I said there was potential good news for Boxing day 2018. That is largely concentrated in the north of England. For the past three years, Merseyrail has run a service. That shows the power of devolution. Merseyrail has a particularly close relationship with the Mayor of Liverpool and the councils on Merseyside, which have a greater consultative role in relation to the terms of the franchise and so on.
I am interested in this issue, coming from a Scottish perspective. As the hon. Gentleman mentioned, there are some services on Boxing day in Scotland, but I get many complaints from my Moray constituents, including this year, that the service and the number of carriages are so reduced that the passenger’s experience is not great. Even though we have a service, it is very limited, with very few carriages, and ScotRail does a lot of maintenance on the railways on Boxing day because of the limited services, so there are many delays. Although there is devolution and there are some services in Scotland and other parts of the country on Boxing day, does the hon. Gentleman agree that those should be better services to ensure that people who choose to use the railways on Boxing day have a good experience?
Order. That is a speech. I call John Grogan.
I agree with the hon. Member for Moray (Douglas Ross). We have to provide a quality service such that people know when the trains are running and that they will be of good quality. We cannot run a ramshackle service, because people will not use it. My worry would be that someone would say, “Why are we running these services at all?” as happened south of the border in 1980.
As I said, Merseyrail has been running services. This year, it was very enterprising, to use the word of the chair of the all-party rail group. It contacted Liverpool football club, which had an evening kick-off at 5.30 pm, and provided trains well into the evening so that supporters could not only get to the game, but get back afterwards. Northern Rail, for some reason—I am not sure how this came to be the case and whether it was down to an enlightened Minister or an enlightened civil servant—has to provide under the terms of its franchise 60 services in the north of England on Boxing day 2018. I am very hopeful that some of those may even go to Keighley, because I have had a very helpful letter from the chair of the West Yorkshire combined authority, Councillor Keith Wakefield. He says that it is working with the Department for Transport and Transport for the North, perhaps to enhance the 60 services and have more. The letter states:
“The consultation response submitted by WYCA noted that the Leeds North-West network (the Airedale and Wharfedale lines) were identified as a likely priority for Boxing Day services in the Leeds City region, not least reflecting the high levels of demand they attract at weekends/holidays and reflecting the extent to which the signalling is automated (which could reduce costs).”
If Bradford City are at home this year, I will look forward, possibly, to getting on to my local train service, on the Airedale or Wharfedale line, to get to the match.
In this more optimistic picture, TransPennine rail has an obligation in its franchise to make proposals to Ministers and to Transport for the North to run services across the Pennines. I understand that it has emphasised making proposals for the aforementioned Manchester airport, and that that is with Ministers and Transport for the North. I very much hope Ministers take an enlightened approach. I well remember a meeting about this in 2009 with Lord Adonis, marvellous man that he is, but I think that he rather humoured me and his mind was on High Speed 2 and very important projects such as that. These are little details, but I feel confident that this Minister is a man of such detail.
On the subject of TransPennine, which provides the main services via the south trans-Pennine route between Manchester airport and Cleethorpes, when the Minister has those discussions, will he make special mention of the fact not only that my constituents want to get to Manchester airport, but that of course people will flock in their thousands to Cleethorpes, where Grimsby Town will probably be playing at home next Boxing day?
They will, and the seaside in winter is particularly attractive.
I end by saying that I have every hope that both Front-Bench teams will get behind the idea of Boxing day transport. Devolution will help. This is one way of ensuring that the northern powerhouse in particular—obviously, I am concerned for the rest of the country as well—is powered for one extra day a year.
I thank the hon. Member for Keighley (John Grogan) for his interest in this matter. I also thank the chair of the all-party rail group, my hon. Friend the Member for Cleethorpes (Martin Vickers), and my hon. Friend the Member for Moray (Douglas Ross), for their contributions.
Public transport must have at its heart the needs of the travelling public. I am clear that we must continually strive to meet those needs as they change and evolve, and I will do my best to answer some of the points made during this debate. If I cannot answer them in full, I will happily write to the hon. Member for Keighley afterwards.
As the hon. Gentleman said, the issue of Boxing day services principally affects the rail sector—he noted that bus services by and large continue to operate on 26 December—so to that degree I will focus my remarks on rail. As he rightly noted, our rail network is part of the lives of many people across the UK and important to addressing social needs—he rightly highlighted the issue of loneliness—which is why the Government continue to invest at record levels to ensure that the service across the country is delivering reliable and punctual rail services to meet the needs of our economy and society.
Indeed, on 12 October, my right hon. Friend the Secretary of State announced our intention to commit some £47 billion—a record sum—to our rail network in the period 2019 to 2024. That is on top of a previous record level of investment, which will see about £50 billion spent on reliability and major transformational infra- structure enhancements up to 2019. All that is in addition to HS2, which the hon. Gentleman mentioned and on which we are spending about £55 billion.
That means that, since 2010, more than 7,000 new carriages have been ordered to provide extra space for passengers and to replace many outdated trains. We are setting challenging targets for passenger experience in operators’ franchise agreements that cover passenger satisfaction and standards of service quality. Increasingly, we are including financial incentives to ensure that they deliver on those targets. That can include requirements to reinvest penalties in improvements for passengers. We are committed to making the railways accessible to all. For the first time, we are introducing a specific delivery plan in our franchise competitions that will require bidders to set out how they will meet the needs of passengers with disabilities. That reflects our commitment to delivering a rail network that is centred on the passenger—providing the services, capacity and experience that rail users want.
To come to the heart of the debate, Boxing day services are just one of many passenger needs that we are seeking to fulfil. I will say a few words about our approach to Boxing day services, which has evolved over time, as the hon. Gentleman noted, and no doubt will continue to evolve.
Our franchises have always had the discretion to explore the operation of Boxing day services on a commercial basis. Since 2015, we have required franchises to, at a minimum, maintain current levels of Boxing day services. In addition, our invitations to tender include requirements to consult passengers and user groups on the demand for Boxing day services. That is reported back to the Department, along with the commercial viability of any such proposals.
I know that the hon. Gentleman is particularly interested in the consultation and associated reports prepared by the Northern and TransPennine Express franchises. I can confirm that those have been submitted and are being considered by the Rail North Partnership. I appreciate that he would wish me to confirm that we will be running services on both franchises, but I am sure that he will also understand that we should allow Rail North, the franchises and Network Rail the opportunity fully to consider and assess the feasibility of the proposals first. I also note that, in focusing on the needs of our passengers, we must look at the needs of the widest number of the travelling public. As I am sure the hon. Gentleman is aware, the rail network uses periods of lower demand, which will usually include Boxing day, to complete essential engineering works—essential, as he knows, if we are to undertake maintenance work that is critical to the reliable performance that passengers demand, and essential, too, for major upgrade work, delivering the additional capacity on the network that passengers want.
The hon. Gentleman focused rightly on the north of England. I gently remind him that we are spending £13 billion on northern transport—the largest investment in a generation—£3.8 billion of which will be invested in rail schemes. By 2020, the great north rail project will see the arrival of brand new trains for customers across the region. Northern and TransPennine Express will deliver more than 500 new carriages, with room for 40,000 extra passengers, as well as 2,000 extra services a week. We hope that this will help transform the passenger experience and improve reliability.
Elsewhere, recent rail franchise awards will deliver brand new, more reliable trains for passengers travelling on South Western, East Anglia and London Midland services. This year will also see the completion of Thameslink and Crossrail, which will deliver desperately needed new capacity, thereby improving performance reliability for passengers and freight. On the Great Western network, we are investing an unprecedented £5 billion to deliver faster, more reliable services and new trains with thousands more seats.
I thank the hon. Gentleman for raising this important subject. Our railways clearly matter tremendously to those who use them, and passengers rightly expect that we will respond to their changing needs. We have a clear vision for delivering on this in future. This means a relentless focus on meeting the needs of passengers; awarding contracts on the quality of service provision and on price; investment in infrastructure to deliver improvements in reliability and increase capacity; and new and refurbished trains that increase capacity and improve the passenger experience.
Question put and agreed to.
Pubs Code 2016
[Mr David Crausby in the Chair]
I beg to move,
That this House has considered the application of the Pubs Code 2016.
It is a pleasure to serve under your chairmanship, Mr Robertson. I would like to say that it is a pleasure to speak in this debate, but I spoke in the equivalent debate in January last year and I hoped then that I would never have to speak in such a debate again. However, given the way things have evolved, it is obvious that I need to, so I am here yet again.
I am something of a veteran of this issue. The initial predecessor to the Select Committee on Business, Innovation and Skills did an inquiry into it in 2004, and subsequent inquiries were held in 2009, 2010 and 2011. I was a member of the Committee in 2009 and Chair of it in 2010 and 2011. Looking back, I remember that Ted Tuppen, the former chief executive of Enterprise Inns, described the MPs who were campaigning on pub companies as morons. I am proud to say that I am probably one of the last surviving morons—by that definition—in this House.
The issues have been standard and constant throughout the evolution of this debate and the subsequent legislation. They arise first around the tensions between the pub companies and their tenants—I know they are commonly described as pub operating businesses now.
I congratulate my hon. Friend on securing this debate and the way he has pursued this issue. Like him, I contributed to debates on it in the last Parliament. I was pleased, as were many colleagues, to see the pubs code at last, but does he agree that the key now is to see it implemented throughout?
Absolutely. My hon. Friend makes an important point. This has been pursued through Parliament for nearly 15 years. If, at the end of the day, we do not demonstrate that our pursuit of this issue and the implementation of the legislation is effective, we will have failed in our duty. I am dedicated to ensuring that it is successful.
The crux of the issue is the mismatch between the power of the pub companies and their tenants. With that mismatch in power comes a mismatch in rewards. Basically, many pubs were being driven into closure and tenants into bankruptcy by virtue of the fact that the pub company was taking a disproportionate amount of the income that they were raising through their services.
I congratulate the hon. Gentleman on initiating this debate. Does he agree that another problem is that the adjudicator has a tendency to make his decisions in private, thereby preventing a bank of knowledge from being built up by tenants, who could perhaps use some of the decisions as precedents?
I thank the right hon. Gentleman for that intervention. To a certain extent, I was going to cover that, but his precise point is a welcome addition, because transparency is the key. That would give guidance to tenants who were looking for the market rent only option. It would enable them to see how viable their application is and on what grounds they could challenge the pub company, if the pub company refused or obstructed it.
I will be writing to the Minister about my constituents’ experience of the Pubs Code Adjudicator following Paul Newby’s visit to York, at my invitation. Despite his commitments about expediency and communications, pubs such as the Golden Ball in York are still waiting 13 months later to hear what is happening about their case. How can that be fair, and how can it be right?
My hon. Friend raises an important point. I know that many tenants feel that this procrastination over resolution is playing into the hands of the pub companies, and that it is, in some cases, deliberately designed to drive up expenses and deter anybody from making such applications.
I congratulate my hon. Friend on securing this debate. I want to ask a question on behalf of the Nottingham branch of the Campaign for Real Ale and its pub protection officer, who wrote to me about this issue. The point they make is that the process of obtaining a market rent only option is massively complicated and virtually impossible for an unsupported tied tenant to use without expensive legal support. Does my hon. Friend agree that if the legislation is to be useful, it must be easily accessible?
My hon. Friend makes an important point. That is one of the complaints, and I will be discussing some of them in a few moments.
Prior to the implementation of the legislation, subsequent Committees sought the industry’s agreement on a voluntary code, but subsequent inquiries demonstrated that the pub companies, despite paying lip service to a voluntary code, were actually not conforming to it and not making any progress on it. It was then in exasperation—almost desperation—that the Select Committee decided that enough was enough, and that it was time to implement legislation. Subsequently, the legislation materialised.
The key issue, above all else, is tied tenancies and the market rent only option. The argument is that tied tenants have to pay a disproportionate amount of money for their stock and other services, and that, as a result, the pub company gets a disproportionate share of the income arising from the premises. If a tenant seeks to go free of tie, the pub company will implement conditions in the negotiations that remove any financial advantage from that course of action. The legislation, by giving tenants the option of applying for a market rent only option, is designed to overcome that handicap. The way in which the process is being implemented is a matter of huge concern, and it needs further consideration by the Pubs Code Adjudicator and the Government.
The Pubs Code Adjudicator report in July 2017—bearing in mind that the legislation came in one year earlier, in July 2016—said that there were two overarching principles in the code. The first was “fair and lawful” dealings in relation to tied tenants. The second, which I have touched on, was the “no worse off” principle, which sets out
“that individual tied tenants should not be worse off than they would be if they were free of the tie”.
Eighteen months after the introduction of the pubs code and the Pubs Code Adjudicator, it is time to take stock and assess whether the objectives set out in the pubs code—I just defined them—are being met, and, if not, what needs to be done.
Before I do that, I have to touch on the controversy that raged over the appointment of Paul Newby as the Pubs Code Adjudicator. I will not dwell on the whole catalogue of concerns, but it is well known that there are accusations of conflicts of interests arising from his past employment with the valuers and surveyors Fleurets, because it had extensive interests with the pub companies, and from his personal investment in it. I said in the debate last January that unless he divested himself of that particular investment, then in no way should he be the Pubs Code Adjudicator because he had an obvious and transparent conflict of interest. He has not done so. Given that confidence in his commitment and impartiality is crucial to earning the trust of pub tenants, that must be of huge concern. I will come back to this issue in a moment.
He has had opportunities over the past 18 months to demonstrate his effectiveness; however, looking at his performance, we see that it is possibly a slight understatement to say that the implementation and the progress made under his supervision fall short of the level needed to achieve the legislative objectives. The first concern is the slowness of the adjudication process. Between July 2016 and March 2017, arbitration awards were made in only 15 of the 119 cases accepted for arbitration. In the cases specifically relating to the market rent only option, the figure was 12 out of 104. Later in the year, in August, the adjudicator published a market rent only verification exercise report, which demonstrates that of the total of 497 market rent only notices, only 11 were actually converted into agreed market rent only tenancies. Of the 130 arbitration cases listed on 31 July 2017, 79 had been delayed for more than three months, and 12 for more than six months.
Now I will come back to the point that I was making earlier. The slowness of arbitration is not the only issue; impartiality is also a problem. The Chartered Institute of Arbitrators has upheld four of the 12 challenges made by pub tenants to the adjudicator’s decisions. That demonstrates the lack of confidence of tenants in the industry in the robustness and impartiality of the way in which he is exercising the code. To have a one-third failure rate in such a key, sensitive position is absolutely unacceptable.
My hon. Friend is making a very solid case. A further conflict of interest in dragging out these cases is that doing so is economically disadvantaging tenants. Has he discovered the same fact?
Again, my hon. Friend makes an important point. The more we drill into this subject, the more comes out of it. Unfortunately, I am too constrained by time to go into every single issue that arises.
I am keen to intervene before my hon. Friend moves on from that point. As I understand it, in the four cases in which the Chartered Institute of Arbitrators found that there was a conflict of interest, Mr Newby has continued to arbitrate. He has not accepted the verdict of the Chartered Institute of Arbitrators. An important question for the Minister is whether he thinks that if the Chartered Institute of Arbitrators believes that there is a conflict of interest, Mr Newby should respect that verdict.
My hon. Friend raises another significant point. By continuing to act on the case, Mr Newby is acting in breach of the code of conduct of the professional institute of which he is a member.
It is also significant that successful negotiations between the pub companies and tenants were rare. Eight times as many cases were referred to the PCA for arbitration, and four times as many went to independent agreement, as decided by bilateral negotiations between the tenants and the pub companies. It is not difficult to understand why. There is now overwhelming evidence that the pub companies’ historic antagonism, intimidation and bullying has continued, and the confrontational culture has prevailed, deterring tenants from taking, seeking or achieving market rent only options as a result of bilateral negotiations with the pub companies.
That is confirmed by the market rent only verification exercise of August 2017. The report states:
“Almost without exception, tenants and tenant advisers reported that while the POBs are abiding by the letter of the Pubs Code, to varying degrees they are not acting within the spirit of the Code; and that some are taking a legalistic approach to the Code.”
The second highest number of calls to the Pubs Code Adjudicator inquiry line related to the behaviour of pub companies, and they included accusations of intimidation, bullying and delay tactics. Those are not my words, but the words of the report.
I do not have time to examine every device used by the pub companies to frustrate negotiations but will pick out just a few. First, they include processes in their negotiations with tenants that are designed to push up costs, and include conditions not commonly found in tied tenancies or pre and non-code free-of-tie agreements.
Secondly, there is insistence by the pub companies for a brand new tenancy agreement, rather than a deed of variation to an existing tied tenancy. That enables pub companies to introduce new terms and requirements not historically found in a free-of-tie agreement, but that introduce substantial additional upfront costs.
Thirdly, deposits and advance rents are designed to make the market rent only option unaffordable. Lastly, there are unreasonable, unexpected and novel improvements of dilapidation requirements, including things such as a new roof, new pumps, resurfacing of car parks, cellar cladding, fire rules assessments and, I believe, patios as well. I would stress that those are only some of the strategies used by the pub companies to circumvent the spirit of the law.
Arising from a letter from my hon. Friend the Member for Leeds West (Rachel Reeves), the Chair of the Business, Energy and Industrial Strategy Committee, on 3 November 2017, the Pubs Code Adjudicator acknowledged
“that very few MRO notices served by tied pub tenants convert into MRO tenancies, and that bilateral negotiation and agreement between pub-owning businesses and tied pub tenants appear to be by exception.”
That is a formal confirmation from the Pubs Code Adjudicator that, in effect, it is not working. It is clear from the verification exercise that the pub companies are using their legal expertise and superior bargaining power to perpetuate the status quo and to thwart the intended objectives of the pubs code legislation.
In the same letter, the Pubs Code Adjudicator says that he is prepared to use his enforcement powers to ensure compliance if necessary. We have been operating with the code for 18 months, and there is overwhelming evidence that it is necessary and reasonable to ask why—given the evidence that has emerged in that period —he has not done it already. Instead, the adjudicator has published a compliance code for pub companies which, frankly, we would have expected to have been produced much earlier. Predictably, the pub companies have reacted with an antagonistic letter to him. I am afraid that, on the basis of earlier precedent, it is only the threat of legal action that will move the companies.
In the same letter, the adjudicator says that he will make recommendations to Ministers about business practices that he believes are unfair to tied pub tenants but are not breaches of the pubs code. Again, the evidence about that has been there for a long time, so why has he not done that before? I ask the Minister this question: if the recommendations from the adjudicator are forthcoming, or indeed even if they are not, will he make the appropriate changes to the legislation to ensure that it meets its objectives?
In his letter to my hon. Friend the Member for Leeds West, the Pubs Code Adjudicator asserts that his aim is to help to reshape the culture of the industry. To date, there has been absolutely no sign of that. The pub companies are intransigent and have enormous resources at their disposal. To change the prevailing culture, a much tougher approach is needed. The PCA is running out of time and it is time that the Government sought a replacement.
The Government need to make a couple of headline adjustments to the legislation or the code to ensure that the code is effective and the problems that I have outlined are overcome. Many such changes would do that, but there are two key ones. The first is to ensure that the definition of the market rent only option makes clear the right of a tenant to pay an independently assessed market rent, and only that rent, to the pub company. Secondly, the only changes to deeds of variation that should be allowed are the severing of tied terms and the rent being an independently assessed market rent. Those two alterations would go an enormous way to addressing some of the important grievances that have emerged so far, but many others could be made.
I will conclude by saying that, as I said earlier, I have been involved with this for a very long time—many Members from all parties in the House have been equally committed. I pay tribute to my predecessors as the Chair of the Business, Innovation and Skills Committee and its predecessor Committees, and the many campaigners in the many voluntary groups who have been so assiduous and dedicated to ensuring that we drag these companies kicking and screaming, by whatever legislation is necessary, to confront their responsibilities as operators of important community facilities that play an absolutely vital role in so many people’s lives, and in the lives of so many communities. I will not rest until that is done and I hope that other Members and the Government will work with me to ensure that we achieve that goal.
It is a pleasure, Mr Robertson, to serve under your chairmanship, and I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing a debate about an issue that, as he has just pointed out, is so important to so many of the pubs that are of such great value in our constituencies and our communities.
The Chipping Barnet area, which gives my constituency its name, was once famous for its pubs and coaching inns, serving people travelling on the Great North Road on their way to and from London. At the height of the coaching era, there were probably more than 30 pubs in a comparatively short stretch of road along Barnet Hill and Barnet High Street.
Charles Dickens, whose meal at the Red Lion in Barnet was once cut short by the news that his wife was in labour, had Oliver Twist limping into Barnet and
“crouching on the step…wondering at the great number of public-houses (every other house in Barnet was a tavern, large or small)”.
Further back, in 1667, Samuel Pepys also dined at the Red Lion in Barnet, enjoying what he described as
“some of the best cheese-cakes that ever I eat in my life”.
And in 1762 the traveller William Toldervy commented positively on various Barnet pubs, including the Red Lion and The Mitre.
Only a handful of Barnet’s old pubs survive to the present day and those that are still open for business face some difficult challenges and circumstances, including the Old Mitre Inne, which attracted that good write-up by Toldervy some 250 years ago. It is a great pub that is very popular with my constituents. Unlike many pubs, it is primarily dependent on what I gather are described as wet sales—in other words, it has not morphed into a restaurant, although it serves some really excellent food.
The pub is run by Gary Murphy, who has recently been granted a Pubs Code Adjudicator arbitration in relation to his dispute with his pub company. It has taken eight months of correspondence, legal advice and hassle to get to that stage which, as the hon. Member for West Bromwich West has already suggested, is a demonstration that this process moves too slowly. We need to find a way to ensure that the pubs code process and the adjudication process can move more swiftly to deliver fairer outcomes for people running these much-valued and much-appreciated pubs.
When Mr Murphy asked to exercise his right under the code to move to a market rent only arrangement, the pubco asserted that that required a new lease, which is costly to negotiate, with legal fees to pay and stamp duty and so on. Moreover, the pubco proposed onerous new terms, including payment of six months’ rent up front in advance, and the obligation to redecorate the premises completely, inside and out, every three years. My constituent believes that the MRO arrangement could and should be delivered via the cheaper and simpler mechanism of a deed of variation, which we have already heard some points about this afternoon. A second problem is that the pubco refuses to accept that any final MRO settlement should be backdated, in accordance with the relevant backdating clause in Mr Murphy’s existing lease.
Those two issues mean that it could cost Mr Murphy well over £100,000 to get his MRO. That has to be against the spirit of the pubs code and it sounds like it is against the letter of the code as well.
I understand the very serious concerns that have been expressed by the hon. Member for West Bromwich West, many of which are echoed by the Campaign for Real Ale in the very helpful briefing that it has provided for this debate. However, I take a somewhat more optimistic approach. With the establishment of the code, we have seen positive steps in the right direction and now need to build on the progress that has been made. Nevertheless, it is clear that more needs to be done to ensure that pub tenants are given the protection that was envisaged by Parliament when it adopted the legislation on the pubs code.
As we have heard, the Pubs Code Adjudicator has started to make decisions and a number of them appear to have been helpful. For example, I gather that there have been cases where the PCA has declared that the pubco must offer better terms to its tenant than those that had been originally proposed. That includes cases where the conclusion has been that a deed of variation can be used and a new lease is not required.
Welcome as those decisions are, however, waiting for individual cases to determine general points of principle is part of the reason why this process is slower than it should be in coming to the aid of our local pubs. It would be very helpful if the adjudicator were to issue further general statements on how he proposes to approach key aspects of the code, including those covering some of the issues that have already been raised this afternoon.
I believe that that would mean that disputes between tenants and pubcos could be settled more quickly, and with less cost and less stress, than they are currently. I very much hope that the adjudicator will consider publishing statements of principle, in particular in relation to the two problems that have arisen in The Mitre’s dispute, namely deeds of variation and backdating clauses.
In conclusion, the pubs code and the PCA are capable of delivering fairer outcomes for tenants. In doing so, they could be a lifeline to the local pubs that so many of our constituents value. A few relatively simple changes in approach could achieve a great deal to ensure that the system works more effectively and more quickly to deliver the outcomes intended by Parliament when it adopted the legislation. I hope the adjudicator and the Minister will carefully consider the points made in the debate about how that might happen in practice.
It is a pleasure, as always, to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey), who has been an incredibly important contributor to us getting as far as we have towards justice for pub tenants and a fully functioning, fair market in our pubs industry. My hon. Friend made his case in a typically impressive fashion and laid out many of the issues that face all those who want the pubs code to work in the way that Parliament originally intended.
I do not propose to repeat all the history that my hon. Friend laid out, but it is important to remember that Parliament, and subsequently the Government, took the fairly unprecedented step of intervening in a market—and despite the rhetoric, that has not been the Government’s modus operandi over the last few years—because of historic market failure. There was recognition that pub companies had failed to get their house in order, despite numerous opportunities to do so, and that there was an unfair imbalance in the relationship between powerful pub companies and tenants, who were individual small business people.
For that reason, hon. Members in all parts of the House voted to support the introduction of a market rent only option in the pubs code as part of the Small Business, Enterprise and Employment Act 2015. The support of Conservative and Liberal Democrat Members meant that the Government were defeated, and the market rent only option was put in. It is important for us all that that works, and that we deliver on the principles intended by the 2010 to 2015 Parliament.
I would like the Minister to clarify that he is responsible for the pubs code. I was under the impression that the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Burton (Andrew Griffiths), had taken over the role.
I confirm that I have that portfolio. That has happened only in the last few days, but I am and will be responsible for pubs. I am listening eagerly to what the hon. Gentleman and other hon. Members are saying.
I thank the Minister. If that was not press released, he has just released it. I congratulate him on that important role. He may well know the history, but others may not.
One of the founding principles of the pubs code’s introduction, as laid out by the right hon. Member for Twickenham (Sir Vince Cable) when he was Secretary of State for Business, Innovation and Skills, was that there should be a rebalancing of the level of reward between pub companies and tenants. The Government’s intention was specifically that tenants should be better off as a result of the pubs code’s introduction.
My hon. Friend the Member for West Bromwich West referred to two key principles: that the market rent only option should be on a fair and reasonable basis, and that tenants who were tied should not be worse off than those who were free-of-tie. I will come back to that point.
Perverse and bizarre as it may sound, the introduction of the pubs code was simultaneously late to arrive and rushed. It had a short period of implementation and took a long time after the legislation was passed to be delivered. As a result, sufficient preparation was not done by Government, or by some companies, to get ready for its introduction.
The appointment of the Pubs Code Adjudicator was surrounded by controversy. My hon. Friend referenced the inordinate delays and some of the methods used to prevent landlords fulfilling their rights to go market rent only. It is important to remember that many tenants are in a perilous financial position when they seek to go free-of-tie. They are not in a position where inordinate delays, very substantial outlays of cash or huge legal costs are attainable.
If we want to deliver the opportunity—the right—for the tenant to assess an independent market rent and decide whether they want to have a landlord-tenant relationship, or whether they want to receive all the services from a pub company, it is important that the delays are not inordinate and that false additional charges are not put in to prevent them from being able to take up that right. That is one of the strategies that seem to be being used very deliberately.
Most tenants have a five-year contract period. If they come to the end of a contract and attempt to get a free-of-tie rent assessment, the clock is ticking on their next five-year contract. That delay is being put in there, but if they subsequently go free-of-tie or get an arbitration or adjudication award in their favour, there is no opportunity to backdate that to the start of their five years—all the more reason why the principle should be that the adjudicator carries out their role in the most timely fashion possible. Any tenant who manages to get an independent assessment and decides to take that up does not get that rent backdated. The code should be amended so that rent is backdated to the point of application. I ask the adjudicator to adjudicate on that and the Minister to clarify that in his remarks.
For many tenants, there is a narrow window in which they can take up the right to get an independent assessment. At the end of their contract, they have to let their pub company know. They are often waiting for a new assessment and under the impression that they are still part of a negotiation by the time that they realise that they have missed out on their opportunity to take advantage of it.
My hon. Friend referred to the conflict of interest that many people feel Mr Newby had when he took on this role. There are two important elements of that for tenants’ confidence in the process. We should be clear that many tenants would like the opportunity to take up their right, but have lost confidence in the process. They believe that if they try to take up that right, they will only take on additional cost, so they are not taking advantage of this. I am sure that that disturbs all hon. Members who wanted the legislation to be introduced.
There is a financial conflict. Mr Newby continues to hold shares and to be owed money by Fleurets, which has many leading pub companies as its customers. Whatever the questions about his history, it is absolutely wrong that he did not divest himself of that interest when he took on this role. We are talking about a relatively small sum—although significant for an individual —so given the importance of the industry and the legislation, it would have been far better for him to have divested himself of that.
The point about the Chartered Institute of Arbitrators ruling against the PCA’s arbitrating on four different cases is significant. The Chartered Institute of Arbitrators’ spokesman said that when a challenge was upheld, an arbitrator’s appointment in that dispute is “immediately terminated”, and they should not be involved in that case again. In response to that, a spokesperson on behalf of the Pubs Code Adjudicator said that because his responsibilities were established by an Act of Parliament, the PCA did
“not accept that the Chartered Institute of Arbitrators has any jurisdiction to appoint or remove an individual from the role of arbitrator in a pubs code arbitration.”
That is an important matter of law for the Government, and also a matter of direction.
I believe that as a matter of law, the PCA should have listened to the Chartered Institute of Arbitrators. Even if it is true that the institute does not have the power to remove him, a sensible arbitrator would say, “Given that an independent body says that I have a conflict of interest, it surely makes sense for me to stand down and appoint a truly independent arbitrator.” The question of the extent to which the Pubs Code Adjudicator is both an adjudicator and an arbitrator is significant, because arbitrations happen in private and adjudications happen in public.
What we have seen from the Pubs Code Adjudicator so far is that he is much more of an arbitrator than an adjudicator. Might the Government consider separating those roles? The role I envisage for the PCA as a spokesman for the code is undermined by the fact that so much of his dealings are done in private, so he has not taken on nearly enough of a forceful role, which is what I would like him to play. If he criticises some of the pub companies, as he does, that perhaps makes it more difficult for him to arbitrate in private with them, so there are real difficulties in all of that.
My hon. Friend the Member for West Bromwich West referred to the section 40 powers of the Small Business, Enterprise and Employment Act 2015, which impose a duty on the Pubs Code Adjudicator to notify the Secretary of State if he believes the code is being breached and not followed. It is clear from his public pronouncements that he believes the code is being breached, but I am under the impression that there has never been a section 40 notice given to the Secretary of State. If that is the case, will the Minister or the Secretary of State pursue that with the Pubs Code Adjudicator? If he is publicly saying that there is wrongdoing, why has he not written to the Secretary of State with suggestions about altering the code to clarify and strengthen his case, or made the report that he has a duty to make?
There are two or three key questions in the pubs code that it is important to clarify. One of them concerns market rent only. The right to market rent only is laid out in the Act, and that should not need any arbitration. It is a fact that if someone reaches one of the trigger points, they are entitled to ask for a market rent only option. The pub company has a right to make an offer, but if the tenant believes the offer is not fair, they have the right to go to an independent arbitrator. For some reason, the Pubs Code Adjudicator considers all the different applications to be arbitrations, but an independent assessment should not be a matter of arbitration. That is absolutely the principle of the clause in the Bill that we all approved.
On the market rent only option, the fact that someone would pay rent for the pub and not be tied on the drinks that are sold is absolutely accepted by the tenants and the pub companies. The question then arises: which of the other terms in the contract should also be a part of the contract? The pub companies would say a market rent only option means market rent only, and that is the basis of the entire relationship, whereas the tenants say that anything that is common in the industry that was part of the original contract should be part of the subsequent contract. Will the Minister clarify that?
Finally, to be positive, the appointment of the Deputy Pubs Code Adjudicator is welcome. We have seen a real difference since she was appointed. I would like to see her take an ever greater role. Some tenants are getting a better tied deal as a result of the threat of going free of tie. However, the question of deeds of variation is important. Will the Minister set out his view on that?
In conclusion, how many times, if at all, has the Pubs Code Adjudicator written to the Secretary of State to report failure to adhere to the spirit of the code? What is the Government’s view on whether terms that were in a previous tied contract should remain in free-of-tie contracts? Do the Government agree that Mr Newby should accept the verdict of the Chartered Institute of Arbitrators, and do they believe that the Chartered Institute of Arbitrators has a right to a view on those questions? It is important. The pubs code is a vital opportunity for the industry. It is important that we all make it work.
It is a pleasure to serve under your chairmanship this afternoon, Mr Robertson. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate.
As right hon. and hon. Members are aware, the pubs code does not apply to pubs in my Scottish constituency of Berwickshire, Roxburgh and Selkirk. However, that does not mean that this debate is not important to pub owners across Scotland. One of the real positives of devolution is our ability as legislators to learn from, improve on and replicate any legislation passed in other nations of our United Kingdom, if it is shown to be effective. There are plans for a similar pubs code and adjudicator in Scotland in a private Member’s Bill promoted by Neil Bibby, a Labour Member of the Scottish Parliament. He believes that tied pubs in Scotland would
“'be subject to similar legislation, protection and opportunities as those in England and Wales”
if his Bill became law.
Although not perfect, the protection now offered in England and Wales is perhaps evidence that Government intervention might be the answer to helping pubs thrive, and I am sympathetic to a cause that looks to make this equal across all of the United Kingdom. However, it is worth reminding hon. Members that the pub landscape in Scotland is very different from that in England and Wales. Most pubs in Scotland are independent free trades, whereas in England the majority are tenanted, so it remains unclear as to how effective the proposed Bill in Scotland would be. I look forward to hearing what my MSP colleagues in my party and others make of the legislation.
I am supportive of anything that can be done to help pubs across Scotland and the wider United Kingdom. It is no secret that, over the past few years, many have been shutting down at an alarming rate. I am sure hon. Members from rural constituencies like mine are particularly aware of this. None the less, all is not doom and gloom. The importance of pubs in our communities is profound. For hundreds of years people have been able to congregate in our pubs with friends, neighbours and family members. No doubt many of this country’s finest ideas and movements have been dreamt up at a night in the pub. This sentiment is truer today than on any other, on the eve of our celebration of Robert Burns. The pubs’ practical role is clear, too. The great “Pub is the Hub” initiative helps publicans expand their offering into being the local newsagent, post office or village shop in communities that have lost those services, increasing the viability and integral value of a community pub.
In Berwickshire, Roxburgh and Selkirk alone, 800 jobs are supported by the pubs and drinks sector, and it is growing. Great pubs such as the Auld Cross Keys Inn in Denholm are regularly mentioned in CAMRA’s “Good Beer Guide”, and good pubs need good beer. In the Borders, those are supplied by the fantastic Born in the Borders and the award-winning Tempest brewery, to name just two. Thriving distillers are creating innovative gins and bringing whisky production back to the Borders for the first time since 1837.
I am very proud to highlight the innovation and achievements taking place in my constituency and across Scotland, but we must also consider the great work that the Government have done to help improve the livelihoods of publicans and the communities they serve. Freezing duty on wines, ciders, beers and spirits is one of the most prominent. That was something I was more than happy to call on the Chancellor to do because I know and understand the benefits that are felt in many rural communities in my area and across the United Kingdom. In addition, the pubs code, while by no means perfect, demonstrates that the Government have the long-term interest of pubs at heart. I look forward to hearing from the Minister how the Government plan to address the concerns that were raised about the pubs code and the adjudicator, and how the Government plan to support the pub sector across the United Kingdom.
I congratulate the hon. Member for West Bromwich West (Mr Bailey) on bringing the matter forward today. The hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) said that it does not directly affect his constituency, and neither does it directly affect Northern Ireland, but that does not lessen our interest in the issue. I have spoken on it, and asked questions about it, before. I want to speak about the principle of the matter, although it is only England and Wales that are affected.
I have long held the view that we need to consider who audits the auditors and who holds to account those who hold the rest of us to account. I have been dismayed at times, when, trying to represent my constituents, I have requested information from accountability bodies. It would appear that the matter before us presents another example of the need for more accountability, as the hon. Member for West Bromwich West suggested.
I want to give credit to someone who is no longer in this House, and whom the hon. Member for West Bromwich West will well recall—Greg Mulholland, who represented Leeds North West. He fought the case in the Chamber whenever he had the opportunity. I was betwixt the two—the hon. Member for West Bromwich West, who sat behind me, and Greg Mulholland in front of me.
I am grateful to the hon. Gentleman for saying that. I wrote down the same point in my speech but failed to read it out, so I am grateful that he took the opportunity. He is right to say that Greg Mulholland was a principal actor in getting the measure into the draft.
I thank the hon. Gentleman for that intervention.
I agree with my hon. Friend the Member for Chesterfield (Toby Perkins). In fact I received a comprehensive brief from Greg Mulholland about an hour before I came into the Chamber. I had a feeling that somehow his beady eyes would be upon us today to ensure that we would articulate the viewpoint on which he has campaigned so effectively for many years.
I thank both hon. Gentlemen for their comments which, along with mine and others’, are a recognition of the tremendous work that the gentleman in question put in, in this Chamber. We all recognise that his efforts were one reason we have got so far forward.
Others have endeavoured to take us the extra mile through their efforts, and I was made aware of the details from the briefing that was most helpfully provided by the Library. We do not often say it, but I thank those researchers for their diligent work. They provide tremendously factual and detailed information to sharpen the memory a wee bit and help in recalling what is important—the briefings also provide a signpost to further excellent information.
I am aware of the importance of pubs in my constituency, as all hon. Members will be. In rural areas in my constituency, more often than not the pub is the central focus of attention for meeting, entertaining and eating—just somewhere to meet. The importance of pubs cannot be underlined too strongly. I think it was just a few weeks ago, perhaps just before Christmas, that there were pubs closing. The rate of pub closures across the United Kingdom of Great Britain and Northern Ireland is alarming. I think that the pubs code and the Pubs Code Adjudicator are part of a methodology to try to hold back the tide of closures, so it is important that that is in place.
There was a community project where a collective got together and used their own investments to restart their pub with a major refurbishment. They did so for a purpose. They recognised that the community had lost something important and they wanted to reinstate it. Pubs are important in contributing to the economy and providing jobs, and as focal points for leisure and meeting.
It seems to me that hon. Members stepped in to stop the monopoly that was affecting small pub tenants. The spirit of the law under the pubs code was to allow a tenant to request a quote from their pub-owning company for a rent only agreement when their tenancy was due for renewal. We also established a position whereby there could be arbitration and mediation to ensure that the spirit of the law was being followed. That job lies squarely in the hands of the Pubs Code Adjudicator. Members have outlined credible and legitimate concerns, and we look to the Minister, as we often do, for a comprehensive response. Questions have now been asked as to whether the adjudicator is impartially fulfilling the role. In a few cases, the professional arbitrators body has stepped in to ask for someone else to arbitrate. Sometimes we must ask why something is happening: is there a failure in the present system? Some Members have set out a case that there is. The Minister must deal with that in his response.
I believe that the spirit of what we strove for was giving the little man or woman a chance. That might not mean every case being granted, but it does mean every case being fairly considered. Perhaps that means that the involvement of a third person is needed. I stand by the bringing in of a deputy to take up the cases that are questionable or that need to be reviewed or looked at again. That is what the spirit of the law has been. No man in this world is infallible and we all understand that we must submit to allowing others to step in at some stage to give oversight to something if there is a different way of seeing it or a clearer way to understand it.
As an example of such a difficult issue, if a lady came to the constituency office for help with serious intimate problems, she might prefer to speak to one of the girls in the office. Anyone would know what to do: set themselves aside so that they could do that. Why cannot that happen in the present difficult matter as well? I have no issue about handing such a case to one of my capable staff, who understand the issues very well. The best interest of the people in the case is most important. That is the view to take.
We must look at what we sought to achieve and find a way to bring that about practically. That is what I support today, and what other right hon. and hon. Members have argued for. Just as an auditor would be entitled to audit my affairs, they must be open to having what they do audited. That is true accountability. Each one of us is ultimately accountable to someone. That was the spirit of the pubs code—to help the little man or woman. Let us uphold that spirit today.
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on bringing to the Chamber an important debate that affects many people’s lives.
Having managed bars during my career, I want to say a few words for the people who work in pubs and the hospitality industry. It can be a difficult and demanding job, but also very rewarding. All those people put in a shift and a half on many occasions, and do us proud, regardless of which nation of the UK they work in.
The hon. Member for West Bromwich West talked about difficulties with the adjudicator in England and Wales. He went into welcome detail about the challenges for operators—unfair expenses and difficulties in getting market rent. There were many things for the Minister to respond to. The impartiality of the operation is also an important factor to take on. The hon. Gentleman mentioned the onerous conditions placed on publicans, which I think will ring true for people who have been in such a difficult position.
The hon. Member for Chesterfield (Toby Perkins) said that the imbalance between powerful pub companies and people who are trying to run pubs is an historic market failure, which it is.
Obviously, we have introduced the code of practice—the hon. Gentleman has heard about some of the issues with its implementation, which hopefully Scotland can learn from. He will be aware that in the 2010 to 2015 Parliament, Scottish National party MPs voted for that code, because even though it was England-only legislation, they hoped that a similar provision might be introduced in Scotland. Will the SNP support the private Member’s Bill when it reaches the Scottish Parliament?
I intend to cover that point, and will answer it fully in a moment or two.
I congratulate the new Minister for pubs on his remit. If he listens today and is able to make the required changes, I am sure many people will raise a glass to toast his appointment. It is pleasing to be able to agree for a change with the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont). It is a rare occurrence. He mentioned a private Member’s Bill in Scotland—I will return to that—and rightly said that the pub landscape in Scotland is different from that in England and Wales. He mentioned the importance of pubs in the community, and again I agree. In areas where pubs are successful, they make a vibrant offering to the economy. He also mentioned Burns. As he will be aware
“gude ale comes and gude ale goes”—
wise words indeed. The hon. Member for Strangford (Jim Shannon) made an important point about who audits the auditors, which the Minister should address. He also made a point about community.
On the private Member’s Bill, there is cross-party support in Scotland for looking into a statutory code, and to back that up the Scottish Government commissioned a study to look at various pub models. Work on that is ongoing, but it is looking at whether pubs in the tied sector are more unfairly treated than those in other sectors. The conclusion of the initial investigation was that, as I said earlier, it is difficult to compare the market in England and Wales with that in Scotland, because they are so different due to Scotland’s independent free trade model. The Scottish Government are currently looking into whether such legislation is required, and I understand that discussions have been continuing right up to the minute about how to take that forward.
Since the Minister for pubs is here, I wish to underline that pubs need support. In Scotland, the SNP Government are working closely with public bodies and the industry to support jobs, infrastructure and the hospitality sector. Interestingly, the introduction of minimum unit pricing, which targets very cheap alcohol, could help the pub economy in Scotland because it will prevent people from buying cheap drinks in supermarkets, and allow them to spend more time in the controlled environment of a pub. The alcohol minimum pricing is set at 50p a unit. The chief executive officer of the Scottish Licensed Trade Association, Paul Waterson, has said:
“Cheap priced alcohol has turned Scotland into a nation of stay-at-home drinkers. Some 72% of total alcohol sales in Scotland are off-sales; 80% of this total, is sold by supermarkets. When people drink in uncontrolled environments, alcohol-related problems increase significantly.”
The brewing and pub industry in my constituency has had considerable success. Cairngorm brewery is nearby, as is the Black Isle brewery. The oldest bar in Inverness is Gellions, which was formed in 1841, and the Best Bar None awards have just declared through their best bar scheme that 22 venues in Inverness have won awards for outstanding efforts in helping to create a safer environment for the public. Will the Minister look into the small business bonus that has operated successfully in Scotland? Two out of five pubs now pay zero or reduced rates thanks to that bonus, which helps their viability.
Does the hon. Gentleman recognise that, because of the reforms to business rates introduced by the Scottish Government, many pubs, including many in my constituency, have seen their business rates go through the roof? The basis on which rates are now calculated means that many businesses are paying much more than they were under the previous regime, yet they are not seeing any additional income and many pubs now face closure.
The hon. Gentleman is trying to make a point. He will also be aware that the Scottish Government have acted to restrict the increase in rates for the hospitality trade, and put measures in place to ensure that pubs and other small hotels and businesses are not disproportionately affected.
In conclusion, the Minister has an opportunity to make a big difference to the pub industry and I hope he will listen to the points raised by hon. Members about the situation in England and Wales. I also hope that he will consider other measures to support the licensed trade, and ensure that the pubs in our communities are viable.
It is a pleasure to serve under your chairmanship, Mr Robertson, and I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on—yet again—securing a debate on this topic. I did not attend the debate on pubs last year, but I did attend the one before that. I am no longer the shadow pubs Minister; that is now my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss), but sadly she has the flu and has sent her apologies for today’s debate.
I hope she gets better quickly.
I will pass on that message from the Minister.
Given that I follow the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), I will point out that my constituency includes the oldest pub in Lancashire, the Scotch Piper Inn—there is a link there of some sort. We have three microbreweries and two micropubs, the Beer Station and the Corner Post. The hon. Member for Strangford (Jim Shannon) made a good point about the importance of pubs as community hubs, and I agree with his other comments about the need for accountability in the implementation of the code.
My hon. Friend the Member for West Bromwich West set out the key issues with his usual forensic accuracy, and he mentioned the concerns about the appointment and continuation in post of Mr Newby. I raised concerns about conflicts of interest in the debate two years ago, and such concerns have continued. Sadly, the predictions about Mr Newby’s difficulty in obtaining the trust of pub tenants have been all too well demonstrated. The cases against him by the Chartered Institute of Arbitrators—that he has continued to arbitrate and has not accepted the decision, and that he is in breach of the code of conduct for a body of which he is a member—have not helped, and they continue to give the impression that all is not well with the implementation of the pubs code.
My hon. Friend the Member for Chesterfield (Toby Perkins) was modest in not mentioning his role in securing cross-party agreement on amendments to the Small Business, Enterprise and Employment Bill in 2015. The cross-party agreement had a lot to do with his work, as well as that of Greg Mulholland and other Members across the House. We had the insertion of the market rent only option, but the delivery of that is missing, as is any assurance on the intention that tied tenants should not be worse off than they would be if they were free of tie. My hon. Friend made those points extremely well. As he said, it is vital that we make this work. That is why it is so important that we are having this debate.
I will go through three points for the Minister, who I welcome to his new role. His brief is interesting and exciting, and it is important for many people across the country. I hope he is able to get to grips with the real challenges and concerns that remain. Three questions have been brought to my attention in preparing for this debate. They have been covered, but I will attempt to summarise them. First, the Government may make the point that the code is complicated and will take time to bed in. That is true, but it is overly complicated and completely unnecessarily so. As other Members have said, that complexity has allowed pub companies to use their resources and their power in the relationship—my hon. Friend the Member for Chesterfield made this point—to make it difficult for pub tenants to challenge them and achieve the fair market approach that they should be entitled to. Because of the size of the legal bills, it is simply not possible for pub tenants who attempt to use the code to come up with the necessary resources.
The second point that the Government may make is that the Pubs Code Adjudicator, through the Government, was not prepared for the huge take-up. Few staff were in place at the start, and there was a delay in putting in place a deputy adjudicator, despite the overwhelming evidence of abuse. There were 15 years of inquiries by Select Committees, as my hon. Friend the Member for West Bromwich West set out in his opening speech. The system was not set up in the right way, and it should have been.
The third point that the Government may make is about whether there has been an improvement in the financial balance between the pub-owning companies and pub tenants. Ballpark figures suggested to me are that a pub company would typically earn £90,000 from an average pub, which possibly breaks down to £20,000 in rent and £70,000 from tied products. The tenant earns just £10,000. Because of the process, the delays and the inaction from the adjudicator, it is difficult to do anything about that; but for those who try, there has been something of a change, as my hon. Friend the Member for Chesterfield alluded to. There may be a slight improvement, with a £5,000 or £10,000 reduction in the rent and an increase in the tenant’s income to £15,000 or £20,000, but that is still not a realistic living wage for someone running a pub, and the pubco is still earning £80,000 or £85,000.
The point is that legislation was supposed to leave the tenant no worse off than they would be if they were free of tie, not marginally better off than poverty levels. That is the point being made by the campaigners. I pay tribute to all the campaigners who have lobbied so hard over the years—including for this debate—advocating for pub tenants. I include in that Liverpool CAMRA, which has been in contact with me a number of times over the years.
On their own, the three areas that I have set out are grounds for the Minister in his new role to make an early commitment, today or after he has considered the debate, to carry out a proper review of the application and implementation of the pubs code and how the adjudicator is operating. If he can address that and the other points made by my hon. Friends, we will make some real progress.
I am tempted to say—so I will—that the right hon. Member for Chipping Barnet (Theresa Villiers) demonstrated a certain failure by a Government of which she was a member for some years to support a pub in her constituency. I can assure her that the next Labour Government will stand up for pub tenants in a way that so far has not happened under this Government, and that will not happen unless they make the changes touched on in this debate. I was grateful to the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) for pointing out that in Scotland, Labour is at the forefront of introducing a pubs code north of the border.
It is a cross-party position.
Well, there is a Scottish Government of one minority party. Perhaps they will learn from what has happened here and get the implementation right.
We want to hear from the Minister, so I will make only a few further remarks. Tenants’ experience has revealed the process to be drawn out and complicated. Many have to turn to professional legal support, which is expensive and time-consuming. Most worryingly, there have been suggestions that the pubcos are knowingly gaming the code to make it more difficult for tenants to achieve market rent only. That essential plank of the pubs code sought to redress the balance between pubcos and pub tenants.
The adjudicator’s own independent report on the allegations suggested that pub-owning businesses may be operating the code in a way that makes it hard for tied pub tenants to access their MRO rights. It revealed the shocking lengths to which some pubcos go to wear down tenants, including intimidation, bullying and antagonistic, delaying and frustrating behaviour. Tenants are often given terms that make MRO appear as unattractive as possible, such as being arbitrarily forced to provide six months of MRO rent up front. Some pubcos have refused to allow the deed of variation of lease, thus forcing tenants who want MRO to agree a new lease under unfavourable terms. That is pretty damning. I give credit to the adjudicator for carrying out that review, but it is what he does with it and how quickly he acts that matters.
There is identified failure in the full implementation of the code, and Parliament’s intentions have so far not been followed. I look forward to hearing what the Minister has to say, and I thank Members for their comments. I hope he can give us a proper assurance that there will be the action that is needed, and not just words.
It is a pleasure to serve under your chairmanship, Mr Robertson. I very much thank all Members who have spoken, particularly the hon. Member for West Bromwich West (Mr Bailey). I make clear that I was gesticulating to the shadow Minister, the hon. Member for Sefton Central (Bill Esterson), simply because I wanted the time to be able to go through the points he was raising. His comments, like those of everyone else, were extremely useful. I will do my best in the time allocated, conscious of the fact that I need to give the last word to the hon. Member for West Bromwich West, who secured this debate on a serious matter.
I was made the Minister with responsibility for pubs just this week. One can never say in politics that something is not a temporary job, but pubs are part of my portfolio—I accept that the shadow Minister is here because of the sickness of his colleague, and he dealt with that extremely well, as he always does—and I want to learn. Today’s debate is part of the learning process. The Government remain fully committed to the pubs code, because we intend to ensure that tied tenants can operate in a fair environment that allows their businesses to thrive.
Many Members, but in particular my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont), went through what the Government are doing to support pubs. The announcements in Budget 2017—the freezing of alcohol duty and the extension for another year of business rate relief for pubs valued under £100,000—are important, but we are here to discuss the pubs code.
The pubs code regulates the relationship between more than 500 tied pubs in England and Wales and their tenants, and there are six pub-owning companies involved. In total, 11,500 tied pub tenants are covered by the pubs code, so it is quite a lot, given that it is comparatively new.
We all know the principles, which I do not have time to go through. The code was intended to ensure fair and lawful dealings by pub-owning companies in relation to their tied tenants, and that those tenants should be no worse off than if they were not subject to any tie. It is now 18 months old. The shadow Minister asked whether the Government would carry out a review. That was an important point, but the legislation makes it clear that the Secretary of State will carry out a review of the pubs code and the performance of the Pubs Code Adjudicator every three years, with the first review period running from July 2016 to March 2019. That does not mean that I am avoiding anything, but the law is very clear. We will not just ignore the situation until that time, and I am very conscious of the points the hon. Gentleman made.
The tenants are engaging with the Pubs Code Adjudicator, Mr Paul Newby, and his office. His role is very clearly to oversee the pubs code, and to encourage and monitor compliance by the businesses in scope. He has the enforcement powers to arbitrate individual disputes concerning the pubs code. It is still early days, but I can see that individual tenants do not have confidence in that approach, given the many people in the Gallery today and the comments that have been made by hon. Members, reflecting what they have been told by pubs in their constituencies.
I hope many people have confidence in the PCA’s decisions. Some tenants have reported publicly—I looked at the reports before the debate—that PCA decisions have left them better off. However, I would be very ignorant, blind and deaf to what has been said today if I said that everything is fine. I realise that there is a problem. Many hon. Members in the Chamber have spent a lot of time and effort getting the legislation to the stage that it is at today and monitoring its implementation. I do not intend just to say that everything is fine. I recognise the points made about the PCA’s performance.
As a result of today’s debate, I read the correspondence between the PCA and the hon. Member for Leeds West (Rachel Reeves), the Chair of the Business, Energy and Industrial Strategy Committee, with whom I dealt many times when working on my previous portfolio and for whom I have a lot of respect. I read the letter that she wrote to the PCA last year. There are key concerns about the speed of the arbitration process. Clearly, the PCA’s office has faced far greater demand than predicted, and the number of referrals has been significantly greater than was foreseen. At the PCA’s request, we have taken action to build up the team. The appointment of a Deputy Pubs Code Adjudicator, Fiona Dickie, who started at the beginning of November last year, has been mentioned. She is supporting Mr Newby in enforcing the pubs code, including arbitrating individual disputes. If it is under-resourced, it is our job to ensure that that is not the case. The PCA seems to be very conscious of that matter, and has not as far as I know asked for resources that have not been given.
The statements of principle on clauses mentioned by my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) seem to me a very good idea, and I will look into that straight away. Officials may tell me that it cannot be done for some reason, but it seems to me, on the face of it, to be a very good idea to look into.
I am very conscious of time, Mr Robertson, but on the arbitration point, the PCA has received 225 cases for arbitration and accepted 186 as valid referrals. Of the accepted cases, 165 related to the market rent only tenancies that have been mentioned today. The PCA has issued 93 final awards. The fact is that Parliament chose arbitration as the means to resolve such disputes under the pubs code. My right hon. Friend the Member for East Yorkshire (Sir Greg Knight) asked why it was always in confidence. Arbitration, by definition, is a confidential process—that point was made later in the debate. We do not see individual cases. It is not right that the Government should see such cases such as that of Gary Murphy, the constituent of my right hon. Friend the Member for Chipping Barnet, because that is not how an arbitration system works. That does not take away any comments about the merits of the case, but it is not right that we, as the Government, are in a position to second-guess the arbitrator’s result. That is just how the system of arbitration works, but hon. Members might feel that it is not the right system.
The PCA has already published 40 products on its website, which I looked at before the debate. It provides a lot of information and guidance on the pubs code and PCA activities. As has been mentioned, it published the result of a verification exercise to understand the tenant’s experience in applying for MROs. When that was published, the PCA undertook work with the pub companies to inform the development of a compliance handbook that was published just before Christmas, setting out minimum standards for pub companies to comply with the pubs code MRO requirements.
The point about the lack of enforcement was a valid one. Perhaps on another occasion I will be able to go into greater detail, when I have more time. The PCA has set out his approach to investigations and enforcement in statutory guidance, and stands ready to take further action.
On the conflicts of interest point that was made about Mr Newby, the Secretary of State explained to the BEIS Committee that the appointment process was in full accordance with the code of practice for ministerial appointments to public bodies. I cannot comment on this one in particular, because I was not involved in it, but I have seen that practice for many other appointments that I have been involved in as a Minister. The process is very thorough, and I cannot believe that things were not disclosed and not considered properly. The panel concluded that Mr Newby had no particular conflicts of interest that should call into question his ability to do the job. I know what hon. Members meant—they are being very graceful in not chuntering—but there were proper processes.
The Government support the pubs trade. In the short time remaining, I would like to say that I have never met Mr Newby. I intend to send him a copy of the Hansard report of today’s debate when it comes out tomorrow, and ask for a meeting with him—perhaps in two or three weeks, to give him a little time—where he can provide answers to the specific questions that have been raised. After that, it is my intention to speak again to the hon. Member for West Bromwich West, and ask him to attend a meeting with me to go through those responses.
I belatedly welcome the Minister to his new role and portfolio. I do not envy him trying to grasp the ins and outs of the issues surrounding this topic, which some of us have been dealing with for many years. Having seen him perform before, I am confident that he will demonstrate both the commitment and competence to address our concerns properly and effectively.
A couple of things emerged from the debate, the first of which is the enormous expertise within the ranks of the House. I refer particularly to my hon. Friend the Member for Chesterfield (Toby Perkins). Without his actions in 2015, we would not be as far as we are in the debate, and I think that deserves formal recognition, as does the work of Greg Mulholland in the past. I also thank my hon. Friend the Member for Sefton Central (Bill Esterson) for his prosecution as locum for the other shadow Minister, my hon. Friend the Member for Sheffield, Brightside and Hillsborough (Gill Furniss).
I welcome the assurances given by the Minister, and would be very happy to work with him whenever I can to ensure that the issues that have been raised today are addressed. On the point about conflicts of interest, I was open-minded, but I think that the decisions of the Chartered Institute of Arbitrators and the implications are serious. I ask him to examine those very carefully.
Question put and agreed to.
That this House has considered the application of the Pubs Code 2016.
RBS Closures (Argyll and Bute)
[Sir Henry Bellingham in the Chair]
I beg to move,
That this House has considered RBS branch closures in Argyll and Bute.
It is a pleasure, as always, to serve under your chairmanship, Sir Henry. The Royal Bank of Scotland’s decision to close 62 of its branches in Scotland—a decision that will leave 13 towns in rural Scotland without a single bank—is, in short, a disgrace, and will inflict further long-lasting reputational damage on the Royal Bank of Scotland. For it to have announced the decision to close almost one third of its branch network so callously, without even the courtesy of a consultation period with the communities involved, is quite frankly appalling. For a Royal Bank of Scotland spokesperson to respond, when asked why it did not consult before announcing the closure plan, that “we are not required to consult communities in advance” just shows the contempt in which we customers are held.
One would have thought, hoped and certainly expected that having been bailed out by the public purse to the tune of £45 billion, the Royal Bank of Scotland would have exercised a degree of humility before steaming full speed ahead with a closure plan on this scale. One would have thought, hoped and certainly expected that, being 73% owned by the public purse, the Royal Bank of Scotland would have consulted its largest shareholder before making this shameful announcement, which will cause long-lasting damage to communities across Scotland, both urban and rural.
I would be interested to learn from the Minister if Royal Bank of Scotland management ever consulted the UK Government ahead of the announcement. If it did, what advice did the UK Government give the Royal Bank of Scotland regarding its bank closure programme?
My constituency faces the loss of four branches, not only in Inverness but in the thriving tourist towns of Grantown, Aviemore and Nairn. Does my hon. Friend agree with me and the Federation of Small Businesses, which has said that this is bitterly disappointing news for not only people, but businesses in the highlands that will now have difficulties with cash transactions?
My hon. Friend is absolutely right. That is a point that I will come to with some vigour later. The decision of the Royal Bank of Scotland to turn its back on so many of our communities, particularly those where it is the last bank in town, despite an earlier promise not to do such a thing, is a scandalous abdication of its social responsibility to rural Scotland, and to those people who were forced to keep it afloat when it threatened to sink without trace during the financial crisis a decade ago.
My hon. Friend is making an excellent case. In my constituency, we are losing a branch in Kilwinning, Kilbirnie and Saltcoats. Does my hon. Friend agree that the Royal Bank of Scotland appears to have totally misjudged the public mood, and does not understand the deep sense of anger about the fact that while it is publicly owned, there is no sense of social responsibility or financial inclusion in these decisions?
My hon. Friend is absolutely right. If the Royal Bank of Scotland was not aware before of the anger that this has caused across Scotland, it is very aware now.
It has been well documented that in my Argyll and Bute constituency, RBS plans to close three branches, in Campbeltown, Rothesay and Inveraray. I cannot begin to describe the sense of anger and the growing hostility in those towns, and right across my constituency, at the decision to close those local branches. My constituents are well aware of the hardship that the closures will cause across our communities. It is that anger and burning sense of injustice that has led so many of them to sign my parliamentary petition, which I launched just before Christmas. In Inveraray, Rothesay and Campbeltown, there is not one shop that has refused to take a petition to gather local signatures. I have the petitions here, and will be lodging them on the Floor of the House in the very near future. That is testament to the anger felt across Argyll and Bute at this callous closure plan.
It further underlined the annoyance to see the Prime Minister wash her hands of the situation at Prime Minister’s questions today, following a question from my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). Surely the chairman of the Royal Bank of Scotland cannot be gliding on to BBC’s “Question Time” ignoring this issue? Ross McEwan cannot continue ignoring invites to meetings. These people, with their salaries, should show respect to the people and justify what they are doing. The UK Government should make sure that these people are not making monkeys of them, either, and should ensure that they go.
My hon. Friend makes a very powerful case. Like the Royal Bank of Scotland at the beginning, the UK Government have underestimated the sense of anger within our rural communities. We must keep up the pressure on the UK Government to act, and act swiftly.
The hon. Gentleman is making a very powerful case, much of which I agree with. In my constituency, I am losing six bank branches. I suspect the anger in my communities is equal to what he is experiencing in Argyll and Bute. Does he share my concerns that the bank is putting too much additional pressure on the post office network, which I do not think has the capacity to deal with that extra custom? Post Office Ltd is saying one thing about what the network can deliver, and post office operators are saying something very different.
The hon. Gentleman is absolutely right. The idea that the post office network in our rural communities can somehow pick up the slack on this is nonsensical. It is an absolute fantasy and it will not work.
Without any consultation whatever, RBS has decided that people in Campbeltown who wish to continue banking with it must now endure a 175-mile round trip to Oban. Alternatively, they could drive an hour to Claonaig, take a 30-minute ferry to Lochranza on Arran and drive over the hills for 40 minutes to bank at the branch in Brodick. RBS customers on the Isle of Bute, in order to remain RBS customers, will be expected to take a ferry to the mainland, get off at Wemyss Bay and drive or get a bus to Largs. No matter which way one looks at it, a visit to the nearest branch of RBS for customers in Campbeltown and Bute will be a day out of their lives.
Worse still is the position of the people of Inveraray. The closure of the RBS branch in Inveraray, despite previous assurances that RBS would not close the last bank in a town, means that there will be absolutely no banking facilities in that town at all. It borders on the unbelievable that a town such as Inveraray, with a booming tourist industry and three good-size hotels, and boasting numerous cafés, bars, restaurants and high-quality clothing outlets—a town that has an estate and a castle that is a magnet for tourists—will be left without a single bank. The Inveraray-based author and journalist, Marian Pallister, who launched her own online petition against the closures, was spot on when she said:
“The Inveraray branch is used by businesses, individuals and charities throughout Mid Argyll. Online banking is not a valid alternative in many rural areas and now businesses and charities will have to make a 75-mile round trip to the nearest RBS branch. Inveraray is a tourist hub and while this closure disadvantages local people, it is a death sentence for the local tourist industry”.
I agree with much of what the hon. Gentleman says. I do not represent an area that is losing branches, but I represent the headquarters; RBS is based in my constituency. Does he share my disappointment that RBS appears not to have researched whether the areas where it is closing branches were the same—or not the same—as those with broadband blackspots? The facilities that these areas need to replace the bank have not yet been rolled out to them.
I absolutely agree. It is a double whammy for so many of our rural communities. Whether RBS likes it or not, there are still plenty of people who rely on a local, accessible bank in their town or village: the elderly, who still depend on an over-the-counter banking facility; people with learning difficulties, who have built a relationship with bank staff and trust them to help with their banking needs; small shops and businesses—of which we have an abundance in Argyll and Bute—that still primarily use cash; and, of course, foreign tourists, of whom we have a plentiful supply in Argyll and Bute, looking for a cash machine or the ability to change currency, for which a local bank is essential. Moreover, as the hon. Lady said, people do not yet always have sufficiently reliable broadband to bank online, and let us not forget that some people still do not want to bank online. Every one of those groups will be affected.
I thank my hon. Friend for giving way once again; he is being very generous. He makes the point very powerfully about access for people in rural communities, and for those who are disadvantaged in different ways. Online banking just does not cut it. For example, people cannot get cash from their computer, and when the branches go, so do the cash machines, which further disadvantages businesses and people in our communities. Does he agree?
I absolutely agree, and I find it utterly bewildering that the work was not done—or, if the work was done, that the Royal Bank of Scotland did not reach that very obvious conclusion.
Let me be clear: I have no doubt that the number of people accessing their local branch is falling, but I question the way in which RBS has collated the numbers. It is twisting and manipulating them to make them justify a predetermined case for branch closures. The Royal Bank of Scotland appears to have a pretty unique way of calculating the number of customers accessing its branches. My right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) said in the main Chamber just before Christmas that
“RBS is trying to create a picture of these branches as a relic of the past”—[Official Report, 18 December 2017; Vol. 633, c. 883.]
RBS is saying that “demand for branch banking” has declined to such an extent that customers are abandoning branches in their droves.
I will make some progress before I give way again.
Using RBS’s own statistics, however, my right hon. Friend the Member for Ross, Skye and Lochaber showed how misleading those numbers are. He explained that the justification given by the Royal Bank of Scotland for closing a branch in his constituency, in the town of Beauly, was that only 27 people a week used it, yet the Beauly branch has almost 3,500 customers and processed 29,000 transactions last year; 29,000 transactions from just 27 customers does not seem right to me. As I said, I cannot help think that the figures have been calculated in such a way as to simply justify a pre-planned closure.
If the Royal Bank of Scotland wants a meaningful, open and honest discussion about closing local branches, then let us have one, but let it be predicated on facts, not the spin and obfuscation that we have witnessed up until now.
My hon. Friend makes a powerful argument. He talks about statistics, the number of customers using banks, and those figures being used as a lever to close branches in order to cut costs, but one way of cutting costs would have been not to award £16 million in bonuses last year.
I could not put it better myself, so I will not try to. Let me be clear: there is more to these ruthless closures than the effect on individuals and businesses. As many know, Argyll and Bute is a beautiful but remote part of the country. With that remoteness come many demographic and economic challenges, but we are determined to overcome those obstacles. Argyll and Bute Council, Highlands and Islands Enterprise, the Argyll and Bute Economic Forum, Scottish Rural Action and I, along with many others, have been busy telling folk that Argyll and Bute is open for business. Together we have been actively promoting Argyll and Bute as a great place to live, work, raise a family, invest and open a business, but the Royal Bank of Scotland has kicked us in the teeth.
As Cleland Sneddon, the chief executive of Argyll and Bute Council, said:
“I believe RBS has a responsibility to those rural communities that have banked with them for generations and this decision appears to have scant regard to their particular needs…Argyll and Bute Council has called on RBS to urgently review this decision”.
Nicholas Ferguson, chair of the Argyll and Bute Economic Forum, was equally scathing:
“For the last few years, major efforts have gone into changing the depopulation trend in Argyll and Bute. To do this, we needed to create jobs and major progress has been made…But Argyll is a place of many small firms.
These rely heavily on local banking services and the plans by RBS to close their offices in three of our most important towns would be a major setback…As the UK government is the principal owner of RBS, I would strongly request that this decision be reversed.”
Those two are not alone. Emma Cooper of Scottish Rural Action, who is a constituent living on the Isle of Bute, said:
“It is our opinion that these branch closures demonstrate a lack of care and compassion from RBS about rural communities and vulnerable people, who will be disproportionately impacted by the decision, and the process by which these decisions were made was unethical.”
As the Minister can tell, Argyll and Bute is demanding action on the issue. He does not need me to remind him that there is a precedent: George Osborne, when he got involved as Stephen Hester was leaving RBS, told the BBC’s “Today” programme that
“as the person who represents the taxpayer interest...of course my consent and approval was sought”.
So there is precedent, and it is an undeniable fact that the Government have the power to intervene. It is only a matter of whether they choose to exercise that power and to get involved.
Will my hon. Friend give way?
If the intervention is extremely short.
My hon. Friend is making a very important point. Have not the Government demonstrated that they have intervened on matters relating to management of the Royal Bank of Scotland? Nothing is more important to our communities than the maintenance of the bank branch network. The Government have a responsibility and a duty to ensure that RBS recants this decision.
My right hon. Friend is absolutely right.
The Minister should be in no doubt: the people of Argyll and Bute, Argyll and Bute Council, the Argyll and Bute Economic Forum and Scottish Rural Action demand that the UK Government intervene to stop the closures. Will the UK Government choose to get involved, or will they ignore the overwhelming opinion of the people of Argyll and Bute and choose to abandon my constituents to the RBS hatchet men? My constituents want to hear from the Government that they will bring Ross McEwan to the Treasury to tell him that, in the interests of our communities, the brutal branch closures will not go ahead. Anything less than that and the UK Government will stand accused of being complicit in the shameful betrayal of rural Scotland.
In conclusion, will the Minister tell me whether RBS management consulted the UK Government ahead of the announcement? If so, what advice did it receive from the UK Government? Does he accept that the UK Government, as the largest shareholder, can intervene to stop the closure, should they choose to do so?
It is a pleasure to serve under your chairmanship, Sir Henry.
I warmly commend the hon. Member for Argyll and Bute (Brendan O’Hara) on securing this debate and speaking with such passion and determination. Let my first words be that the Government recognise how often banks are seen as an intrinsic part of the community fabric. That point has been made by several Members this afternoon, and the hon. Gentleman has reaffirmed it eloquently.
We have heard a lot about the closure of physical branches. I believe that this is the fourth time that the hon. Gentleman has raised the issue in the House since RBS’s announcement last December. I want to make clear my sincere sympathy for the concerns that he raised on behalf of his constituents and that hon. Members raised during the debate.
I reassure the Chamber that one of my key priorities as Economic Secretary is to promote and support financial services that deliver for their customers, making those services as accessible as possible. However, the hon. Gentleman must appreciate that the way we bank is going through a period of unprecedented change. Online and mobile technologies mean that customers—perhaps some of us in this Chamber—are reducing our use of high street branches quite drastically.
Will the Minister give way?
I will give way but I will be very sparing in giving way, because I do not want to run out of time to say what I need to say.
I thank the Minister for giving way. On accessibility, my constituents in Montrose have been told that they will have to travel to Arbroath, but RBS will give no confirmation that Arbroath will remain open for the foreseeable future. I agree that accessibility is of the utmost importance, but it is understandable that constituents are concerned—they do not know what the future holds for the next nearest branch.
I will come on to a number of practical steps that I think can challenge the banks’ logic and help hon. Members across the House.
We have to acknowledge the change in the way that we use banks, and the fact that banks will adapt to reflect the shift in consumer patterns. That means making tough decisions, such as modernising their services to maintain profitability. I go back to what I said two weeks ago on this spot: the decision is not for the Government, and it is important that I explain why. I acknowledge the point that has been made about Stephen Hester, but there is a material difference between the Government, as the largest shareholder, being consulted on who the chief executive is, and the day-to-day operational decisions made branch by branch. There is a reasonable difference in the level of involvement. Each bank’s branch strategy, including whether to open or close individual branches, is for the management of that bank to determine. The Government rightly do not intervene in those commercial decisions in this bank or in any other bank.
I will not take an intervention, because I need to make some progress. Likewise, the Government do not manage the RBS Group; that is headed by its own board, which is responsible for strategic direction and management decisions. By its own volition, RBS has announced a number of branch closures in line with its commercial strategy. Obviously, banks will keep a number of factors in balance when they make these decisions: customer interests, market competition and other commercial considerations. The decisions are theirs to take, but they are also theirs to defend.
I say to the hon. Gentleman who secured the debate that by bringing the matter to the attention of the House again, he is doing a very good job of challenging the bank to justify the decisions it makes. It is for the bank to do that. Indeed, two RBS executives gave evidence to the Scottish Affairs Committee on this very matter last week, and they were pressed on their rationale. I have read the transcript, and they made it clear that customer behaviour is changing and bank branch networks logically are changing to reflect that.
I am going to carry on, I am afraid, but I will address a number of points that flow from that.
The banking industry estimates that branch visits have fallen by roughly one third since 2011, and that more than one third of our adult population regularly uses mobile banking apps. The Office for National Statistics estimates that 63% of adults used the internet to bank in 2017. It is not the Government’s role to speak for RBS, but its own figures paint a similar picture of substantial change. Strikingly, I understand that RBS estimates that only 1% of RBS customers in Scotland use any of its branches on a weekly basis. I am aware that there are disputes over that, and I will address that point in a moment. The banking industry is changing to accommodate this shifting customer behaviour. However, the Government recognise that closures have an impact on customers who still need or want to bank in person. We have addressed that and ensured that measures are in place so that everyone can continue to access banking services.
The Minister said that only 1% of customers are accessing those branches. On an island of more than 1,000 people, that does not square with RBS telling us that only 13 people went into the branch. I do not need MI5 on the Isle of Barra to tell me who goes in the branch. We see exactly who goes in there. Twenty went in on the morning that RBS made that announcement. It got rid of a load of employees and hired people from an agency. Surely, as the largest shareholder, Government have to have some oversight over the cowboy behaviour that has been going on at the Royal Bank of Scotland—it is not Scotland any more.
I am grateful for that intervention, but I will not take any more. I will address how the bank can be challenged on this point in a moment.
I want to make four points in the remaining time I have. First, I want to discuss the Post Office. The Government has improved face-to-face banking services at the Post Office. With more than 11,600 Post Office branches in the UK, it offers a robust network to ensure that customers have a physical opportunity to bank locally if they choose. We should not forget that 99.7% of people live within three miles of their local post office, and 93% within one mile. We are going to experience a cultural change in the appetite and behaviours around using post offices.
Earlier last year, the UK’s banks and building societies and the Post Office reached a new commercial agreement that set the standard for the banking services available at the Post Office—balance inquiries, cash withdrawals, cash deposits and depositing cheques—to ensure that there would be a uniform level of service across the country. That agreement means that 99% of personal customers and 95% of business customers can do their day-to-day banking there.
I am aware that for the service to maximise its potential, the banks’ customers must know about it and know how to use it. That is why my predecessor wrote to the Post Office and to UK Finance last month; I am expecting a response today and I expect to see substantive commitments from all involved. We can all do our day-to-day banking at the Post Office and we should spread that message far and wide, especially to those of our constituents who may be worried about this issue.
Secondly, I will address a number of the concerns raised by hon. Members about the access to banking standard. As well as bolstering the Post Office, the Government support the industry’s access to banking standard that all major high street banks have agreed to. The standard commits banks to a number of outcomes when a branch closes: first, that they will give at least three months’ notice of a closure and explain their decision clearly; secondly, that they will consider what services can still be provided locally and communicate clearly with customers about alternative ways to bank; and, thirdly, that they will ensure that support is available for customers who need extra help. That support includes help for the digitally excluded who want to learn how to bank online, and guidance for those who regularly use branches and who need to be shown where and how to use the local post office that can help them.
I understand that RBS has undertaken substantive discussions with MPs and other local stakeholders on the future of banking in the communities affected by closures.
I am not going to give way again. Where it has not done so, it is incumbent on RBS to engage with Members of Parliament to do just that. In excess of the notice required by the standard, RBS has given six months’ notice of these closures. The access to banking standard is the practical way to shape a bank’s approach to local areas, and I encourage every Member to ensure that their community is aware and able to engage with their bank directly. The Lending Standards Board monitors and enforces the access to banking standard. It will monitor how RBS and other banks fulfil their obligations to their customers. The board can be contacted by Members of Parliament if they have legitimate concerns about the way in which the process is being fulfilled. That new and additional scrutiny is a necessary and welcome addition to the way the standard works.
Thirdly, I will address the current account switch service. Should other banks offer more extensive local facilities, the Government have made it easier than ever before to switch to an alternative, using the current account switch service. The switch service is free to use. It comes with a guarantee to protect customers from financial loss if something goes wrong, and it redirects any payments mistakenly sent to the old account, providing further assurance for customers. That means that, more than ever, banks are incentivised to work hard to retain their existing customers and attract new ones.
Finally, a number of points have been made about access to cash. I understand that RBS is considering whether an additional mobile bank branch would be required in the constituency of the hon. Member for Argyll and Bute. More widely, the Government continue to work with industry to secure the provision of free access to cash. In December, LINK—the organisation that runs the ATM network in the UK—committed to protecting all free-to-use ATMs that are a kilometre or more from the next nearest free-to-use ATM. This is a welcome strengthening of its financial inclusion programme.
I acknowledge that this is a very difficult matter, and I commend the hon. Gentleman for bringing it to the House again. I commend all hon. Members who have contributed. I believe that I have set out clearly where there are some options to challenge the banks, if they feel justified in doing so.
Question put and agreed to.
Heathrow Airport: Public Consultation
I beg to move,
That this House has considered public consultations on Heathrow airport.
It is a privilege to introduce this debate. The whole issue of Heathrow expansion is of course massive and will be debated extensively in the next six months, but I want to focus on the various consultations and ask the Minister how they fit together, how the Government are responding to them, how responsive the Government are to evidence and how far they have committed themselves to fundamental decisions.
I will refer to three specific consultations. The first is the major consultation on the national policy statement—the basic strategy document—which finished in May and was reported on by Sir Jeremy Sullivan. The second is the more recent consultation on the adaptation of the NPS, which finished in December and related to new bodies of evidence on air quality and passenger numbers. The third is the consultation that is taking place at the moment. A glossy document came through my door a few days ago, and it is probably going through hundreds of thousands of others. That raises a fundamental question, because the proposal in it is different from the Government’s. How do the proposals fit together, and how many residents in London are supposed to respond to that consultation?
I will concentrate on the second consultation, and the main document I will refer to is the response of the four councils—Richmond, Wandsworth, Hillingdon and Windsor. It is worth mentioning in passing that those councils between them incorporate the constituencies of the Prime Minister, the Foreign Secretary, the shadow Chancellor and me, among others, so they are not totally devoid of political interest. Let me focus on the two main respects in which the questions in December’s revised consultation were framed—air quality and passenger numbers—and how they change our perspective on this subject.
Air quality is important because it involves not just aesthetic considerations but matters that directly impinge on human health and mortality. We start from a position where NOx emissions and particulates are at dangerous and illegal levels according to internationally recognised standards, and the most recent evidence suggests that emissions are rising, not falling. That is the context in which we have to look at the new evidence on air quality.
Since the original NPS consultation, the Government have produced their own national air quality plan. One of the problems with that is that it does not specifically take into account Heathrow. Will the Minister say how it would differ if it did? It also does not take into account the plans of the Mayor of London, who is in the process of formulating proposals for what I think he calls an ultra-low emissions zone. There are issues with how that will be implemented, given that the Government will not give special consideration to funding it. The arithmetic of London government suggests that the Mayor’s plans for reducing emissions will be almost entirely offset, if not worse, by those originating at Heathrow.
The bigger question is whether those emissions need to be produced at all. On the basis of the Government’s original estimates, it is possible that there might be such a switch to public transport that there would not be any additional cars on the road. I believe the Government used the phrase “no more cars on the road” in the original formulation of their NPS. However, to achieve that, they would have to achieve an enormous change in modal split: something like 70% of vehicle journeys would have to be by public transport.
I thank the right hon. Gentleman for giving way and apologise for arriving just after he had started. He is right, but does he acknowledge that, according to Transport for London’s own statistics, to accommodate the projected increased traffic to and from Heathrow would cost around £18 billion? That assumes that current trends would continue—in other words, that the same proportion of people would drive to and from Heathrow. Even based on those status quo assumptions, we would require £18 billion of additional investment, which Heathrow will not pay, the Government have said they will not pay, and TfL is unable to pay.
The hon. Gentleman is absolutely right. I want to dwell a little on that £18 billion figure which, as he says, is based on rather conservative assumptions. Where that will come from is one of the big unanswered questions. The Government say that they will not provide financial support. The airport itself has come up with £1 billion towards the £18 billion, but it is already a highly leveraged company. Questions have been raised about its balance sheet, and particularly about the large-scale tax-avoidance schemes that have enabled it to finance its debt so far, so how will it raise yet more to fund the infrastructure? The only way that could happen is if the airport very substantially increased landing charges. One of the reasons why major airlines such as British Airways have turned against Heathrow expansion is that they realise that that would be a necessary consequence. The other potential source of funding is TfL, but it is highly constrained by public sector borrowing restrictions and the need to fund Crossrail, which will be a major burden on its balance sheet in coming years.
TfL has spelled out in detail how the public transport infrastructure would have to be provided, and much of it is highly problematic. It would have to go a lot further than some improvements to the Piccadilly line and the Elizabeth line. It would involve, among other things, improving southern rail access. However, as the hon. Member for Richmond Park (Zac Goldsmith) well knows, that is problematic. The southern rail route runs through my constituency and his. If the route to Heathrow ran through his constituency, there would be serious problems with prolonged closures of level crossings, and the line through Kingston and Wimbledon is already congested. It is not at all obvious how that improvement is feasible— it has not even been sketched out—and there is a big question for the Government about how it would be funded.
The other question that the revised consultation raises is about increased passenger numbers. It is important to stress that the revised figures—the Government’s own numbers, not anyone else’s—suggest that the national economic benefit of airport expansion would be significantly greater at Gatwick than at Heathrow. That is a reversal of the Airports Commission’s analysis. Do the Government accept that conclusion? If they do not, perhaps they will explain why not. If they do, how do they propose to respond? They could say, “Well, we don’t care, because we’re not really interested in national economic benefit. We’ve decided we’re going to have a hub airport.” However, that would raise two big questions: why proceed with a national hub airport if it is less economically beneficial than the alternative, and why not ask or expect Gatwick to provide its own hub facilities, which it is perfectly keen and anxious to do?
The other factual information that has emerged from the new passenger numbers is that Heathrow airport will fill up very quickly. On current assumptions, it will start in 2026 and be full by 2028. That has knock-on consequences. There will be very little resilience, the airport’s authorities will be tempted to switch from domestic routes to more profitable international routes and it will make it much easier, given the monopolistic position, to push up fares even further.
Then there are the consequences of the higher passenger numbers, which are new. There is the impact on noise, which I think is of concern to all the constituencies whose MPs are in the Chamber. The original assurance given by the Secretary of State was that, when Heathrow was expanded, no more people in London or the areas around it would be affected by noise. The current numbers suggest that an additional 90,000 will be. Again, do the Government accept that?
What is important is not simply the aggregate numbers, but how that very large number of individuals—we are now talking about 1 million people—are directly affected. That relates to take-off and landing routes and the trajectory of the aircraft. At the moment, we have no information on flight paths, which is crucial to making an informed decision on how the project will affect our constituencies.
My final point on the data is that, although connectivity is one of the major reasons why Heathrow expansion is being considered, the new data suggests that connectivity to other British cities will decline with Heathrow expansion, from eight major destinations at present to five, and will be smaller than were Gatwick to proceed. I ask the Minister to consider how the Government regard this new evidence, which casts doubt on the feasibility of the proposal.
I will round up by raising the more basic question of how the Government are approaching consultation. Have they come to a conclusion, in which case we are going through a ritual, or are they meaningfully engaging in dialogue, listening to evidence and seeing it as a genuinely iterative process? One important step is how we are to see the consultation that Heathrow airport itself is now engaging in. It is important for our constituents to understand that what Heathrow airport is proposing seems substantially different from what the Government are proposing.
One of the options the airport is looking at is moving and substantially shortening the runway. I understand why it would want to do so, because that avoids all the horrendous problems of tearing up the M25 and rebuilding it under a tunnel, with all the costs involved. If it is changed in that way, that substantially affects the noise contour; I think there are 20,000 people who would face much more intense and intolerable noise levels, many of them in the constituency of the shadow Chancellor. There is a question how that would be dealt with.
I am very grateful to the right hon. Gentleman. This is a timely debate. I have to confess that I have not received the same volume of consultative literature in the north of the borough of Ealing as he has, for various reasons. I wonder whether, among the data of the passenger and transport movements to and from the airport, there has been a disaggregation that identifies the cargo and freight movements—specifically because the economy of Northern Ireland is almost entirely dependent on cargo freight movements into Heathrow airport. I appreciate that the right hon. Gentleman is talking about passenger movements, but is there a disaggregation that identifies cargo movements to and from Heathrow?
I cannot answer the hon. Gentleman’s question, but I hope the Minister will be able to. There is a specific issue about freight, not just in the air, but on the ground. One of the contributing factors to a lot of the worries about air quality relates to freight on the ground, which is linked to air journeys.
I have one minute left for my presentation, so I will conclude by trying to probe further how the Government see this consultation. The Secretary of State said in July that the Heathrow expansion project, along the lines that were originally identified, would definitely go ahead. We are left with the question of whether that is inevitable if the evidence changes? We now have evidence based on the Government’s own numbers to suggest that Gatwick is a more economically attractive alternative. Does that matter? How much more attractive does it have to be before the Government might consider the fundamentals around the location? If the air quality evidence is so damaging, at what point do the Government reconsider their options?
Fundamentally, going back to the intervention by the hon. Member for Richmond Park, we are potentially talking about large Government subsidy if the airport is to avoid a very large increase in landing charges or funding from sources that we cannot yet identify. Is there a level of subsidy and Government funding that is unacceptable? We have new evidence, which is emerging all the time and is becoming progressively less favourable to the case for Heathrow, so I will leave this question with the Minister: how open-minded are the Government to that new evidence, and how will they progress the project?
Order. I have four Members standing, and it might be of interest to the House to know that I plan to call the Scottish National party spokesman at eight minutes past five. If you could bear that in mind, that is about five and a half minutes each.
It is a pleasure to serve under your chairmanship, Sir Henry. I thank the right hon. Member for Twickenham (Sir Vince Cable) for securing this debate. I am minded to speak positively about Heathrow expansion, but I must initially mention the issues affecting the four councils, so eloquently described by the right hon. Gentleman, which include air quality and ground-based infrastructure.
Heathrow expansion is a UK-wide issue, and the ripple effects of expansion will go far and wide throughout the United Kingdom. All parts of the UK have a stake in it, and in this consultation. The need has been clearly identified for greater airport capacity in south-east England, so that we can have not only more international but more domestic flights, including—this may be a selfish statement—to and from Scotland. In recent years, flights between Scotland and London have been restricted due to a lack of capacity. Improved connectivity would also benefit Scotland’s economy.
Expansion will allow our airports to turn that situation around, restoring services that existed previously and introducing new ones. More opportunities to get to London from Scotland and vice versa will make travel, be it for business or pleasure, far more convenient. That is why I welcome Heathrow’s commitment to a £10 million fund to support new domestic routes as part of its expansion plans. With more domestic and international flights, Heathrow expansion will help link Scotland to emerging global markets. Heathrow’s recent reduction in landing charges for domestic flights will make domestic flights more accessible, and I am convinced that it will incentivise more flights in the future.
It will therefore come as no surprise to right hon. and hon. Members that Heathrow expansion has the support of most Scottish airports. When I say most, I understand that Edinburgh airport is not enthused by it, but I think there is a commercial link between the ownership of Edinburgh and Gatwick. The Scottish Chamber of Commerce and the Scottish Government are fully supportive of the expansion, and I hope that their voices will be heard and taken on board in this consultation.
The benefits of Heathrow expansion will be felt particularly strongly by residents and businesses in Ayrshire. South Ayrshire’s very own Prestwick airport, which is not in my constituency but the neighbouring constituency of the hon. Member for Central Ayrshire (Dr Whitford), is one of six airports expected to be added to Heathrow’s domestic network by 2030 as a consequence of the third runway. Flights between Heathrow and Prestwick, in addition to being good for Prestwick, will make travel to London and around the world much easier for my constituents and for people across south-west Scotland.
I am also pleased to note that Prestwick has been included on the longlist of potential logistics hubs serving Heathrow expansion. The four successful sites will pre-assemble parts of the expanded airport for delivery to Heathrow; I am looking forward to Prestwick being selected as one of those, bringing new jobs and investment to Ayrshire. I am optimistic for Prestwick and for the Ayrshire communities, where the aerospace park is a major employer. The Ayrshire growth deal, which is in the pipeline but not coming as fast as I would like, will include plans for Prestwick to become an aerospace hub. Heathrow therefore has good reason to work with Prestwick. As a site with great access to air, road, rail and sea, it is an ideal candidate for a logistics hub, and I hope Heathrow will give due consideration to Prestwick’s bid.
It is a pleasure to serve under you, Sir Henry. I thank my constituency neighbour, the right hon. Member for Twickenham (Sir Vince Cable), for securing the debate. I also thank the Library, which released this week an excellent summary of where we are and how we got there. It is neutral, dispassionate, but factual, and pulls together all the references that we need for such a debate. I also thank the No 3rd Runway Coalition for its help in briefing some of us for the debate.
I will not cover, as we have covered between us many times before, the details of the impact of a third runway; the net cost to the economy, according to Department for Transport figures; or the increased air and noise pollution. We have had, and will have, many other opportunities in this House and other places to raise those issues. I want to focus on the current public consultation, but I will just give the context. My constituency, Brentford and Isleworth, lies immediately to the east of Heathrow airport. Two thirds of my constituents live underneath the approach path for the two runways on westerly operations, and the other third of my constituency will be underneath the approach path to the third runway, so this is a massive issue for my constituents.
I thank the hon. Lady for giving way so early. I would compliment her on her speech, but she has not given it yet, although I know it will be brilliant, because she is an absolutely stalwart campaigner on this issue. Does she agree that one problem with the consultation is that we know that hundreds of thousands of new people will be affected by noise, but we do not know which hundreds of thousands, because the Government and Heathrow have yet to tell us where the new flight paths will be, which renders the entire consultation process entirely disingenuous, if not dishonest? It is a bit like saying, “We’re going to put a new incinerator in your constituency, and we’d like to ask people their opinion, but we’re not going to say where it’ll be put.” Surely the entire basis of the consultation’s legitimacy has a question mark hanging over it.
The hon. Gentleman, another constituency neighbour, has stolen one of my key points; I will come on to that.
As I was saying, my constituents live under either the current or the proposed—or inevitable—flight paths. Also, living between central London and Heathrow, we have the traffic congestion and the associated air pollution, so this is a really big issue for us. I have been dealing with the issue for more than 15 years—before coming to this place, I was a lead member of Hounslow Council— and it feels like we have been involved in perpetual consultation. Again, the Library report lists a lot of those processes. In the autumn, there was the Government consultation on the draft national policy statement on airports, and I felt sorry for DFT staff in that consultation, because the answer to so many of the questions that local residents asked them were, “I’m sorry; I don’t know,” or, “I’m sorry; we don’t have that information yet.” I see the same thing happening with Heathrow airport staff in the newly relaunched consultation. Last week, Heathrow Airport Ltd launched its consultation on a slightly different proposal from that covered in the NPS consultation, but as far as my constituents are concerned, there is not a lot of difference.
What is clear in the Heathrow consultation is what is not clear; so little is said. I have to read out a key quotation from the consultation document:
“we have been assessing the design options for developing a scheme which meets the government’s requirements for an expanded airport, whilst responding to the needs of local communities and mitigating environmental impacts.”
That makes it look like we will see some detail, but the document goes on:
“We are still working through this process, therefore there is not yet a fixed master plan for the expansion of Heathrow.”
If it is not yet possible to map the detailed impact on local communities, what is the point of consulting right now?
What my constituents want to know is this. First, where is the approach path to the third runway? There is no reason why that cannot be mapped now, because the runway is there. We are within 6 miles of the airport, and all flights will be locked into final approach; it is basic physics. So why cannot we be told where the approach path is, how high the planes will be and how wide the approach path will be? We are not in one of the areas where there can be concentration or spreading out. We are so close to the airport that all planes have to be locked in, at least on approach. I think it is deliberate that we are not being told. The thinking is, “It’s okay, because we’re going to tell people that they are going to be underneath the flight path.” I challenge Heathrow airport or the Department for Transport to tell us that we are wrong.
There is very little information on respite. We have a marginal improvement on previous situations, in that there will be no night flights for six and a half hours, but in the real world, no night flights does not actually mean no flights overhead for those night periods. It means no scheduled night flights, but there might be emergency flights, VIP flights, medical flights and so on. There is probably a good reason for all of them, but at one of the busiest airports in the world, there is seldom a time when there are actually no flights at all during those periods, and certainly the rules are not as strict in the UK as they are in other jurisdictions.
What will the air quality implications be if there is no diesel scrappage scheme? How will a congestion charge affect the many local businesses and residents that need to travel around the airport even if they are not actually using it? What will the new transport infrastructure be? There have been many questions about that. And of course nationally we are all concerned about who will pay for this. There is no clarity on how the runway, terminal buildings and essential work will be paid for, and there is certainly no clarity or agreement on the essential traffic impacts. The issue of traffic impacts is not just about passengers or people who work at Heathrow. It is not just about freight. By the way, the aim is to double the amount of freight going in and out of Heathrow with no additional freight vehicle movements. There is no clarity about how that will work, and I challenge any transport engineer to map it.
The issue that no one ever seems to mention is the additional flight servicing. There will be 47% more flights with runway 3. That to me means 47% more journeys in and out of the airport servicing those flights. I am thinking of the catering vehicles and the long-haul flight crews, who stay at our local hotels and are bussed in. There is nothing about that, but of course it will put additional pressure on the local transport infrastructure. I can see that I do not have any more time. I have deliberately focused on the omissions from the consultation and the issues that most affect local residents in Brentford and Isleworth.
It is a pleasure to serve under your chairmanship, Sir Henry. This consultation is really just the latest consultation for Heathrow—the fruit of the poisoned tree. The issue has been heavily politicised over a long time, under successive Governments, but things really went wrong during the period of the Airports Commission. Prior to 2010, David Cameron made promises, which he then decided he did not want to keep, and we had the protracted and rather embarrassing saga of the commission stringing out the process, using assumptions that were already out of date, and producing a report that in the end said what the Government then wanted it to say and allowed them to change tack. Those are tactics that Heathrow has used for more than 30 years, and nothing really surprises me, but both the NPS consultations and the latest one are tarnished by that.
Nothing in this consultation, as my constituency neighbour to the west, my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury), has just said, tells us about flight paths. That is the key point that people want to know. Without that, it becomes an almost vacuous exercise. Yet we are not to know the flight paths, we are told, until 2021, after all the major decisions are made. There is nothing in the consultation about who will pay—particularly, as has been mentioned, who will pay the estimated £18 billion for public transport. Getting these glossy pamphlets through the door, as one does on a regular basis from Heathrow, sends the subliminal message, “This is a done deal. Get used to it. Get what you can out of it by way of mitigation.” It simply is not good enough.
The point on mitigation is interesting. We hoped that campaigns such as the one the Mayor of London is fighting; the action he is taking to improve air quality; advancements in air transport, which can lead to noise reduction; and planned improvements—such as Crossrail and upgrading the Piccadilly line—to public transport in London, would improve quality of life and enable Londoners to go about their business better, but they will all be sacrificed to mitigating the additional burdens, inconveniences and health hazards that Heathrow intends to inflict on us. Why should that be the case? Why should Londoners have to pay financially, through their health and through the inconvenience in their daily lives for this white elephant project to go ahead?
We are still talking about hub airports here, which to a large extent have had their day. There are alternatives. We are talking about London as if it was going to have a single airport, rather than a number of airports, each serving different areas, because of the size of the community in London and the south-east that they serve. It is no more than propaganda. It is out of date.
We have heard today that the financial figures have been looked at again. Let us see who we are serving here. We are serving a company that is 90% foreign-owned, that is debt-laden and that, as far as can see, pays no tax other than the VAT it pays on the sales from shops— increasingly it is a business in that way. We have opposition from the airlines that are unwilling to pay the greatly enhanced landing charges that will be levied in order to pay for this white elephant project. Everybody seems to pay except the shareholders of Heathrow Airport Holdings. Yet at the same time we are being told that Gatwick is a better option, not only, as we have always known, in relation to congestion, noise and pollution, but in terms of financial effects, both locally and on the national economy. There is very little left to recommend Heathrow as an option. Once again, as has been set out, we are going through a farce of a consultation.
I will end on that point. We will be here again, probably in another month, having another debate on Heathrow. We will be here in 10 years, wondering why London does not have additional airport capacity, as we wondered 10 years ago. The sooner the Government grasp the nettle, the better. I wait to hear with interest the speech from my hon. Friend the Member for Kingston upon Hull East (Karl Turner) on the Front Bench. Very wisely, the Labour Front-Bench team has set a series of tests and not prejudged the issue. As time goes on, we will see that those tests will not be met. I hope to hear encouraging noises from my hon. Friend, as I often do.
Will the hon. Gentleman give way?
That’s not fair.
I am so sorry; I will not give way, as there is a further speech to come. I will end on that, and I wait to hear what the Minister has to say.
I call Jim Shannon. It might be helpful if the Member was aware that I will call the Scottish National party spokesman to wind up at 5.8 pm.
Thank you, Sir Henry. I thank the right hon. Member for Twickenham (Sir Vince Cable) for bringing the issue to the House. I put on record that I am a very vocal supporter of the Heathrow extension, as is my party. We supported this to enhance the connectivity of Northern Ireland to the rest of the United Kingdom. It is for this reason that we are also, in our relationship of confidence and supply with the Conservative party, looking at the end of the air passenger duty for Northern Ireland flights, which we hope will go further than that. Certainly it is our intention to look across the rest of the United Kingdom. The hon. Member for Ayr, Carrick and Cumnock (Bill Grant) put his marker down. I am putting my marker down.
Let us be quite clear: we are not in decline mode; we are in build-up mode and we can do better. The key for us is the enhancement of connectivity in routes and flights. The Democratic Unionist party was the first political party in the United Kingdom to back Heathrow. We have always maintained that expansion will support growth in Northern Ireland and strengthen our great Union of the United Kingdom of Great Britain and Northern Ireland. More cargo travels from Belfast through Heathrow than any other UK airport. We need to continue the vital link and the supply chain between Northern Ireland’s businesses and their clients in every corner of the globe. That is a clear issue.
A 2017 report produced by the Freight Transport Association found that air cargo and night services in the United Kingdom is currently worth some £5.5 billion per annum or £20 million per working day. It estimates that the customs value of the typical export item shipped on a night service is two and half times that of standard air freight. The vast majority of the £5.5 billion, let us be clear, is achieved from productivity gains. In the wider economy, we all gain from connectivity—Northern Ireland gains and the rest of the United Kingdom gains —rather than just the operators of the service. These impacts are also spread geographically across the United Kingdom, with express and priority cargo services used by businesses based in all regions of the country. Northern Ireland is an integral part of this business and we rely on this service, the build-up in this service and the ability of the airport to carry that out at the correct times. Things go from Belfast City and Belfast International airport, to Heathrow, to the rest of the world. That is an example of connectivity. We are all gaining.
Will the hon. Gentleman give way?
I am sorry, but I am constrained by time.
The issue now arising is the question of who will pay for the £14 billion project. It cannot be the airline user in its totality, as this will clearly and undoubtedly take away from the viability of routes by upping the price and putting people off the service. I mentioned earlier about the air cargo. I had a quick conversation with a member of my staff, who was looking for the cheapest trip. That was the trip to Heathrow and it was also at night time, so for a girlies’ weekend away they were able to do that. I suggest to hon. Members here that, if they want to reciprocate and go to Belfast, we are very happy for that to happen.
The price very much indicates what happens when it comes to who pays. Heathrow passenger charges have trebled in the last decade. We cannot afford any increase. I look to the Minister for a very careful response. I support the expansion and register concern about the cost going completely to the end user. That is why I am asking the Government to step in and ensure that, as opposed to a little increase, simply no increase is acceptable.
To conclude, as a Northern Ireland MP who seems to be continually fighting to have parity with the rest of the mainland, I am fighting again for my corner of the wonderful United Kingdom of Great Britain and Northern Ireland to be allowed to benefit from this expansion and not penalised with greater charges, which put businesses off from investing in Northern Ireland due to the connectivity, and which put tourists off from sampling the beauty and wonder that is found on our shores, as many hon. Members know. I ask the Minister gently to make clear that the costs should not and must not be at the expense of connectivity for Northern Ireland. We can all gain. Let us do it together.
I now call Alan Brown from the SNP. It may be of interest to know that I want to call the Labour spokesman after five minutes.
It is a pleasure to serve under your chairmanship, Sir Henry. Hopefully I will not take the full five minutes.
I suspect that, as always with any debate on Heathrow, there is a divide between for and against. It would seem that those against would be the right hon. Member for Twickenham (Sir Vince Cable), who introduced the debate, and the hon. Members for Brentford and Isleworth (Ruth Cadbury), for Richmond Park (Zac Goldsmith), and for Hammersmith (Andy Slaughter). My neighbour the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) and the hon. Member for Strangford (Jim Shannon) spoke in favour of Heathrow expansion. I must say that I fall into the “for” camp as well because of the potential benefits it can bring to Scotland.
In supporting the principle of a third runway, air quality considerations, noise considerations and other potential neighbour nuisance aspects still need to be considered and cannot be ridden roughshod over. I look forward to the Minister responding to the issues brought forward by the right hon. Member for Twickenham. I also thought the hon. Member for Brentford and Isleworth made some valid points in terms of actually identifying what the approach paths are and making them public. Clearly, the people near the airport need to understand that and it is a valid question. The comments on respite and night flights are valid, as are the points about flight servicing requirements and how that could impact air quality. The Government need to take those aspects into account.
The SNP is in favour of the third runway because of the potential benefits it could bring to Scotland, including up to 16,000 jobs and connecting Scotland to a more global market. Ideally, the expansion will allow Scotland to open up and increase connectivity.
I am grateful to the hon. Gentleman for giving way. This is the same point that I was going to make earlier. BA has announced that later this year it will be cutting half its routes between Leeds Bradford and Heathrow. Does that not show that the economics of domestic flights and domestic connections just does not stack up? The promises on greater connectivity between Scotland and Heathrow can be delivered only with the help of Government subsidy, and as far as I know there are no promises relating to that.
I disagree. Clearly, the Government can have a role in terms of public service obligations—that can be considered. Heathrow has offered to guarantee slots to Scotland, and therefore I am not sure. In the existing climate, it is clearly much more difficult because Heathrow is so congested, hence the whole premise of a third runway to open up that connectivity.
It is clear, as the hon. Member for Ayr, Carrick and Cumnock said, that all the airports in Scotland bar Edinburgh are in favour of this expansion. Northern Ireland is in favour of it. The hon. Member for Hammersmith mentioned hub airports. The reality is that hub airports want this. In my ideal world, if Prestwick and Glasgow could expand and pick up some of these new world markets, that would be great, but they are saying that that is not a reality and that they need that connectivity to Heathrow. That is where the critical mass is—that is just the reality of the situation. I also clearly support the idea that Prestwick could become a hub in terms of service delivery for the construction of Heathrow and off-site fabrication, which would be a welcome addition to the Ayrshire economy.
On the consultation, I am aware of some of the asks of the Englefield Green Action Group on statutory noise limits, which my hon. Friend the Member for Livingston (Hannah Bardell) has campaigned for and which I support. Air quality targets obviously need to be considered. They have suggested considering targets on a reducing, tapered basis, which is reasonable, and possible Civil Aviation Authority enforcement powers for airline operational performance on matters such as ascent angles—they appreciate that Heathrow is doing a name-and-shame process with airlines at the moment.
Overall, the Government need to consider these measures and respond accordingly. They need to look at air quality and produce a coherent air quality plan that looks at diesel HGVs, transport refrigeration units and construction vehicles, which will clearly be an issue in the construction of a third runway at Heathrow and need to be considered. I look forward to the Government’s response, how they will accommodate the revised proposals that Heathrow is now consulting on and how they will take this forward in the foreseeable future.
It is a pleasure to serve under your chairmanship, Sir Henry.
I congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing this important debate. He has been a long-standing campaigner on Heathrow expansion.
The Labour party supports the expansion of airport capacity in the south-east, subject to our four tests being met. However, the Government’s draft airports national policy statement, published in October last year, and the responses to it have raised more questions than they have answered. The updated passenger demand forecasts show an increase in passenger growth, with a third runway at Heathrow to be full by 2028. The third runway will open in only 2026. That means that all take-off and landing spots will be full just two years after opening, which is a point made by the right hon. Gentleman. Does the Minister agree that that limits the potential benefits of increased airport capacity?
The NPS states that none of the cost of a third runway will fall on the taxpayer, and that it will be met by private funding. Yet it does not provide any evidence to support that. There is a reference to an independent assessment that has been carried out, but it has not been published. There seems no reason not to publish that assessment unless there is something to hide. Will the Minister agree to release that document?
The commitment that there will be no net increase in airport-related traffic is essential to ensuring that expansion is sustainable. Transport for London has estimated that to achieve that, between 65% and 69% of passengers would have to travel to the airport by public transport. The NPS sets an unambitious target of 50% by 2030, going up to 55% by 2042. TfL has said that that will lead to a substantial increase in vehicle trips on the already congested networks. Furthermore, the western rail access and southern rail access are essential for expansion, but TfL is concerned that the NPS gives no firm commitment on that. The Department for Transport has estimated that costs will be about £5 billion, but TfL puts the figure closer to £15 billion. The difference seems to be TfL costings for southern rail access.
Given the difference between the NPS and TfL estimates on both costing and public transport targets, and the fact that TfL is the highways authority and public transport authority that completely surrounds Heathrow, I find it absolutely astounding that it has been excluded from the service access steering group for Heathrow by the Department for Transport. Will the Minister explain that decision?
We all recognise that air pollution is one of the biggest health crises facing the UK, leading to an estimated 50,000 premature deaths each year. On air pollution, the Government have frankly been found wanting. They have failed to give local authorities the powers they need to protect air quality and failed to support sustainable transport. Those failures threaten not only public health, but future investment. Will the Minister take this opportunity to explain how he will ensure that legal levels of air quality will be achieved if Heathrow is expanded? What resources has he or the Government directed to that important task?
The revised NPS has increased the estimate for carbon emissions from the third runway, but it does not explain the national implications. Will that lead to the sacrificing of growth at regional airports or more challenging limits for other sectors? Can the Minister shed some more light on how the UK will meet carbon emissions targets with the expansion of Heathrow?
Noise is another area in which the revised NPS does nothing to alleviate the concerns of hundreds of thousands of people who are affected by the issue. I think that point was made by the hon. Member for Richmond Park (Zac Goldsmith). The noise assessment in the NPS uses indicative flight paths, and the actual flight paths will be published only after the decision on Heathrow’s development consent order application is made. There is no requirement for them to bear any resemblance to the flight paths published in the NPS. The revised NPS uses 2013 as a baseline, which allows the airport to bank technology changes when they should be used to alleviate the noise impacts of the airport. Given the importance of the issue, I would be grateful for the Minister’s thoughts on whether the noise assessment in the NPS gives an accurate account of the noise impacts.
The Minister will be all too well aware that right hon. and hon. Members from all parties have strong views on both sides of the argument regarding expansion at Heathrow, so any decision must be based on hard evidence with transparency. As we have seen today, many questions seem to remain unanswered.
It is an honour and a pleasure to serve under your chairmanship, Sir Henry. I greatly admire the way in which you have steered the debate to—I hope —a satisfactory conclusion and allowed a number of hon. Members with different voices to contribute. I congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing this important debate.
As the right hon. Gentleman knows—indeed, as he indicated—the consultation on the revised draft airports national policy statement closed on 19 December. I am the new Minister with responsibility for aviation in the Commons, with the rich experience of 10 days in the job and the accumulated expertise that goes with that. The debate gives me the opportunity to thank the tens of thousands of respondents to the February and October consultations.
As the debate has shown, the Government are not afraid to take controversial decisions when they deem them to be in the national interest. I note the diversity of views around the Chamber and the voices that are supportive of the Government’s strategy, as well as the concerns that have been indicated.
For decades, the UK has failed to build the capacity needed to match people’s growing desire for travel. The revised aviation passenger forecasts published in October show that the need for additional capacity in the south-east is even greater than was previously thought. There is a significant cost—tens of billions of pounds—to failing to act, and there are potential benefits to acting.
I will come to the many issues that have been raised, but I start by reiterating why, for additional capacity in the south-east, the Government’s preference is for a new north-west runway at Heathrow. The revised analysis shows that the north-west runway scheme will deliver the greatest benefits the soonest, and that it will continue to offer the greatest choice of destinations and frequency of vital long-haul routes. It has been asked how that relates to revised numbers for Gatwick, and I emphasise that the decision is not purely an economic one. It is also a question of when those benefits are delivered, the strategic nature of the location and the vastly greater volume of freight that goes through Heathrow.
That is the Government’s preference at present, but I emphasise that no final decision—indeed, no decision of any kind—has been taken on the matter. To that extent, to answer the right hon. Member for Twickenham, the Government are absolutely open to contrary arguments and considerations, within their stated preference.
Will the Minister give way?
I will finish the thought, if I may. I have relatively little time remaining, and lots of questions have been asked.
As the right hon. Member for Twickenham knows, not only is the whole process governed under statute by the Planning Act 2008, but an independent former lord justice of appeal, Sir Jeremy Sullivan, has the specific job of advising on the consultation process. That is designed to give the public comfort, and to support the importance and independence of the process.
It was found that a new north-west runway would deliver benefits of up to £74 billion to passengers and the wider economy over 60 years, and that it would offer the greatest benefits for at least the first 50 years. That will secure the UK’s status as a global aviation hub. This is a national project in the national interest that enhances the country’s ability to compete with other European and middle eastern airports. It will help UK businesses to connect with markets by delivering an additional 43,000 long-haul services from across the UK in 2040, and it will provide the kind of domestic connectivity that will fuel regional growth across the UK—the important point made by my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) and the hon. Members for Strangford (Jim Shannon) and for Kilmarnock and Loudoun (Alan Brown).
There is a wide range of views, which is why the matter has been the subject of one of the largest consultations ever undertaken and why the Government have been keen to ensure that the consultations were full and fair. Hon. Members have mentioned the enormous amount of literature that has been posted out, and rightly so; a very keen effort is under way by the Government, regarding the NPS consultation, and by Heathrow—an entirely independent, separate entity—to gather public information. On the Government side, that includes delivering 1.5 million leaflets and holding dozens of information events and other such consultations.
It is also worth noting that, as the right hon. Member for Twickenham mentioned, Heathrow airport launched its own consultation on 17 January. Of course, there are differences between the aspects on which Heathrow has been consulting and the proposals in the NPS. That is to be expected from a system that is run in a non-judgmental and independent way. That consultation is set to run for 10 weeks and will close on 28 March, with 40 public information events to be held. For what it is worth, all hon. Members should thoroughly encourage the public—those affected and those with a wider interest—to take part in it. It is the first opportunity for the public to comment on and inform the proposals of Heathrow Airport Limited directly, and potentially to shape them.
As the right hon. Member for Twickenham (Sir Vince Cable)—my neighbour—has said, we know that the economic benefits of the two options on the table are broadly in the same area, in terms of connectivity. Heathrow is already the most polluting airport in Europe, and it will become more so. It is the noisiest airport in Europe, and it will become more so. It is the most expensive option, and the most legally difficult to deliver. Does the Minister at least understand why people who question the Government’s decision suspect that it may be born not of a rational process of elimination, but of a form of crony capitalism? It is hard to understand why the Government would opt for the option that has so little going for it.
Given the minuscule amount of time remaining and my desire to allow the right hon. Member for Twickenham to speak at the end, I will be very brief. I absolutely register my hon. Friend’s point. Air quality has been extensively discussed today. I remind him that the Government have assessed the impact of the Heathrow north-west runway scheme on the air quality plan. Within that analysis, it appears to be compliant, and that is before taking account of any mitigation measures that Heathrow could apply. That is the basis on which the Government are proceeding.
I will pick up on a couple of other quick points in the minute or so that remains to me. There has been some concern about different costings over surface access. The Government do not recognise TfL’s numbers, which appear to include schemes that are not directly related to Heathrow. The infrastructure contribution that the Government make will be related not to the airport, but to the other incidental benefits that transport has for users.
In response to the hon. Member for Ealing North (Stephen Pound), it is worth mentioning that he should recognise that Heathrow is substantially better equipped to handle cargo volumes. To take non-EU cargo alone— the wider world, as it were—Heathrow handled about £130 billion of cargo to those countries in 2016, compared with less than £1 billion out of Gatwick. Such significant differences play a part in the wider economic picture that is being built up.
Finally, on the detail on flights, proposals to change the UK’s airspace need to follow the Civil Aviation Authority’s airspace change process, which is the regulatory process that the Government have adopted. It is not in the Government’s hands to vary that in this context. As with other aspects, we will follow due process.
I will wind up quickly. I thank hon. Members, who have given their diverse views and argued their cases extremely well. I want to reiterate a few points. As far as the responsiveness of the Government is concerned, I am gratified that the Minister said in his concluding remarks that they still have an open mind. Many past comments cast some doubt on that. I am also grateful that the hon. Member for Kingston upon Hull East (Karl Turner) said that the Opposition are approaching the issue pragmatically and in terms of tests, and that they have not come to a final conclusion on it. Those responses give me some encouragement that there is a lot more to argue for.
I emphasise the basics of the argument: the NPS revisions—the new round of evidence that has been produced—point clearly to the fact that the Minister’s initial comment is simply wrong. There is no suggestion any longer that this is the best economic option; it clearly is not. The Government’s own figures and analysis show that Gatwick would be better for the national economy. As the hon. Member for Richmond Park (Zac Goldsmith) said in his last intervention, it is not just that Gatwick would be better for the national economy, but that Heathrow would be far more polluting, would have a far more damaging noise impact on people under the flight path and would be very much more expensive for Government and passengers. I welcome the responses that we have received.
Question put and agreed to.
That this House has considered public consultations on Heathrow airport.