Wednesday 21 February 2018
[Mr Virendra Sharma in the Chair]
Leaving the EU: No-deal Alternatives
I beg to move,
That this House has considered alternatives to a no-deal outcome in negotiations with the EU.
It is a pleasure to serve under your chairmanship, Mr Sharma.
Up until now we have focused on the binary choice between the Government successfully achieving a good Brexit deal or a departure on the terms of the World Trade Organisation that almost nobody wants. That stands in stark contrast to the promises of senior leavers prior to the referendum. We were promised that Britain would have access to the single market and told that the idea that our trade would suffer is silly. Now we face leaving the single market and, in the worst-case scenario, on WTO terms. We were promised that there would be no change to the border between Northern Ireland and the Republic. Now we see that there are huge uncertainties about the issue of the Irish borders, with a few hon. Members even going so far as to criticise the Good Friday agreement.
We were promised that an EU trade deal would be the easiest in human history. Now we see just how ambitious that claim was. This is why I am calling this debate: we were promised a smooth and simple exit from the EU, and instead we have complexity and the risk of chaos. It is even more important now in light of the leaked letter from a small minority of my colleagues. These hard-line Brexiteers have a very strange view of what WTO rules or terms would mean. This is in marked contrast to the views of the vast majority of my colleagues, who would prefer to assess all the options available.
First, I would like to outline why a no-deal or WTO-terms Brexit would be quite so chaotic. A WTO-terms hard Brexit is greeted by some of my colleagues with considerable sangfroid. My right hon. Friend the Member for Wokingham (John Redwood) told the “Today” programme last year that
“we will do just fine”
if we leave on WTO terms. He was joined earlier this week by my right hon. Friend the Member for Clwyd West (Mr Jones), whom I see in his place, who told the Daily Express:
“I’m entirely happy to continue trading with the EU on WTO terms.”
I am afraid that I and many others are not entirely happy with this. Some 43% of UK trade is with the EU and I am not willing to see that prosperity put in jeopardy. It would be economically catastrophic to simply walk away from the negotiating table, crashing out.
Crashing out with no deal would lead to a reduction in EU trade of between 40% and 60%. That translates into between 4.8% and 7.2% of GDP. The impact of new tariffs on our trade would be hugely damaging. Around 45% of UK exports of goods and 54% of UK imports of goods would become newly subject to tariffs. While the simple average tariff is 5.1%, in some sectors this can be much higher: for dairy products—a key sector for my constituency— it is 39%; for preparations of meat and fish it is 40%; and for cars it is 10%. Tariffs would drive up prices for ordinary consumers. A Credit Suisse report last year said that food prices could rise by 8%, with UK dairy warning of a staggering 51% increase in the cost of Cheddar. Credit Suisse also said that car prices could rise 15% and predicted a 20% drop in sales as a consequence.
Non-tariff barriers would also have a significant impact on industries where the supply chain is deeply integrated across borders. A KPMG study for the Dutch Government cites a number of concerns. It estimates the costs of customs formalities to be between €78 and €126 per shipment. These costs would likely be passed on to consumers in addition to tariff costs. They also have concerns about the capacities of ports, both here and on the continent, stating:
“Even brief delays will probably lead to long queues at terminals in the Netherlands and the UK.”
This is not just a matter of physical capacity either, as we will need to ensure that our workforce develops customs expertise that has not previously been necessary. There are also questions about the capability and capacity of regulatory authorities. A National Audit Office report last year estimated:
“The number of decisions that have to be made over whether to permit people and goods to cross the border could increase significantly (potentially 230% and 360% respectively).”
I will make one final point about the border. There has been a recent push to suggest that an EU-UK hard border in Northern Ireland would not be an issue, as technology would solve every problem. These advocates cite the US-Canada border as an exemplar. I cannot agree. I refer colleagues to the evidence heard by the Business, Energy and Industrial Strategy Committee in which Dan Mobley of Diageo said explicitly:
“It is not completely frictionless.”
If the Government are convinced that this is an approach that can work and meet the need for a frictionless border, I would press Ministers to publish detailed plans of how it would work. Overall it is easy to see why the Treasury estimates that the cost of a WTO-terms Brexit would be around 8% of GDP over the next 15 years. It is also easy to see why it is important that we assess the alternatives to this disastrous course of action.
I congratulate my hon. Friend on securing this debate. Does she share my concern about not only the potential of tariffs, but the fact that the WTO is unsatisfactory in many other ways? For example, it is simply non-existent or silent on swathes of industry, including the aviation sector. It is either WTO or nothing, but in the aviation sector, for example, there is not a default to WTO. That is the same in several other industry sectors and that is causing alarm and concern for business.
I absolutely share my hon. Friend’s concerns. There are concerns in relation to intellectual property and the vast majority of our service industry, which is a huge contributor to our balance of trade. He is quite right to outline the deep flaws that a WTO Brexit would bring.
The most preferable option in terms of a Government deal is the Government successfully completing their negotiation with the EU and securing the “deep and special partnership”. I support the Government’s work and the comments by the Brexit Secretary in his speech yesterday that we need to ensure a broad base of mutual recognition of standards. Without those, we would risk many of the drawbacks that we would face under a no-deal Brexit, especially with regard to the non-tariff barriers that are in fact the biggest concern for our economy. However, I press the Government to ensure that the service sectors are included in the deal that they strike. Services make up nearly 80% of our economy. Service industries such as legal services, insurance services, consultancy services, the music industry and the aviation industry contribute to our balance of payments surplus in service trade with the EU. A failure to strike a deal could cost us about 75,000 jobs and £10 billion in tax revenue.
Some hon. Members may think that simply remaining in the EU is an option. Rather than pressing for this currently unachievable choice, I would encourage hon. Members to see if we can deliver a Brexit that removes us from ever closer union and the political institutions of the EU, while seeking to maintain our prosperity and our trade links, which brings me on to my final option. This final option is the one that, aside from the Government’s plan, would be the best for Britain. Re-joining the European economic area/European Free Trade Association would be a bold step towards preserving our prosperity and provide many answers to the questions that are currently vexing Ministers.
EEA-EFTA would give us access to its free trade agreements spanning 27 countries. EFTA has free trade agreements with, among others, Turkey, Canada, Columbia, Mexico, Egypt and Israel. There are ongoing negotiations with India, Indonesia and Vietnam. These agreements, as well as EEA membership, would give a market of over 900 million customers for our products and services.
I congratulate my hon. Friend on securing this important debate. Is she proposing EFTA-EEA membership as a transition or a permanent safe harbour?
I am proposing a permanent safe harbour. If we went into EEA-EFTA, we would have an opportunity to shape and influence that trade body going forward. It delivers what many of my constituents originally voted for in the 1970s, an economic free trade area, but its great benefit and advantage is that it removes us from the ever closer union, which is what many of my constituents who voted leave were concerned about.
Will my hon. Friend give way?
I will give way to my hon. Friend the Member for South Cambridgeshire (Heidi Allen), and then to my hon. Friend the Member for Carlisle (John Stevenson).
At the end of the day we have to try to find some peace on both sides of this argument. This could be the common market. It could, in some ways, be what many people who voted leave were hoping that we would go back to, and it could actually be the best compromise for everybody.
I completely support and endorse my hon. Friend’s comments.
My hon. Friend the Member for South Cambridgeshire (Heidi Allen) raised my question. In the referendum our country was divided between 52% and 48%. Does my hon. Friend the Member for Eddisbury (Antoinette Sandbach) agree that the EFTA solution potentially unifies those two groups?
I certainly do. It delivers what many people voted for, which was to leave the political institutions of the European Union while continuing our prosperity and building on our common links with the European Union. It would enable us to be in that common market that so many people originally voted for, with all the benefits that it entails for our businesses and constituents.
My hon. Friend makes a powerful and compelling argument. Does she agree that we cannot ignore the fact that we are now 20 months down the road from the referendum? Whatever people might have voted for in the referendum, the reality of our current negotiating position will have to dictate the public’s acceptance of what we are eventually able to deliver. To simply live in the past as to what people’s views were in the middle of 2016 is to fly in the face of the reality of the evolving picture at a European level and what we can in practice achieve that is best for our country.
I am grateful for my right hon. and learned Friend’s intervention. He calls to mind the comments of Bismarck, who said that
“politics is the art of the possible.”
It is my view that this is a possible and realistic achievement. It should be the Government’s plan B. We should be looking at this option as a realistic alternative. I cannot understand why, when we talk about a no-deal Brexit, we discuss only WTO rules and this eminently sensible, common-sense option, which would help to preserve economic prosperity in this country but deliver leaving the EU’s political institutions, is not treated with more seriousness by the Government.
My right hon. and learned Friend has rightly made the point that we are 20 months into the negotiations. We need to ensure that our plan B is credible and deliverable in a way that does not damage this country’s future, our shared values or the prosperity with the EU that has delivered for us over our 40 years of membership. The EFTA option gives us a huge opportunity not to throw the baby out with the bathwater, which nobody voted for.
As my hon. Friend knows, membership of EFTA-EEA connotes membership of the single market, which was rejected by the British people when they voted to leave the European Union. Is it her proposal that membership of EEA-EFTA also be put to the British people in a referendum?
I am interested by my right hon. Friend’s comments. The quote that I referred to at the beginning of my speech—
“Britain will have access to the Single Market”—
came from the Vote Leave paper, “‘Leave’ looks like...”. So I would argue that the British public were promised that we would stay in the single market by Vote Leave.
I recall listening to the wonderful BBC’s “Today” programme on the eve of the referendum and the leading Brexiteer Daniel Hannan MEP describing the EEA as an economic free trade area that stretched from Iceland to Turkey, and how possible it would be for the UK to consider staying part of that even if Britain voted leave. Does my hon. Friend recall that type of message?
I certainly do recall that type of message. It was one of the big messages that was being sent out: our prosperity would not be threatened, we would be able to stay in the single market and we would have the “exact same benefits” as before.
I am intrigued because I thought the whole basis of my hon. Friend’s very fear-based analysis of Brexit is that the EU wants to stick tariffs on trade between the UK and the EU. Which leader around the European Union has said that they want to put tariffs on trade between the UK and the EU?
The consequences of a WTO—
No. The consequences of a WTO Brexit mean that we fall back on rules that require the imposition of tariffs, unless we waive them as a most favoured nation status for all other countries. That would then expose our manufacturing, farming and other industries to competitors with far lower standards than us, some of which have far cheaper labour costs, when we have very high quality products in this country. That is the consequence of WTO terms.
I congratulate the hon. Lady on securing this debate. One of the common misconceptions is that the EEA and the single market are exactly the same thing. That is not the case. There is no common fisheries policy and no common agricultural policy. The writ of the European Court of Justice does not run to the full EEA; there is the EFTA arbitration court. Articles 112 and 113 of the EEA agreement allow for safeguard clauses suspending things such as free movement of labour. So it is important that in this debate we clarify that the European economic area and the single market are not synonymous.
I entirely concur with the hon. Gentleman. My hon. Friend the Member for Wimbledon (Stephen Hammond) is in his place, and in a previous debate he eloquently outlined the benefits of and difference between EEA-EFTA membership and full membership of the European Union.
Does my hon. Friend agree that there seems to be a misconception about the nature of the European Union? Listening to the intervention made by my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), I picked up the idea that the EU is some sort of sovereign entity. But it is not; it is an international treaty organisation, and therefore to ask it to change its rules base to accommodate the kind of access that was wanted, but which comes without subscribing to the rules, will be impossible in practice.
I fear that my right hon. and learned Friend may be right, but I am very happy to give the Government the benefit of the doubt in their negotiations and to seek to achieve the aims that they aspire to. However, I am outlining the consequences of a no-deal, and if the Government are unable to achieve their aims, EEA-EFTA membership should be the plan B, alternative option, which the Government need to give greater consideration to.
It seems to me that whatever side of the argument the public started on, what they want from Parliament more than anything is to find a way through this and to secure the best outcome. That involves compromise, which my hon. Friend’s suggestion of EFTA-EEA could be. On behalf of the country, as Parliament we should get behind the Prime Minister and offer that as a solution. No side gets absolutely what they want, but that is the nature of democracy. It is about compromise.
I entirely agree with my hon. Friend. My personal view is that I would much rather remain in the European Union. That is what I voted for and believe in, but in seeking to honour the result of the referendum, we need to look at this credible and deliverable option that removes us from ever-closer union. As my hon. Friend the Member for Wimbledon outlined in his debate two weeks ago, this option has significant advantages in terms of taking us out of the jurisdiction of the European Court of Justice and delivering on many of the issues that concerned the UK public.
I was talking about the potential access to 900 million consumers for our products, which I would say is an optimistic, not a fear-based outlook. When compared to EU membership, EEA-EFTA membership is significantly cheaper. In 2015, Norway’s net contribution was €115 per person, compared to €214 per person from the UK.
An EEA-EFTA agreement would protect our services industry, as it would give us continued access to the common market. The impact on our GDP and trade would be barely a quarter of that of a WTO-terms departure, which would cause a drop in trade of between 40% and 60%. EEA-EFTA would substantially reduce that.
Some hon. Members insist that EFTA membership would not respect the referendum result, but I disagree. The referendum told us that we should leave, but not how. If we value prosperity above ideology, and pragmatism above all, there is a clear case for an EEA-EFTA-style agreement. We would be free of the risk of ever-closer union; the organisation is clear that it is strictly an economic grouping. We would be rid of the prospect of ever having to join the euro. EEA-EFTA decisions require the agreement of all members rather than the votes of a qualified majority, so the risk to sovereignty would be reduced. Disputes would be resolved through the EFTA court, not the European Court of Justice. We would be free to set our own agriculture and fisheries policies.
My hon. Friend the Member for South Suffolk (James Cartlidge) put my argument in its most succinct form:
“if EFTA-EEA is such a bad idea, why are its four constituent countries among the richest and most successful on the face of the planet?”—[Official Report, 7 February 2018; Vol. 635, c. 560WH.]
None of my proposals regarding EEA-EFTA are incompatible with the Government’s ambition. In the previous debate about EFTA, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker) said that the Government seek
“a partnership that in many ways goes beyond the EFTA arrangements we have discussed.”—[Official Report, 7 February 2018; Vol. 635, c. 569WH.]
I would welcome such an end point and I am sure many colleagues would too. All we seek is the reassurance that if the Government fail in that laudable aim, we will fall back on an EEA-EFTA arrangement, rather than no arrangement at all.
Order. Before I call hon. Members to contribute, I note that there is a huge interest. Priority will be given to hon. Members who have already requested to speak in writing. The time limit will be four minutes, because I want to accommodate as many people as possible. I call Stephen Kinnock.
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on securing this important debate.
As the Government’s own analysis shows, a no-deal outcome would mean that growth would be 8% lower nationwide, 10% lower in Wales and 12% lower in the midlands, Northern Ireland and the north-west—and the north-east would take a huge 16% growth hit. Tariffs would be 10% on every movement along the supply chain of an industry such as the automotive industry, which is so vital to the steel industry in my constituency. It would crush not only that industry but connected industries.
Anybody—any hon. Member—can see those figures in the Treasury report, but the report caveats them by saying that that is without any other Government interventions or reaction of businesses in adjusting to a new world of trade with the European Union. Does the hon. Gentleman accept that?
Clearly, the figures are a forecast, which is more of an art than a science, but the fact is that leaving our largest market—where 43% of our exports go—will inevitably have a negative impact on growth. Whatever remedial measures businesses attempt to take, they will always be playing catch-up with the impact of that seismic event. It seems inevitable to me, therefore, that there will be a contraction in the economy.
At the end of last year, the head of HMRC told the Brexit Committee that preparing for Brexit is set to cost £1 billion over the next five years—and that is on the basis of our securing some kind of deal. That tells us that no deal is simply not an option, as the hon. Member for Eddisbury so eloquently set out. It also underscores the importance of the final part of the Brexit negotiations, in which the framework for the future relationship will be set out. If this House wishes to shape that, we must move quickly.
Today’s debate could not be more timely, because we are in a race against time. Later this month, the EU will publish the legal text of December’s joint progress report. In mid-March, the European Parliament plans to publish a resolution to be adopted ahead of the European Council meeting on the future relationship. That will be akin to the 3 October resolution, which made it clear that there would be no regulatory divergence across the Irish border, and that transition could
“only happen on the basis of the existing European Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures”.
That must sound familiar to hon. Members, and it means that we cannot dismiss it as just white noise. The October resolution was effectively the blueprint for the deals that have followed. That will also be the case for the resolution that will be passed in March about the negotiating guidelines for the future relationship.
When it comes to the future relationship, Michel Barnier has been clear: our options are a deal based on the Canada model or one based on the European economic area. Once that basic model has been agreed, there will be some scope during the transition period to add or subtract from it, but to all intents and purposes the choice will be made, and it will be binary—and it is coming very soon. That matters because the Canada model offers little on services, which make up 80% of the UK economy and almost 40% of our exports. As Mr Barnier has said, there is no place for services, because
“There is not a single trade agreement that is open to…services. It doesn’t exist.”
The Canada model also leaves us without a customs partnership, which is incompatible with the desire to have a frictionless border in Ireland.
Our conclusion must be clear: our preferred model—the only conceivable model, in fact—for the future relationship is one based on EEA-EFTA membership. EEA-EFTA offers the best possible terms of exit by providing the maximum possible access to the single market from outside the EU while allowing for differences that preserve our desire for greater control and self-determination. The EEA ends the principle of direct effect, so this House would have to pass all rules relating to the EEA internal market into law. It ends the jurisdiction of the European Court of Justice. Instead, we would move to the governance of the EFTA court, which frequently forges a path different from that of the ECJ, and which would have British judges on its bench if the UK were an EEA-EFTA member.
In EEA-EFTA, we could shape the rules of the single market, of which only 10% are relevant to the EEA. With the right of reservation, we would possess a veto over anything we considered inappropriate. That is not being a vassal state; that is not an empty vessel. The Norwegians have used their veto almost 20 times, most recently in rejecting the third postal directive, for which they suffered absolutely no repercussions.
Articles 112 and 113 of the EEA agreement allow for suspension—
Order. I call Paul Masterton.
It is a pleasure to serve under your chairmanship, Mr Sharma. A Brexit that put trade restrictions and tariffs between us and the continent would be an unacceptable outcome; it would make us an island off the coast of northern Europe, rather than a truly global trading nation. That is why we must support the Government in their aim to achieve the best possible free trade deal with the EU. However, a deal is by no means certain; we still have plenty of hurdles to jump.
Even if we have heads of terms by October, it will be some time before a formal, fully fledged deal is signed and in place. That interim period will be rife with uncertainty, because a contract simply cannot be managed and run on heads of terms, however well drafted. We are now negotiating with 27 nations at once, with 27 different opinions. Diverging interests among the EU28 have led to frequent delays and dilution in previous EU trade deals, or even their collapse, and the new deal with the UK may be no exception. Although I have no doubt that the UK can and will form new trading partnerships across the world, I am not convinced that a full suite of shiny new trade deals with key markets will be in place and ready to go on day one.
For me, for my constituents and indeed for my children, the alternative to a deep and special free trade agreement cannot be no deal. Only seven countries trade on WTO-only terms; most nations trade with the EU via trade facilitation, customs co-operation and bilateral standards. Independent WTO membership would require agreements on division of EU import quotas from the EU27 and consensus, if not unanimity, from the other 164 members. If we start unilaterally reducing tariffs, “most favoured nation” rules will also come into play.
Of course, WTO barely covers services. Some 24% of people in the general insurance, life assurance and pensions sector in the UK work in Scotland. Many of them are in my constituency, East Renfrewshire, because of its access to the burgeoning Glasgow financial district and the central belt, and its easy links to London and the continent. Having no deal would mean that banks, insurance companies and fund managers could not provide services across the UK from the EU. Contracts that run over exit day, particularly for derivatives, could simply become unenforceable. Business liability insurance contracts often stretch decades ahead, so a no-deal Brexit could result in insurers losing their licences in a customer’s jurisdiction. Cross-border pension payments between the UK and the EU simply could not be paid.
Numerous investment funds used by pension providers are set up under Irish law or other EU-based jurisdictions; in fact, more than 150 UK managers are managing Irish funds right now. More than 2,000 Irish-domiciled funds have been sold in the UK—more than €600 billion in fund assets is managed by UK managers in Ireland on behalf of UK investors. Collective investment schemes are established and authorised under a harmonised EU legal framework. Whatever route we choose, there will be huge issues with authorisation, with passporting under the alternative investment fund managers directive and with maintaining the ability to distribute, say, Irish funds into the UK post-Brexit, but under a no-deal scenario those issues will be absolutely magnified.
Securing country-by-country authorisations for each business line will be time-consuming and expensive, which is why the Association of British Insurers said very clearly last summer that a no-deal Brexit would be “unacceptable”. The Pensions and Lifetime Savings Association was even more blunt:
“WTO-only would cause major disruption. On no account could the pension fund industry support a regime based only on WTO rules. This would be likely to cause economic harm, create regulatory barriers and undermine essential pensions support services.”
The impact of a no-deal Brexit on the economy would have significant issues for pension funds. Not only would it lead to weaker investment return—it might put defined-benefit schemes at additional risk by weakening employer covenants, because sponsoring employers in the sectors worst hit under a WTO scenario would struggle to meet their deficit reduction payments.
I accept that Government contingency planning for all scenarios must cover a no-deal Brexit, but it should never advocate it as a preferred outcome. It must also cover a range of other possibilities, including entering EFTA with the EEA bolt-on, as I have said before. I will not repeat the arguments I raised in our debate on 7 February. Instead, I will conclude by saying that I will not allow my constituents to face the choice between a deal on the table and a no-deal quagmire on the floor. If a deal cannot be reached or is rejected, our plan B can and must be EFTA-EEA. I urge the Minister not to dismiss that out of hand.
I am grateful for the chance to speak in this debate. I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on securing it and on her forensically detailed devastation of the prospects of a no-deal Brexit. Sadly, 62 of her colleagues are not listening, but I hope that the Prime Minister and her Cabinet are.
Yesterday, among other Brexit hyperboles, the Environment Secretary announced that his colleagues the Foreign Secretary and the Brexit Secretary were the Lionel Messi and Cristiano Ronaldo of the UK Government. I had never thought of Ronaldo before when thinking about Brexit, although the word “messy” has crossed my mind on a number of occasions over the past couple of years. However, it strikes me that they are two people who perform all over the world, but always on opposing sides—never on the same team. They also have a very clear vested interest in getting the Brits out of Europe as quickly as possible; with apologies to Chelsea fans, Messi did his wee bit for that last night. I assume that neither of the Cabinet Members in question can copy the tax evasion conviction that Señor Messi acquired a few years ago, so perhaps the analogy breaks down there.
I hope the hon. Gentleman is not about to contradict me on that point.
No, although as a Chelsea fan I feel the pain of the hon. Gentleman’s Messi remark.
Since we are talking about the movement of people and services, what is the hon. Gentleman’s understanding of the implications of an EEA-EFTA arrangement—if that turns out to be the deal—for free movement of people post-Brexit and for the United Kingdom’s contributions to the European institutions?
I am not actively promoting the EEA-EFTA option. Although it is significantly less bad than the no-deal option, it is still not good enough. For the record, I repeat that the position of the Scottish Government and the Scottish National party has always been that free movement of people is a good thing, not a bad thing that we have to accept in return for the benefits of free movement of goods, services and capital. It is a good thing for Scotland and—I believe—for the rest of the United Kingdom; I am disappointed that so many people in the rest of the United Kingdom do not accept that point of view. The contribution that EU foreign nationals have made to my constituency is far too important even to attempt to measure in purely financial terms.
The hon. Member for Aberavon (Stephen Kinnock) commented that this debate could not be more timely. That is certainly true, especially given the publication yesterday of a letter by the 62 out of 650 MPs who have taken it upon themselves to dictate to the Prime Minister what to do. It is interesting that the demands of 62 out of 650 have to be followed, but the expressed wish of 62 out of 100 people in Scotland in the EU referendum can simply be swept aside and ignored.
I commend the hon. Member for Eddisbury for reminding us that there is no democratic mandate for leaving the single market or the customs union. There is a mandate for two of the four nations in the UK to leave the European Union, but there is no mandate for leaving the single market.
Will the hon. Gentleman give way?
I am sorry, but I really do not have much time and many other hon. Members wish to speak.
It is significant that the 2015 election, in which the Conservatives stood on a manifesto that said yes to the single market, was the only one in the last 25 years in which they secured an overall majority in Parliament. Two years later, they entered an election with a 20% lead in the opinion polls, published a manifesto to leave the single market and then lost their overall majority. That does not mean that single market membership was the only thing that mattered, but as an indication of a mandate from the public it certainly does not point to a hard no-deal Brexit.
We always talk about WTO terms as if they would solve all our trade problems. However, apart from the fact that international trade deals cannot be created overnight—the transition period gives the opportunity to complete them, either substantially or totally—it is against the treaties of the European Union to agree to allow the United Kingdom or any other member state to sign and implement trade deals unilaterally or bilaterally outside EU deals.
That part of the 62 Brexiteers’ demands simply will not be accepted by the European Union, and I think they know that; I think that demand is the wrecking amendment with which they are trying to wreck any deal whatever. WTO terms do not cover the single sky agreement: if we leave without a deal, the planes will stop flying. Nor do they cover Euratom: if we leave without a deal, the life-saving medical isotopes will stop coming across the channel in time to be of any use.
A lot has been said about Northern Ireland. I am frankly terrified by the number of hard Brexiteers who are prepared to sacrifice the peace process in Northern Ireland for their ideological obsession with a hard Brexit. I hope that they genuinely do not understand what they are putting at risk, but I fear that they are prepared to risk it all.
If we go for a no-deal Brexit, we will be getting rid of a lot of the boxes on Mr Edmonds’s table. It may well be that the only box left is the one with the penny in it.
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate my hon. Friend the Member for Eddisbury (Antoinette Sandbach) on securing this debate.
The alternative to no deal is, of course, a deal, and that is what the Prime Minister has set out to get. I was pleased to hear her support a deal that will mean free and frictionless trade in goods and services between the UK and the European Union.
That is a perfectly sensible position. Why would the European Union not want to adopt it? We have a trade deficit with the EU, particularly with Germany, of course, so it is sensible economics that the EU would give us a deal. That is a win-win situation, as Dr Stephen Covey said in his book, “The 7 Habits of Highly Effective People”, which is a habit that I aspire to but will probably never achieve. Nevertheless, win-win is hugely important.
Stephen Covey also refers in his book to the “dialogue of the deaf”. That is when one negotiator is speaking one language—I am not talking about foreign languages—and the other negotiator is speaking a different language. The difficulty is that we are, quite rightly, talking sensible economics, yet the EU is talking politics. It is talking about the politics of survival of the EU. For us to leave with a good deal would almost undermine the very fabric of the EU, which calls into question the EU’s ability to agree a deal. Therefore, it is difficult to get the deal that the Prime Minister is setting out to achieve. It is possible—politics is the art of the possible—but it will require compromise on all sides. That has to be the key to this negotiation.
None of us should accept being locked into the EU or it holding us to ransom by threatening us, for its own reasons. That is not an emotional point; it is simply a point of the negotiations. We cannot be held to ransom in achieving and delivering on the objective that the British public gave us of leaving the EU.
That is the reason I did not support the “meaningful vote” amendment to the European Union (Withdrawal) Bill. We have to accept at all cost the deal that the Prime Minister negotiates with Europe, and the EU needs to understand that. We will then give effect to the decision of the British people.
On the question of a meaningful vote, does my hon. Friend agree that we may as well at least discuss the EEA option? The political reality is that, at either the 2022 or the 2027 general election, one of the major political parties is highly likely to adopt it as a potential option, depending on how the scenario plays out in terms of the Brexit deal. Why not have that discussion now, because it is almost certainly going to come back to us in a future election?
My hon. Friend makes an interesting point. My point is that I will accept the deal that the Prime Minister negotiates. We will get a deal. I guess that it will not be the deal that we are all hoping for, but we will get a deal and I will accept it in Parliament. However, others may not and that is where plan B possibly comes in.
We should look at other options. Clearly, EFTA and the EEA have been discussed as an option and promoted by my hon. Friend the Member for Eddisbury as a return to the Common Market. There are difficulties, however, with regard to timescales and non-tariff barriers, which would still be an issue in terms of customs checks, border checks and sanitary and phytosanitary checks. The Northern Ireland situation has improved to some extent but it is still an issue, with the potential for a hard border. We are potentially rule-takers, of course, but there are fewer rules—we currently have to take 20% of the rules, according to the House of Commons Library. Free movement of people is a consideration, of course, although there are potentially some ways to control that, using articles 112 and 113. Another question is: is the proposal a transitional arrangement or a permanent state?
Ultimately, leave we must and therefore compromise we must, in order to deliver on and honour the decision made by the British public. I call on all sides in this debate—by which I mean Members of our party and of the Opposition—to look at all possible options, be willing to compromise over a deal that comes back, and consider where we will get to. Hopefully we will get the deal we want, but if we do not we have to consider a sensible plan B and I think that is what my hon. Friend the Member for Eddisbury was alluding to.
I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on her speech. She spoke much sense, as she has done throughout this whole process, which neither of us ever wanted to be in.
I share the hon. Lady’s dismay at waking up this morning to see that leaked letter by 62 of her colleagues—the hard Brexiteers—who have, in effect, written a ransom note. However, they are holding a gun not only to the head of an enfeebled Prime Minister but to the whole country’s head, given that the Government no longer have a majority.
What is at risk here? First, there is 20 years of peace in Northern Ireland, which is one of the proudest achievements of the last Labour Government, through the Good Friday agreement. Also, the Prime Minister made a speech last week about security arrangements; if we leave the European arrest warrant system, all the things that follow would make us less safe. And as has been mentioned by right hon. and hon. Members from both the Government and the Opposition today, leaving the customs union and the single market would make us less prosperous, because those two things are our passport to the world’s biggest single trading bloc. We would lose the unfettered access that we have enjoyed. I completely understand, appreciate and support the hon. Lady’s arguments for taking the EFTA-EEA route as a form of damage limitation if we are to leave the EU.
The motion states:
“That this House has considered alternatives to a no-deal outcome in negotiations with the EU.”
That is what we are being asked to do. To my mind, a no-deal option would be the worst possible outcome. The Minister has enjoyed a rapid rise. We are from the same intake and she is a nice person who I get on with, but I am curious to know this: if no deal appears to be a likely outcome, even if we are not making projections for it, will the Government reconsider altogether their position on the withdrawal of the article 50 application?
I am a London MP, so other Members will know more about issues such as fisheries. I want to talk about London. It is often said that the EU referendum result was the biggest electoral event that this country has gone through. The politician in this country with the biggest personal mandate ever is the Mayor of London, Sadiq Khan, and the independent research by Cambridge Econometrics that he commissioned has produced some quite scary figures. It projects that 87,000 jobs will be lost in London, with 27,000 of those in the creative industries alone. The research also mentions a “lost decade”, with £5 billion of lost investment by 2030 and GDP dropping by 3%.
For a London MP such as me, who knows about the economic powerhouse that is our financial services sector and in which many of my constituents are employed, a no-deal scenario seems unthinkable. We were promised a land flowing with milk and honey, with sunlit uplands ahead; now the best that we can hope for is not to have a Mad Max-style dystopia. The bar is being set rather low.
The complete lack of preparation is irresponsible. Yesterday’s debate on sanctions and anti-money laundering showed that even leavers want to transpose into our law what we already have, with the fifth anti-money laundering directive coming our way. Surely, therefore, if we must leave the EU, we must aim for the most prosperity-ensuring and pragmatic approach, and not a damaging and dogmatic exit, if we are to ensure that the road to Brexit is not—to use what I think is the Government’s own phrase—paved with broken glass.
I had not intended to speak in this debate. The Prime Minister has set out her intention to have a smooth, orderly Brexit, delivering stability on security and maintaining trade. That is key for many jobs in the UK, but it is challenging to deliver.
In my constituency of Chelmsford, people voted 50:50—almost exactly—and I have always said that we need to try to find an outcome to the EU-UK negotiations that works for both sides, respecting those who voted to leave but also reassuring those who voted to remain.
Delivering that deep and special partnership is important for my constituents, many of whom work in the service sector. The insurance sector is the largest employer in the city and many of my constituents commute to work in the City of London, but we also have people involved in science, research, advanced manufacturing and other areas.
I was prompted to speak this morning after reading the letter signed by some of my colleagues last night, because instead of helping the Prime Minister it seeks to tie her hands. I genuinely believe that some of the people who put their names to that letter did not fully understand the potential consequences, particularly the limitations and restrictions that would be imposed on an implementation period, which would make it much more difficult to have a smooth bridge between where we are today and that deep and special partnership.
Let me be clear: no deal is not an attractive deal. Falling back on the WTO pushes up tariffs, which pushes up the costs for consumers for food and shopping, and it brings in checks at customs, and I am fearful especially for Northern Ireland and Ireland. WTO rules would bring delays for producers, and they do not cover key areas, such as aircraft.
The Canada deal is also not an attractive deal. When I talk to key sectors of the British economy about what they want from a new UK-EU relationship, they tell me that it is about much more than just eliminating tariffs. A year ago I wrote that,
“for the digital entrepreneurs, it is access to cross-border data flows; for the car manufacturers, it’s knowing that once a vehicle has passed its safety…tests”
in this country, they can sell it across Europe;
“for the creative sector, market access includes being able to have a joint action to stop…infringements of copyright; for pharma companies, it is being able to continue to run cross border clinical trials”
and, once a drug has passed, to sell it across Europe;
“for scientists, it is being able to take part in collaborative research”.
Banks and financial services want to know that once a product has been approved by the regulators here they can sell it across Europe, and high-value manufacturing wants to be able to source parts “from all across Europe” and to sell and manufacture them easily. All of those are covered by our current trading relationship with the EU, but not by the Canada free trade agreement. We need to be able to put the pluses on CETA.
The Norway EEA-EFTA option is also not particularly attractive, because it would mean that we would need to have common rules in many areas to keep a frictionless border. Having said that, I believe that Britain will want to continue to have high standards on many products. There will be very few areas where we would be likely to choose to diverge, because I do not see it being a race to the bottom in standards. That is not in our interest or that of consumers. The WTO is not attractive. CETA does not have enough pluses. The EEA is not perfect, but let us at least use it as a starting point. Fundamentally, any new trade deal is not in our hands alone. We need to agree it with all 27 other countries, and we need to give our negotiators space to talk.
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on bringing forward this hugely important debate. I want to go off at a slight tangent, Mr Sharma, but it will become apparent why as I do so. As usual, I want to use examples from my constituency and from history.
Members will have heard of the highland clearances, which depopulated vast chunks of the highlands, but the fact is that throughout the following years, the depopulation continued. The export of our youngest and best was the most dismal feature of the history of the highlands. Indeed, if we look at the populations of towns and villages in my constituency in the far north of Scotland, we see populations falling steadily during the 19th and 20th centuries. Indeed, my father said to me in the late 1960s, “Young man, when you are grown up, you will go south and you’ll work”, because that was what happened in the past.
Someone travelling to the west of my constituency today will see very large signs saying, “This stretch of road was built with the assistance of the Scottish Government and the European Union.” I cannot overemphasise how important that infrastructure investment was to my constituency and to remote parts of the highlands. Members may have heard of objective 1. It was a deliberate targeting by the Common Market or the EU—call it what you will—of the most deprived parts of Europe. Additional funds were put in. To that end, new harbours were built, town centres were completely revamped and we saw a completely new, positive approach. In the early to mid-1980s, the population decline in my constituency and neighbouring constituencies in the highlands had halted and reversed. That strikes me as being hugely important.
I will not only mention what was good about the EU, but it is against that candle that I will hold all proposals in all their complexity. What do they mean for my constituency? Where will the replacement investment come from, whether we have hard Brexit, soft Brexit, membership of one organisation or membership of another? I need to know what will happen. Let us put it this way: my constituents voted remain by a majority and they can see that change is probably upon us, but they want to know where we are going, who is taking us where, and why all these people signed that letter to the Prime Minister. It seems slightly dotty to my constituents.
As has been said, we need to find our way through this. I for one will always be watching closely to see what things mean for my constituents. Without the EU, the tragic depopulation of the highlands would have continued. It is a fact on the record for history that the EU halted that and helped turn the situation around. That has made a huge difference to my constituents. It means that young people are being brought up and educated where they come from, rather than being sent south. The final question my constituents ask is, “What are you saying down in Westminster? Can you get people in the south to understand where we are coming from? The EU was not always a bad thing—it has done us good.” I leave Members with that question. It is hugely pertinent to me, and I mean every word of it.
It is a pleasure to serve under your chairmanship, Mr Sharma. I congratulate the hon. Member for Eddisbury (Antoinette Sandbach) on securing this important debate, and I thank her for bringing it forward. I am sure she will not mind me saying that we do not always see eye to eye on everything, but the thoughtful way she has gone about the contributions she has made in this and other debates is a credit to the House. I am grateful to her for that. I am also grateful to her for bringing some facts into the debate. With some elements of her parliamentary party, those facts are so often sadly lacking.
The right hon. and learned Member for Beaconsfield (Mr Grieve) is not in his place at the moment, but he made a strong and good point that we should all reflect on. We are now 20 months—almost two years—on from the EU referendum. If people outside this place think we are going round in circles, I have some sympathy for them, but those who voted leave and those who were central to the Vote Leave campaign bear a huge amount of responsibility for that. It was grossly irresponsible to go into an EU referendum that everyone knew could have gone either way without setting out a White Paper, a manifesto or any detail of what leaving the European Union could actually mean.
When there is a referendum, those of us who are elected have a responsibility that we are held to by those who have elected us. That lack of detail means that the mess we are in at the moment sits at the door of the Vote Leave campaign. I have some sympathy—they will not hear it often from this side of the House—for Ministers for the mess in which they have been left, but not that much given that senior members of the Vote Leave campaign are in senior positions in Government and have been since the day after the EU referendum. They need to bear some responsibility for the devastation and uncertainty we are facing.
As usual, the hon. Member for Aberavon (Stephen Kinnock) made some pertinent points. It is worth reflecting on the devastation in every part of the United Kingdom. That is not just something that those of us who backed remain or who want to have a closer relationship with the European Union think; it is borne out by the Government’s own analysis and by the Scottish Government’s analysis. Incidentally, the Scottish Government had no problem with publishing their analysis. The Scottish Government’s and the UK Government’s analyses appear to be very similar, which is interesting. It was reflected by the hon. Member for East Renfrewshire (Paul Masterton), who rightly highlighted some of the problems that his constituents face.
The hon. Member for Eddisbury was correct when she mentioned Northern Ireland. Some Members of Parliament have been utterly and grossly irresponsible in their talk about the Good Friday agreement. I give credit to the previous Labour Government, John Major’s Government and Members across the House for their work on that agreement. I give credit to the bravery and far-sightedness of politicians across the island of Ireland, but in particular in Northern Ireland. The agreement was endorsed by a referendum on both sides of the border. That gross irresponsibility is something that those seeking to unpick the Good Friday agreement should reflect upon, and reflect upon well.
One thing that we can learn from Northern Ireland is the need for compromise, however hard won. I back the compromise set out by the Scottish Government to remain a part of the single market. As somebody whose constituency and nation voted overwhelmingly to remain part of the European Union, I might not like that very much—I want to remain part of the European Union—but that is the nature of compromise. It is tough on everybody. I am not saying that this is the end point in compromise—that can never be the case—but what has been very striking is the Government’s lack of willingness to engage with different parties, with the exception of the Democratic Unionist party, perhaps. That again is an irresponsibility that two years on we should all reflect on.
Moving away from the Government for a moment, I appeal to colleagues on the Labour Front Bench. We might think we are looking at an internal Conservative party squabble at the moment, but it is not. I wish it was only an internal Tory party squabble. A fierce one it is—I do not deny that—but one that impacts on each of us and on every constituent. My appeal to the Labour party is this: the Government are on the ropes and there are people and reasonable voices we can reach out to. I appeal to the Labour party to look again at the customs union and the single market and perhaps listen to their Back Benchers.
Does the hon. Gentleman recognise that more people in Scotland voted leave than voted SNP at the general election? The issue is not a Conservative one. There are plenty of issues in the Labour party and in the SNP as well. We have to work across parties to try to get the best solutions to avoid what might be a WTO exit.
The hon. Gentleman is right; we have to work across parties. It is a great pity that the Government will not do that. They will not sit down with the other parties, apart from the DUP, which is a great pity. He talks about the number of people who voted SNP and voted leave. A lot more people voted SNP than voted Conservative, and many more people voted remain than ever voted Conservative.
I want to ask the Minister a few questions. What happens to issues such as REACH and Horizon 2020? The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made an excellent point about immigration. Scotland, like other parts of the United Kingdom, is losing people. We need freedom of movement. My hon. Friend the Member for Glenrothes (Peter Grant) made an extraordinarily powerful point about the need for freedom of movement and the benefit that EU nationals bring us, and also how young people and others from across the UK have benefited from freedom of movement. I am one of them. I benefited from freedom of movement and was able to come back.
What happens to seasonal workers? James Orr, who farms next door to my house, relies on seasonal workers to pick broccoli, which has to be picked by hand. What happens in universities? The excellence of the University of St Andrews relies on EU nationals. Finally, does the Minister think that the implementation period should be based on WTO principles?
It is a delight to wind up for the Opposition with you in the Chair, Mr Sharma. I join other Members in congratulating the hon. Member for Eddisbury (Antoinette Sandbach). A large majority in this House respects the outcome of the referendum, but wants to ensure that we leave the EU on terms that protect the economy and people’s jobs and livelihoods, as well as the rights and protections that we gained through 43 years of membership. It is a majority that recognises our future lies in a close and collaborative relationship with the European Union. The hon. Lady is very much part of that majority, and she has done us all a service by securing this debate and in the way she opened it.
There is a heavy responsibility on this Parliament, on all our shoulders. We face the most important choices in our lifetimes that will affect generations to come. That demands that we are honest and open in evaluating the decisions we face. That is why Labour has consistently pushed for the publication of impact assessments and economic analyses so that we have the information we need to inform our decisions. We need to avoid what the Prime Minister’s former deputy, the right hon. Member for Ashford (Damian Green), described on Monday as the
“problem of politicians who won’t accept evidence.”
He was also right when he said:
“If analysis is being produced, then publish it. And frankly there will be a big political debate...Let’s have this argument in public, that’s what democracies do.”
The referendum was a clear decision, but it was a painfully close vote that we should implement in a way that unites the country, which involves the sort of compromise that many Members have talked about. Whether people voted remain or leave, they will not thank politicians who lead them into a Brexit on a false prospectus that fails their expectations and damages their prospects. We need to be honest about the expectations created by the referendum. Everybody now recognises that £350 million will not be released for the NHS, or for anything else, as the Chancellor confirmed in his 2016 autumn statement.
Nor will taking back control mean a significant change in migration. As the Environment Secretary told the National Farmers Union yesterday,
“agriculture needs access to foreign workers...both seasonal and...permanent.”
He echoed the Brexit Secretary who said in Estonia last year that the door will not “suddenly shut” on EU immigration, as it will take “years and years” for British citizens to fill the employment gaps.
On the ECJ we need to recognise that any trade agreement will involve ceding sovereignty to bilateral or transnational bodies. People need to know that trade deals will have consequences. The US Commerce Secretary, Wilbur Ross, has made it clear that a
“critical component of any trade discussion”
with the UK would be the scrapping of EU food rules. And for what? For 0.2% growth anticipated by the Government. So open discussion of all the options is vital as we move forward.
I have been to the reading room and I should make it clear that I am complying with the confidentiality requirements, so I quote from information in the public arena. We should pay attention to the Government’s own analysis that EEA membership would see 2% lower growth than otherwise projected over 15 years. A comprehensive free trade agreement with the EU would result in 5% lower growth, and no deal would almost double that: an entire 8% lower growth.
No deal is, of course, the most damaging of all the options. The hon. Member for Eddisbury made that case extremely clearly and well. We should look at everything. The Labour party wants to keep a customs union and a new relationship with the single market on the table. We want to consider the EEA-EFTA model, as my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) argued when we last debated the issue.
Did the hon. Gentleman say he wants to keep membership of “a” customs union or “the” customs union on the table?
I really love the pedantry of this. I was clear that we are talking about a customs union that serves the needs of the British economy and British manufacturing.
As my hon. Friend the Member for Greenwich and Woolwich argued previously, the EEA-EFTA model raises challenging issues and would need to be supplemented by customs arrangements, but it should not be lightly discounted, because there are features of the EEA-EFTA model that we would want to see as part of any final deal.
Will the hon. Gentleman give way?
I was just about to mention the hon. Gentleman, so I am delighted to give way.
I await with anticipation what the hon. Gentleman will say. When he said he would not lightly discount EFTA and the EEA, does that mean the official Opposition are not discounting it as an option?
I think that is fairly clear: we want to keep options on the table, in an economy-first Brexit negotiation. I was going to say that the hon. Gentleman’s points about the political ideology of the EU27 were reflected, ironically, at the weekend in Munich by the Prime Minister, when she warned the European Union not to let “political doctrine and ideology” stand in the way of a good deal on security—the hon. Gentleman is nodding. She was right, but if that is good enough for security, why is it not good enough for the economy? Political doctrine and ideology from the European Research Group has framed the Government’s approach from day one, ignoring not simply the 48%, but so many of the 52% who did not vote for an extreme and destructive Brexit.
We have now had two of the series of Cabinet speeches apparently defining the “road to Brexit”, and they highlight the depth of divisions. We had the Foreign Secretary’s damp squib, setting out his ambition for regulatory divergence, contradicted yesterday by the Brexit Secretary, who tried to reassure everybody that little would change. Tomorrow, of course, the Cabinet will try to resolve the differences.
At this moment, out of the shadows, comes the European Research Group again, with a letter echoing the one co-ordinated by the Minister when she was its chair, seeking to derail the Government’s policy on the transitional period, and with it to ensure that the country stumbles towards the extreme and destructive Brexit that the vast majority of people simply do not want. Perhaps the Minister will take the opportunity, having not yet replied to my letter of several weeks ago, to reject that approach, and make it clear that she supports Government policy on the transition.
There has been a lot of common ground in today’s debate. The Opposition hope, even at this late stage, that the Government can reach out to the common ground in Parliament and in the country, with a sensible approach to the negotiations that face us in the few short months that we have left, seeking a Brexit that puts the economy first and keeps all options on the table.
Thank you, Mr Sharma, for your chairmanship of today’s very interesting, fascinating and useful debate. I am grateful to my hon. Friend the Member for Eddisbury (Antoinette Sandbach) for raising this issue and securing a debate on the alternatives to a no-deal outcome in the EU negotiations. She has raised this topic on many occasions in the House, both in Westminster Hall and in the main Chamber. I gladly respond to her points, and those raised by many hon. Friends and hon. Members this morning.
My hon. Friend raised a number of ways in which the UK could leave the EU, including becoming a member of EFTA, having a Canadian-style deal with the EU, the Government’s preferred objective of creating a deep and special partnership with the EU, and the very unlikely scenario where we leave the EU without a deal. The Government are confident that we can negotiate a close relationship with the EU that is mutually beneficial to the UK and the EU. Alternatives, such as EFTA and the EU-Canada comprehensive economic and trade agreement, are not outcomes that the UK is pursuing. As the Prime Minister set out in her Florence speech, we want to
“be creative as well as practical in designing an ambitious economic partnership”
that works for both the UK and the EU. We believe that that is a reasonable expectation.
Does the Minister support the implementation period, or does she back the letter, published this morning by her colleagues, that said that the implementation period should be based on WTO principles?
The hon. Gentleman pre-empts my comments. The implementation period has been set out and explained in considerable detail by the Secretary of State, and I will come to it later. If he will bear with me, I will deal with his point in my later comments.
We believe that it is reasonable to expect that we can secure an ambitious new economic partnership with the EU, because we start from an unprecedented position: one of convergence. We have the same rules, regulations and values as the EU. That starting point is unmatched by any of the other options explored today—a vital distinction, which makes the prospects of securing a mutually beneficial agreement high. That is why the Government continue to seek that new deep and special partnership with the EU.
Given that much of this morning’s debate has centred on the scenario where the UK leaves the EU without a deal, it is worth setting out the Government’s position on that. As the Secretary of State and my colleagues have clearly explained, the Government are not aiming for—nor do we want—a no-deal outcome. We want to secure a new free trade agreement with the European Union that benefits both parties, our citizens and our economies, and that respects the result of the EU referendum.
There are grounds for optimism that that is eminently possible. We have achieved considerable success in the first phase of the negotiations. We have secured joint agreement on issues previously thought to be insoluble. I am confident that we can build on that success with an agreement about the implementation period, as set out recently by the Secretary of State in his speech at Teesside, and agree on the future relationship with the EU.
As my departmental colleague, my hon. Friend the Member for Wycombe (Mr Baker), the Under-Secretary of State, said in response to a question asked by my hon. Friend the Member for Eddisbury in the House:
“We approach the negotiations anticipating success and a good deal for…the UK”.—[Official Report, 1 February 2018; Vol. 635, c. 957.]
However, let me be clear: although it is in the interests of both the UK and the EU to secure that good deal, we have a duty to plan for all outcomes, including one where no agreement is reached. The Government continue to prepare responsibly for a range of results from the negotiation, including the unlikely scenario in which no agreement can be reached. In reflection of those preparations, the Treasury has already given Departments nearly £700 million to prepare for Brexit, and is making an additional £3 billion of funding available over the next two years to ensure that we are prepared for every outcome.
The Minister remarked that the Government are, quite rightly, looking at all potential outcomes. In the unlikely scenario that there is no deal, the Government must surely prepare for what would ameliorate the economic damage that has been shown by the Government’s economic impact studies. Would it not be sensible to make sure that we have preparations for other solutions as well, one of which could be EFTA-EEA?
As I will come on to, the Government do not think that the EFTA-EEA option meets the objectives that my hon. Friend sets out, because it falls short of what we are seeking in our new arrangement with the EU on many fronts. I will elaborate on that in a few moments.
The first alternative to a no-deal scenario, and the Government’s preferred outcome, is a new settlement with the EU, as set out by the Prime Minister in her Lancaster House and Florence speeches. As she explained, we seek
“a new framework that allows for a close economic partnership”
between the two parties and that honours the instruction of the British people to take back control of our laws, borders and money.
As an existing member state, we share fundamental beliefs in fair competition, consumer rights and strong regulatory standards. Our position as the EU’s largest trading partner means that finding a meaningful deal along those lines is in both our interests. As my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) pointed out, the current trade deficit between the UK and the EU means that tariff-free trade benefits not only UK businesses and citizens, but EU businesses and employees who benefit from cross-channel commerce.
Will the Minister explain what the Government’s approach is towards the service sector and non-tariff barriers?
As my hon. Friend rightly pointed out, 80% of the UK economy is based on services, so it is important that we seek an agreement that will further enhance the possibility for our services to be exchanged, and for collaboration to continue. Reducing non-tariff barriers is, of course, a priority in any agreement that we seek with the EU, and is something I believe would be possible.
We will agree a comprehensive economic partnership, underpinned by high standards and a practical approach to regulation, that ensures continued trade and prosperity between the UK and the EU, based on mutual recognition. Again, the Secretary of State set that out in his speech yesterday. That partnership will aim for as frictionless as possible trade between the parties and will ensure access to each other’s markets, so that our consumers and businesses can benefit.
On security, the Prime Minister said last week that we are proposing a new partnership on future security, law enforcement and criminal justice co-operation—a strategic agreement treaty that will allow us to work together with the EU to promote our shared interests globally. That new partnership is ambitious and will not only reflect our history and the practical benefits of co-operation in tackling shared threats, but demonstrate the UK’s genuine commitment to maintaining a secure and prosperous Europe.
We are not pursuing EEA membership or aiming simply to copy the Canada-EU free trade agreement. The Norway option is not for the UK. We seek a collaboration on trade and security. We want to enable control over migration, autonomy over our laws and regulations, and the freedom to implement our own independent trade policy with the rest of the world. Only the deal that this Government are aiming for strikes that balance, which is why that is the best outcome for the UK and the EU.
As part of the deal between the EU and the UK, we are seeking a strictly time-limited implementation period.
The Minister seeks to rule out a Norway option as not satisfactory. Will she also rule out a WTO option?
We are not working towards a no-deal scenario, if that is what my hon. Friend is implying. As I have set out just now, we want an agreement based on tariff-free access, reducing our non-tariff barriers and with the ability to strike our own free trade agreements, but it is clear that we are a founding member of the WTO and plan to take up our seat at that organisation in due course.
The Minister has set out all the reasons why the Norway option does not work, but has also said that the UK wants collaboration on trade and security; access for services, which are a vital part of the economy; the ability to strike our own free trade agreements; and no ECJ jurisdiction. The Norway option ticks every one of those boxes.
I disagree with the hon. Gentleman because Norway, although part of the EEA and EFTA, does not have much say on rules and regulations that come to it through the EEA agreement.
Will the Minister give way?
One last time—I am running out of time and need to finish my comments.
Norway does have a say on rules and regulations. It sits in various standard-making bodies, for example, and contributes to legislation. It does not have a full vote, but then we are leaving the single market so we will need to have a new relationship with that single market. It gives market access, which is, as the Minister has said, so attractive. Will she again consider that that may be worth investigating—perhaps not in its entirety, but elements could be of interest?
Norway does not have a seat in the European Parliament. It does not have a vote on whether regulations coming through the EEA agreement apply to it or not. It generally has to follow those obligations in line with its obligations under the EEA agreement. To diverge from that agreement would be a breach and would therefore lead to questions about its membership and subscription to that agreement. That is a fundamental point that makes membership of the EEA and the Norway option not attractive for the UK.
In response to calls from business, the implementation period is there to benefit businesses and individuals, so that they avoid the need for two sets of changes. It will also give them more time to adjust to the new future partnership.
Will the Minister give way?
I will not, unfortunately. I have only six minutes and I have quite a lot to get through. I am sorry; I cannot.
The implementation period will also ensure that businesses have time to adapt to the new relationship between the UK and the EU. Crucially, only under a deal with the EU and the UK can this essential period take shape. None of the alternatives suggested in today’s debate can offer that level of continuity and clarity to businesses and citizens in the short term. That is why the deal that the Government are seeking is the best alternative to a no deal and is an alternative that we are confident of securing.
Will the Minister give way? There is a tradition of accepting an intervention from a shadow Minister.
I must continue because I do not have much time, and EFTA has been a big issue in this debate. I will give way if I have time after my comments—I hope the hon. Gentleman will have patience with me.
Several hon. Members have raised EFTA membership today as the main alternative. Although we recognise the benefits of ensuring continuity in our relationships with the EFTA states, we have no plans to seek membership of the EFTA agreement for four key reasons.
First, EFTA is a trading bloc of four countries. Membership of EFTA does not in itself deliver any market access to the EU. Norway, Iceland and Liechtenstein effectively participate in the EU single market by virtue of the EEA agreement. That would not deliver more direct control over decisions affecting the UK, nor would it deliver control over migration, which is a key aspect of our leaving the EU.
Switzerland participates in some areas of the single market through a series of bilateral agreements with the EU, but many of those do not cover the areas in which the UK has interests. In any case, the Government have made clear on a number of occasions that we are not pursuing an off-the-shelf arrangement; we are not copying and pasting other agreements. We are seeking a particular bespoke agreement relevant to the UK’s economy. The model I have been discussing does not strike the right balance on democratic control and mutual market access that we want in our future partnership with the EU.
Secondly, our ambition as a global trading nation goes beyond the scope of EFTA’s existing free trade agreements with third countries. EFTA’s FTAs are not suited to the size and type of the economy in Britain. They are not with the larger economies of the world—countries and economies with whom we would wish to be pursuing new economic partnerships. They are not in the sectors where our economy has strengths, which are areas in which we would want to pursue new agreements. Leaving the EU offers the opportunity to negotiate our own free trade agreements and to be a positive and powerful force for free trade in the world.
It is also worth mentioning that membership of EFTA would not be the quick and easy solution that some here have argued. Even if EFTA members were to welcome us back into EFTA, we would not have immediate or automatic access to their 27 FTAs. Our entry into each one would need to be negotiated individually with the third countries involved.
Thirdly, membership of EFTA means accepting free movement between EFTA member countries, as the EFTA convention provides for free movement of EFTA nationals. Liechtenstein has been raised as a derogation, but it is not a comparable example. Liechtenstein is a country with a population that numbers less than that in almost every constituency in the UK, at 37,000. It is very difficult to see how the example of Liechtenstein can be applied to the UK, with its population of 65 million.
Finally, although we want to maintain our deep and historic relationships with the EFTA states, the UK is in many ways different from those countries. The EFTA states have a combined population of 14 million people, compared with our population of 65 million. The EFTA bloc’s combined GDP in 2015 was around £710 billion, in comparison with the UK’s £1.9 trillion. The UK’s participation in EFTA would fundamentally change the nature of that group.
Minister, would you bring your remarks to a close?
I note your comments, Mr Sharma. I thank my hon. Friend the Member for Eddisbury for raising this issue for debate today.
I thank all right hon. and hon. Members who have contributed to the debate today.
Question put and agreed to.
That this House has considered alternatives to a no-deal outcome in negotiations with the EU.
Coventry City Football Club
I beg to move,
That this House has considered the future of Coventry City Football Club.
It is an absolute pleasure to serve under your chairmanship, Mr Sharma. I thank the hon. Members for Coventry North East (Colleen Fletcher) and for Coventry South (Mr Cunningham), my hon. Friend the Member for Rugby (Mark Pawsey), my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright) and my hon. Friend the Member for Solihull (Julian Knight) for attending this important debate. I also thank a Coventry City supporter exiled in Torbay—my hon. Friend the Member for Torbay (Kevin Foster)—and my hon. Friend the Member for North Swindon (Justin Tomlinson).
It is clear from the number of MPs here today that there is significant strength of feeling in the Coventry and Warwickshire community and the wider area about the issues relating to Coventry City football club. Before I proceed, I must declare that I am a lifelong supporter of Coventry City football club. That is among my reasons for securing this debate, in addition to the fact that many of my constituents support the club.
My hon. Friend the Minister is no stranger to this issue. When she received notification for this debate, she will be forgiven for having thought, “Here we go again”—such is the importance of this issue. To set the scene for the Minister, the football club started as a factory team at the Coventry-based Singer bicycle factory in 1883. It has a proud 135-year history. It has played in every division of English professional football, and has a proud record of a continuous 34-year run in the top flight of English football. It is an FA cup winner, and it recently won the English Football League trophy.
Sadly, after a demise in the club’s fortune since its relegation from the premier league in 2001, it now occupies a place in the bottom tier of English league football. Despite that, 43,000 Sky Blues fans followed the club to Wembley when it won the FL trophy last year; just two weeks ago a reported 28,000 fans attended a match against Accrington Stanley at the Ricoh Arena; and last week 4,500 fans took the long trip to Brighton for the FA cup.
Football clubs are clearly businesses, but they would not exist, particularly if they do not get premier league television money, if it were not for the ordinary—I should say extraordinary—fans who make huge sacrifices to follow their team. Those people deserve a voice.
A lot has been said about the Coventry City saga. The hon. Member for Coventry South has secured several debates to discuss the dire state of the football club’s ownership and its tenure as custodian of Coventry City. A lot has been said about the legal disputes between the football club ownership, Coventry City Council and the Wasps rugby club, which now owns Coventry’s home ground, the Ricoh Arena, on a long lease.
I will not go over old ground or go into the rights and wrongs of where we are today. My intention is not to be political or to favour one organisation over another, but to focus on the football club’s future in the city of Coventry. This debate is the result of fan groups speaking to local MPs. Many of my comments and questions have been endorsed by seven supporters’ groups, which have also issued a unified statement.
At the point of securing this debate, the football club had until May this year before its agreement with the owners of the Ricoh Arena expired. In the intervening period, the owners of the stadium, the Wasps, granted the football club an extension of a further year, which is extremely welcome news. That said, ongoing legal matters between the football club owners and the Wasps mean that the long-term future of Coventry City’s ability to play at the Ricoh Arena is far from clear, which is worrying because there is no other obvious place for it to play within the city of Coventry.
Supporters’ groups are anxious about the future, and want to ensure there is no repeat of the situation in 2013, when Coventry City played its home fixtures more than 30 miles away in Northampton. I give way to my hon. Friend, who is on the Digital, Culture, Media and Sport Committee.
I congratulate my hon. Friend on securing this important debate and on his championing of local supporters’ groups. The supporters’ groups unity and their willingness to work together to come to a solution is in sharp contrast to the behaviour of many of the other parties involved. The loud message we must send today is that those parties must come together to sort out this situation for the benefit of the sport and the people of Coventry.
I completely agree. That brings me to the four issues I want to raise: the current mediation process, at the direction of Court of Appeal judge Mr Justice Irwin; the role of the English Football League; the informal mediation process instigated by my hon. Friend the sports Minister; and future cases of crisis in the management of football clubs.
On the mediation process, Court of Appeal judge Mr Justice Irwin was quoted by the Coventry Telegraph on 28 November last year as saying:
“There is a long standing relationship between the parties, there needs to be working relationships in the future, it seems to me desirable that all parties go into mediation seeking to resolve all of those disputes relating to those relationships.
That would include any future civil proceedings. It would be futile to enter meditation without considering that.
By the end of the mediation process, if it is successful, all parties should be able to walk away with all issues resolved…This is a case crying out for an honest attempt at mediation.”
I could not agree more. All parties involved have an obligation to their own organisations, but they also have a significant moral responsibility to mediate in the spirit that Mr Justice Irwin advocated. They must realise that that famous club’s 135 years of history and its future are at stake, as is what the club means to the community and the economy of the city of Coventry and the surrounding areas. I wish the parties well, and I urge them all to heed that advice.
My hon. Friend is making a typically thoughtful and passionate speech of great importance. As the co-chair of the all-party group for sport, I want to highlight just how important this issue is. Lessons need to be learned from what happened to Wimbledon. Nothing was resolved, and now that football club has been moved to Milton Keynes Dons and its history has been robbed.
My hon. Friend is a great advocate for all sports, and he certainly knows his football. I thank him for his support.
We must not prejudge the formal mediation process, but if it fails to clarify where Coventry City will play its home games, I want the Digital, Culture, Media and Sport Committee to ask the parties, including the English Football League, to attend a hearing of the Committee to explain how the issue of the football club’s future can be resolved.
I congratulate my hon. Friend on securing this very important debate, which is of interest to many of my constituents, who are naturally Coventry City supporters. He is talking about the parties involved, one of which is Wasps rugby club, which acquired the stadium a while ago. Does he agree that it is incumbent on Wasps to do what it can, as it is doing, to provide a home for Coventry City to ensure that the football club can continue to play in the city that bears its name? Elsewhere in the world, two sports operate out of one venue. So far, Wasps has been sympathetic and has allowed a further year. Does he agree that it needs to be encouraged to continue its very generous offer?
I certainly agree with my hon. Friend. That is why I set out at the start of the debate that I would not favour any particular organisation or relive old battles, because a solution to the situation is needed.
Returning to the role of the English Football League, I would like the EFL to explain its earlier role in the club moving to Northampton and to explain to Coventry City supporters its view of the future. In my view, the EFL should not again allow the club to move outside the city of Coventry.
I echo the point made by my hon. Friend the Member for Solihull in his intervention by raising the issue of the start of an informal mediation process. The Minister has been very helpful in that, and I would be grateful if she will explain the work done by my hon. Friend the Member for Daventry (Chris Heaton-Harris) in that regard.
Finally on the approach of the EFL, we need to look at situations similar to that of Coventry’s—clubs like Blackpool and Charlton, which are recent notable examples. Coventry City supporter groups have felt that the EFL should in such circumstances be able to appoint someone independent to make recommendations to the league on how to proceed and on the parties.
I will conclude, because I am splitting the speaking time to allow two Coventry Members of Parliament the opportunity to speak in the debate. I appreciate entirely that the Minister will not have all the answers for us today, but I ask her to consider our points seriously and to work with the football authorities to ensure that we do all that we can to secure a future for Coventry City in the city of Coventry. Football and its authorities must send a message to owners of football clubs that where a club is embedded in a community we must ensure that it stays in that community. The issue is important not only for fans of Coventry City football club, but as a marker to be put down because we do not want other football clubs and other groups of supporters to be in this situation in the future.
I congratulate the hon. Member for Nuneaton (Mr Jones) on securing the debate. As he rightly said, we have had many debates on the subject over the past six or seven years. I agree with near enough everything he has said, so I do not intend to cover that, but I have some other points to make, the first of which is to thank the sports Minister for her help. She appointed a mediator—for want of a better term—and the hon. Member for Daventry (Chris Heaton-Harris) did a very difficult job to the best of his ability. I can find no fault in that.
Another interesting point is that, as I have been arguing for a long time, we should have as a mediator someone from outside football—possibly a judge, if need be—to adjudicate. It has to be someone of substance to take the heat out of the situation. I am glad to see that the Court has now finally come to that conclusion, rightly or wrongly.
I have one or two other observations. I have met successive sports Ministers over the years and I have had no doubt that they have a difficult job dealing with the football league. In my view, that is because of the absence of strong regulation of it. In the Bundesliga, for example, very few clubs have gone bankrupt or out of business. Perhaps we can learn a lesson from that—although others in the Chamber probably know more about the Bundesliga than I do.
I have had a number of discussions with the Chair of the Digital, Culture, Media and Sport Committee, the hon. Member for Folkestone and Hythe (Damian Collins). Incidentally, he came to one of our debates and he was very helpful, so in fairness I pay tribute to him for that.
Will the hon. Gentleman give way?
I do not have very long, so I will give way very quickly to the hon. Gentleman.
To reiterate the hon. Gentleman’s point, I am a member of that Select Committee—its second longest serving Conservative member—and in our discussions we have considered what has happened to Coventry to be a stain on football. It needs to be resolved.
I agree with the hon. Gentleman. All of us, including different sports Ministers, have been trying to do that for the past six or seven years.
The Chair of the Digital, Culture, Media and Sport Committee has agreed to meet the interested MPs, as I am sure the hon. Member for Nuneaton knows. Subject to us getting a date—[Interruption.] I can see you signalling for me to finish, Mr Sharma, so I will emphasise the point that the club has to stay in Coventry. It has another 12 months at the Ricoh, so let us hope that in a shorter period we will resolve the problem.
It is a pleasure to serve under your chairmanship, Mr Sharma.
I commend the hon. Member for Nuneaton (Mr Jones) on securing this timely debate. Like my hon. Friend the Member for Coventry South (Mr Cunningham), I would reiterate most of what has already been said today.
The ongoing saga at CCFC raises many pertinent questions. How should a football club be run? For whom should it be run? Who should be allowed to own a football club? How can responsible and transparent club ownership be ensured? When should the footballing authorities intervene in poorly run or failing clubs? Those are all extremely important questions that need to be answered. But the most pressing question of all for Sky Blues supporters—the one that would have had the greatest immediate impact on the club’s future—was: where would the team play their home games once the Ricoh Arena deal expired at the end of the season?
We now have confirmation that an agreement has been reached to extend the Ricoh deal by a year, until May 2019, which gives supporters certainty about where they will be watching their team play, at least in the short term. Any agreement that provides a degree of certainty for the supporters while ensuring that the club remains in its home city is, of course, most welcome. Ultimately, however, all the club’s owners have done is to kick the can down the road. The club still has neither a permanent home nor any tangible long-term stability, and it is likely once again to face the prospect of homelessness in 12 months’ time.
To my mind, there are two ways to avoid a repeat of the situation: the club’s owners sell up and leave; or they fundamentally change the way they do their business. The latter would require them to use the next 12 months to repair the relationships that they have systematically dismantled over the past decade; to make a commitment to the club and its traditions; to provide decent investment on and off the pitch; to engage in frank and open communication with the fans; and to acquire a social conscience by considering the impacts of their actions on supporters and the wider local community in Coventry.
Either way, we need to see a step change in the way the club is run in order to ensure greater long-term stability and an improvement in the club’s fortunes on and off the pitch. I, too, know that the Minister has been following the situation for some time, and I look forward to some answers from her today.
As always, Mr Sharma, it is a pleasure to serve under your chairmanship.
I am grateful to my hon. Friend the Member for Nuneaton (Mr Jones) for securing the debate and for the passionate and insightful contributions he and others have made—although I shall breeze over any reference to Coventry’s FA cup success. That aside, I sympathise with the points made by colleagues. They have re-emphasised the case that football clubs up and down the country remain of great importance to their local communities. Coventry City is no exception. Without question, every care should be taken by club owners and stakeholders to respect their club’s history, and they should seek to preserve their club’s long-term status.
The issue surrounding the Ricoh Arena and where Coventry City plays its home games is familiar to us all—in fact, it seems like only yesterday that I was stood in this very place responding to the hon. Member for Coventry South (Mr Cunningham) on this very subject. It was in October 2016; Members present might recall that I urged the various parties with a vested interest in Coventry’s future to come together and to provide that much—needed stability to the club and its loyal supporters. Since then, it has been a rather anxious wait to hear what progress has been made.
I want to take a moment to say how extremely grateful I am for the efforts made by my hon. Friend the Member for Daventry (Chris Heaton-Harris) to bring the relevant parties together. I am also grateful to the EFL for keeping me abreast of the situation at regular intervals. It was a time-consuming and on occasions frustrating process for my hon. Friend, but I am in no doubt that his efforts while refereeing between the two parties delivered some progress in mediation.
As my hon. Friend the Member for Nuneaton pointed out, the clock was ticking for the club to come up with a solution. I can only imagine how those associated with the club—the players, the staff and the fans—were feeling given the uncertainty hanging over them. It came as some relief when, earlier this month, news emerged that a new one-year agreement had been concluded with Wasps Group for the club to continue to play its home games at the Ricoh Arena until May 2019, providing immediate stability for everyone at the club. However, I recognise what the hon. Member for Coventry North East (Colleen Fletcher) said—that is a short-term solution and we need to find a long-term one.
Although I recognise that those longer-term plans were not outlined, the deal demonstrates that there is a mutual interest in the two clubs working together, which will hopefully stretch much further into the future, for the good of the city of Coventry. At the same time, I want to be clear that future arrangements at the Ricoh Arena between Wasps and Coventry City remain a commercial negotiation between private parties. I am sure that my hon. Friend the Member for Nuneaton and the hon. Members for Coventry South and for Coventry North East will fully understand that it is not a matter in which the Government can—or should, in my opinion—intervene. That said, I am always willing to try to help facilitate. I care passionately about the future of football clubs and their importance in local communities and I am willing to support and help where I can, although the actual intervention is slightly beyond the remit of a Minister.
Will the Minister urge the Football League to meet Members of Parliament for Coventry and Warwickshire to discuss this issue? The League seems elusive when it comes to trying to get meetings with it.
I do not need to ask the EFL to meet Members from Coventry and those who have an interest in the future of Coventry City football club, but I am willing to try to facilitate that meeting if Members are finding it difficult to do so. Yes is the direct answer to that question; that invitation should be extended not just to Members for Coventry, but Coventry City supporters and those in the wider Warwickshire area who have a vested interest in the future of the club.
The ongoing dispute between the owners of the football club and Coventry City Council is rightfully a matter for the courts. Given the protracted history between the parties, the Court of Appeal has taken the sensible decision to begin a period of mediation. I hope that it will result in all parties resolving their issues once and for all. It is sometimes easy to forget that the majority of football fans in this country follow clubs outside the premier league, and that those clubs operate on a completely different financial scale.
The reality for clubs such as City is that they cannot rely on huge sums of money from broadcasters or sponsors; they must rely on private investment from owners and the support of local businesses. They need the watchful eye of the English Football League to ensure that owners abide by the rules and that clubs are living within their financial means. Clubs need the help of their local councils for the use of stadiums, and of course they need the fans as a regular source of income and ongoing appeal.
Football clubs need to be run as businesses, but if a company cannot guarantee a product, its customers go elsewhere. Clubs are not like that. They are built on fan loyalty passed through families and generations; they are wedded to their local communities and they have a social heartbeat.
What is exceptional about the Coventry situation is how there has been a falling out between the club and its supporters. Coventry is a big city, with 300,000 residents. A lot of people are excited by football, but the football club under its current ownership does not seem to have motivated those people. They are more motivated to support the club when it plays away than when it plays at home. That is the bit that needs to be worked on.
A bit later in my speech I will come to the importance and the value of fans. The fan base across the whole of English football is growing. In fact, attendance at the English game is the highest it has been for a very long time. Fans have not lost that local connection. All-important revenues are coming into clubs and helping to keep them financially viable. Ensuring long-term financial sustainability must remain the primary responsibility of all club owners. They are the custodians of that club and wherever possible they should aim to leave the club in a better state than how they found it. That is relevant no just to Coventry City but to a whole host of clubs across English football.
Working with clubs, the football authorities must continue to set the parameters for financial sustainability. Through the owners’ and directors’ test, the EFL—and, indeed, the premier league—must keep under review the framework governing the conduct of club owners and directors, engaging with supporter groups in the process. Where there are breaches of the ODT, they take action, and I would expect them to continue do so.
As my hon. Friend the Member for Rugby (Mark Pawsey) just pointed out, supporters have a crucial role in the fortunes of their football club, and club owners must remember that. From time to time, there may be a breakdown in the relationship for a variety of reasons, but if or when that happens, it is imperative that club owners engage openly with fans. Through the work of the Government expert working group on football supporter ownership and engagement, rules are in place that require open dialogue between senior club executives or owners and fans on the most important issues for the club. These rules are not prescriptive, but they will usually include its financial standing, the identity of its owners and future plans. In the case of Coventry, without question that should include plans for where the club plays its football.
Last December, I reported on the progress being made by the vast majority of clubs to engage with fans, but I am well aware that this needs to be a continuous process. My hope and expectation is that the relationship will grow over time as trust builds; clubs feel more at ease sharing information and fans realise the many facets involved in running a club. As this progresses, as I believe it will, fans will become much more involved in the running of their clubs, and that can only be a good thing.
In conclusion, it is my belief that the Government should not involve themselves in the commercial or legal affairs of any individual club, including Coventry City. The responsibility for ensuring the future of a football club sits with the incumbent owner. As outlined, the football authorities have a role to play, too, and I encourage them to work with supporters as well as owners to ensure their ownership rules remain robust. It goes without saying that those with a direct say or influence over the club’s future must continue to work together to provide the clarity needed.
In the case of Coventry City and the city of Coventry, I remain hopeful that through the mediation process the long-running disputes off the pitch can be resolved quickly, so that this proud club with a wide and varied fan base can concentrate solely on matters on the pitch. I wish them the best for the rest of the season.
Question put and agreed to.
[Siobhain McDonagh in the Chair]
I beg to move,
That this House has considered the application of TUPE to Carillion workers.
It is a pleasure to serve under your chairmanship, Ms McDonagh. I thank the House for finding the time for this important debate, which I am pleased to have secured. I am grateful for the opportunity to speak about the application of TUPE to Carillion workers, which is a necessity due to Carillion’s collapse. I do not intend to speak for long, because I want to allow all Members to express their views about this important issue and to leave the Minister sufficient time to respond to the many questions and concerns that I know Members on both sides of the House have about how the Government claim they are dealing with this important and complex issue.
We are all aware of the history of Carillion plc’s £1.3 billion deficit and the irresponsibility of its directors. I remind Members of the redundancy of tens of thousands of workers who were employed directly by Carillion or indirectly by contractors.
I congratulate my hon. Friend on securing the debate. Does she agree that it is important that we ensure that Carillion apprentices are appropriately looked after? Although about 400 of the 1,400 have been found alternative placements, we must find alternatives for them all.
My hon. Friend is correct: this is about apprentices as well as all the other Carillion workers.
Vital contracts for delivering urgent public services are under threat. Their maintenance is an essential part of the way this country is managed under privatisation. Many long-awaited building projects, such as the Midland Metropolitan Hospital in Smethwick, are under threat and may never restart. Above all, however, I want to focus on the crucial issue of what specific assistance the Government will give to the tens of thousands of workers who have been made redundant and to the contractors whose contracts are now in doubt.
In January, my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) and I met the Minister. At that meeting, I put to him four questions, which I ask him again today. First, will he bring Carillion public sector contracts back in house? If so, when and how? Secondly, what protections will he put in place for employees’ pensions, and will the Government meet union pension officers to address the many issues arising from liquidation? Thirdly, what guarantees can he give employees who were directly affected by the collapse of Carillion, and what programmes will the Government put in place to assist all those who have lost their jobs in this crisis? Fourthly, in view of the national significance of Carillion plc, will the Government set up a taskforce to deal with its collapse and all the associated fallout, and will that body include union involvement?
In response, the Minister told me that a lot of work had been done to prepare for Carillion’s liquidation. I have to say that it does not look like it. He told me that all public sector contracts would receive a smooth transition. What assurances can he give me that that will happen? He told me that the plan was to transfer the contract for the Midland Metropolitan Hospital to another company. What is the latest on that urgent matter? The Government have promised to set up a taskforce comprising the unions, business organisations and construction companies. What steps are being taken to protect transferred workers?
I refer the Minister to the letter from Frances O’Grady of the TUC on 30 January requesting protection of transferred workers’ terms and conditions. As the letter states, the transfer of workers employed on Carillion contracts in both the public sector and the private sector creates a significant risk of detrimental impacts on the pay, pensions and terms and conditions of all those staff. The letter calls on the Government to protect the livelihoods of Carillion workers and to ensure that they suffer no detriment from finding themselves employed by alternative providers of services.
The Government should, as a priority, look at ways of compelling public bodies to protect the terms and conditions of workers transferring to alternative providers. For example, the Cabinet Office should adopt a statement of practice on staff transfers that applies to all public bodies, including central Government and local government, the NHS, Transport for London and Network Rail. In that spirit, staff involved should be treated no less favourably than if the TUPE regulations had applied, and appropriate arrangements should be made to protect the occupational pensions and the redundancy and severance terms of staff in all types of transfer.
I call for voluntary TUPE agreements with new employers and for workers to be treated contractually as if they have continuous service. Will that be done? Will the Minister confirm that the Government’s objective is to ensure that Carillion workers’ rights remain the same, without any detriment?
Does not the sorry story of Carillion’s collapse illustrate exactly why there should be proper oversight of public sector contracts that are put out to private companies? We have seen problems in the Ministry of Justice with G4S and in the Home Office with Clearsprings. We should set the standard for employment terms and conditions through procurement. Does my hon. Friend agree that this is a real opportunity to do that?
I agree. I have finished my speech. I would now like to give my colleagues a chance to speak and to hear the answers to my questions.
It is a pleasure to be called to speak in this debate. I intend to be brief. I congratulate the hon. Member for Wolverhampton South West (Eleanor Smith) on securing this important debate. As a member of the Business, Energy and Industrial Strategy Committee, which is conducting an inquiry into the collapse of Carillion, I assure her and other Members present that a thorough investigation is ongoing. I am sure that Members are aware of the proceedings of that Committee.
As has been said, Carillion’s collapse was a complete commercial disaster, and one that could have been prevented with proper corporate governance. It is right that we focus our attention on the people most directly affected by the failure of Carillion—namely, the employees. It is not their fault that there was a failure of leadership and culture at the top of that business. They are made to suffer the consequences of a situation not of their making.
I recognise that this debate is not about the business model—we could talk about that endlessly—or the business strategy, how the business was run in terms of the standards adopted, or the culture of the business. In other circumstances we would review all of those carefully, to learn what must be learned from such a catastrophe. The decision making of the most senior executives has been mentioned. Having spent 30 years of my life in business before coming to this House, I can honestly say that I have never met such a sorry bunch of directors as the Carillion directors we had before us.
The hon. Gentleman and I are on the joint inquiry into Carillion. Will he say something about how the pension scheme was managed? Does he agree that dividend payments appeared to be a higher priority than funding the pension scheme for Carillion workers?
Although that is not directly relevant to the debate, I agree with the hon. Gentleman. When we look at the facts, we see that there is no doubt that when the board faced choices about how to use money that, frankly, it did not have, it chose to pay dividends rather than to make payments into the pension fund. Those things need to be scrutinised, and lessons must be learned.
This debate is about the employees: decent, hard-working men and women—and their families—who brought their very best to work and did their very best for a company that many felt great fealty to and enjoyed working for. I know that, because just a few days ago a constituent approached me in the street and, in introducing himself, told me that he was a Carillion employee—in fact, he had been a manager. He spoke highly of the people he worked with and of the business he had spent some time at, which, as I have said, he felt some loyalty to. Graciously, he wanted me, as a member of the Select Committee looking into the failure of Carillion, to know that he and his colleagues—former Carillion employees—appreciated the thorough manner in which the Committee was conducting its inquiry. He said, “I know it won’t change anything, but it is right that the directors should be openly held to account. It’s about getting some form of justice, really, isn’t it?” That is what has brought me to my feet today. I needed to come to the debate to stand up and ask the Minister for some form of justice for the Carillion workers.
I congratulate the Government on the actions they have taken on the failure of Carillion, because they have managed to deal with the failure of the business. They could have been tempted to bail out the failing company by putting large sums of public money into it, but thankfully they resisted that temptation. They could have stood back and done nothing at all, but that would have been an abrogation of responsibility. In fact, the Government acted pragmatically, given the circumstances.
The hon. Gentleman mentions the Government taking responsibility and not standing back and doing nothing. Does he agree that, given the company’s three profit warnings, the Government should have done something before the collapse?
Many issues relating to those profit warnings and the circumstances leading up to them need to be thoroughly investigated. Yes, at some point all of the stakeholders involved in this rather sorry story will have to explain and account for their decisions. That is right and proper and the way in which we run things in this country. We will learn from what we discover as we go through the process of inquiry. However, I congratulate the Government on acting pragmatically.
I now ask the Minister to act pragmatically on behalf of those workers who have moved from employment with Carillion to employment with a new private employer. We all know of the limitations of the regulations as things stand: TUPE applies only when a worker is transferred to a new company from an existing functioning company; it does not apply in the event of bankruptcy proceedings or analogous insolvency proceedings. I therefore ask the Minister to consider steps to provide, as my constituent said, some form of justice to Carillion workers who are transferred—thankfully, at one level—to another private company. Surely something can be done to protect the pay and conditions of those workers, because that is what would have happened had the contract changed hands: they would have been TUPE-ed across, as the saying goes. Instead, they have been caught up in the failure of Carillion.
It is wrong that these workers, through no fault of their own, should pay the price of lower pay and lesser conditions for doing the same job for a new company as they did for Carillion. When the Minister replies, I very much hope to hear that the Government will insist, at least in the transfer of public sector contracts from Carillion to new private companies, on a transfer of undertakings for the workers affected.
Ms McDonagh, it is traditional at the start of these debates to say what a pleasure it is to serve under the Chair, and today it is really true. I begin by congratulating my parliamentary neighbour, my hon. Friend the Member for Wolverhampton South West (Eleanor Smith), on securing the debate and by thanking the Minister for his close engagement in this issue in recent weeks, since the company went into liquidation.
As the hon. Member for Stirling (Stephen Kerr) just said, many aspects of Carillion’s collapse are the subject of the inquiries by the Work and Pensions Committee and the Business, Energy and Industrial Strategy Committee, including how the company got itself into such financial trouble, why so many big contracts went wrong at the same time and why the company kept paying out dividends while the pension deficit built up, among many other questions. Today, we focus on one in particular: Carillion and its staff.
At the time of Carillion’s collapse, the company employed roughly 20,000 people in the United Kingdom and a similar number abroad, with 450 employed in its Wolverhampton headquarters. Since then, more than 1,000 of those workers have lost their jobs. Many of them would have had access to the various voluntary redundancy schemes that the company put forward in the 18 months or so running up to its collapse.
That raises a moral dilemma. Workers who had 20 or 30 years of service would have got quite generous voluntary redundancy payments had they pursued that option in the run-up to the company’s collapse. Therefore, the first question is: what was the gap in knowledge between the workers who were simply doing their jobs—perhaps thinking that there might be another couple of rounds of voluntary redundancy, so there was no urgency —and those at the top of the company, desperate to keep the company afloat? What did those at the top know about the prospects for the company’s collapse, compared with the workers, who perhaps did not? That gap in knowledge could result in a loss of tens of thousands of pounds—the difference between what someone would have got under voluntary redundancy and the bare statutory minimum they are now entitled to if they lose their job.
My right hon. Friend is making a really important point. A constituent of mine came to see me about the lack of information from Carillion and, frankly, the downright lies they have been told by their management and leadership. They were told that they would be made redundant on 31 January, and the goalposts have been moved time and again.
Now, staff in Sheffield are being made redundant on a rolling basis—they do not know when it will happen. Staff who have been there for 20 or 30 years, as my right hon. Friend said, run the risk of losing out on significant redundancy payments or are choosing to leave the company and find extra work. I hope the Minister will respond on information and transparency in the company.
My hon. Friend makes a good point. The first thing I will raise is the question of redundancy and the payments available to those 1,000 or so people who have lost their jobs, but the second issue is about the workers who are left.
Carillion was, of course, a complex web of contracts, covering sectors as diverse as the Ministry of Defence, construction, prisons, school maintenance, cleaning and a whole number of other things. The official receiver is now going through those contracts and looking for alternative suppliers to take them over. The central question before us in this debate is on what terms those will be taken over, and what the pay levels and conditions will be for the workers who find themselves transferred.
The right hon. Gentleman is making a valid point about the terms and conditions. I wonder whether he was as concerned as I was to read the reports about Serco picking up the contracts at, I think, about 50 NHS sites somewhere in England—I cannot remember exactly where—and the chief executive saying that it had saved £20 million on the contract. Does the right hon. Gentleman agree with my concern: that that £20 million might be coming from the terms and conditions and the wages of the workforce?
I quite agree; that is a concern. Of course, the context is that a company went into financial collapse while running those public sector contracts, so it hardly looks as though it was making a big killing out of them—frankly, if it was, it would not have gone bust. The margins were already thin, and the public sector has proven itself over the years to be more adept at driving narrow margins. My concern is that somebody who takes over will drive that down further in precisely the way that the hon. Gentleman said and that the people who will pay the price will be workers, some of whom are on quite low pay to begin with.
The legal position is that TUPE does not normally apply in an insolvency; I think hon. Members here understand that. But the point being made in this case is that such a complex web of contracts is involved and there is such a significant public interest: if there is a proliferation of new suppliers, there is a strong case that TUPE should apply, at least where employment is rolled over.
Given Carillion’s collapse into liquidation, it is hard to say that it was earning very heavy margins on the contracts in the first place. The Minister for the Cabinet Office seemed to agree with that point when he told the House, shortly after the company’s collapse, that the official receiver was
“looking at…whether it can offer arrangements whereby workers are no worse off than they were under the terms of their Carillion employment.”—[Official Report, 24 January 2018; Vol. 635, c. 347.]
I agree with what the Minister for the Cabinet Office said on that occasion. That is the point I stress today.
I think we all understand that, sadly, in a case of insolvency there may be some job losses; part of the reason why, legally speaking, TUPE does not apply in situations of an insolvency is that there will be job losses. The question to the Minister is a slightly different one. Even if we understand that there are job losses, can the Government and the official receiver not insist that, when we are talking about not job losses but employment being rolled over from Carillion to an alternative supplier, on this occasion, given the public interest, the existing terms and conditions should apply as though under TUPE? That would be reasonable, fair to those workers and fair in terms of the public interest. On this occasion, it is the right thing to do.
It is a pleasure to speak in this debate; it is one that I have a particular interest in because of my own constituency and the workers there and across Northern Ireland. First, I congratulate the hon. Member for Wolverhampton South West (Eleanor Smith) on bringing the debate forward, presenting the case, and giving us an opportunity to participate. I thank her for that. It is nice to see the Minister in his place. I spoke to him beforehand. We are looking for substantive responses from him; we are not putting any pressure on him, but we are here to highlight the issues. He knows what the issues are and he knows what we are seeking.
Carillion is undoubtedly one of the biggest shakes in the construction industry in recent years, and yet as one delves deeper one can see that it was not a shock to those in the know but an inevitability. The hon. Member for Cardiff Central (Jo Stevens) said in her intervention that there were two or three warnings along the way. I cannot quite understand why nothing happened. What we are seeking, in as gentle a fashion as possible but with firm determination, is to ensure that those warning signs that were clearly there among some businesses are warning signs that the Government are able to take notice of and do something about.
When we hear about other big businesses—hon. Members will forgive me this, because we are probably all the same; I do not think I am any different from anybody else—and hear the names, we say, “Are they okay? What’s their pension fund like?” Those are the questions we ask automatically, right away. If the pension fund is run down, that should be a warning sign of what is happening. I am not sure what powers the Government have on this, but I would be keen to ensure that they have the power necessary to check pension funds and see whether they are being run down.
When I ran my own business, I quickly learned that a business cannot survive with outstanding invoices. A 30-day pay period was my ultimate rule, and for good reason: if the retailer went bust, I would have a loss of £1,000 for one month, perhaps, but if it went for three months it would be £3,000. When the latest diktat from Carillion advised that 120 days could be an invoice period, something major was wrong.
Although we could and should go into a major investigation into how it all could have happened and how Carillion continued to be awarded Government contracts, that is not my most pressing concern. My most pressing concern, and the subject of this debate, is the workers—those with redundancy or uncertainty looming, a mortgage to pay, a family and children to look after and debts creeping up around them. How will the small businesses survive? My hon. Friend the Member for South Antrim (Paul Girvan), who is not here today but in a meeting of a Committee he is involved with, has a company in his constituency that finds itself in exactly that problem, with very deep troubles.
Carillion, as we know, employed some 43,000 staff worldwide and provided services for schools, prisons and hospitals, which have been well illustrated—we all know what they are—across the United Kingdom of Great Britain and Northern Ireland. Reports suggest that Carillion had over 200 jobs in Northern Ireland, but sometimes we need to look at what that means, because 200 jobs does not mean 200 employees. That is 200 jobs with contractors, with subcontractors and with suppliers. There is a domino effect on many other companies. They are all hanging in the balance, and that is not a balancing act that any of us would want to sit back and watch.
There were many contracts, including repair and heating services for the Northern Ireland Housing Executive and for Power NI. Boy, do I know that there was a period in which the Housing Executive in my constituency and across Northern Ireland was struggling under the burden of uncertainty! Constituents were ringing up about repairs not being carried out and fearing that their long-awaited and desperately needed maintenance work would not be done, disabled adaptations would not be made or unsafe stairs would not be repaired. The list is endless—we all have such issues in our own constituencies.
The latest news is that the Housing Executive is transferring its Carillion contracts to the UK division of ENGIE, a French energy and outsourcing company. That is great, but it begs the question whether the workers who have the contract continue in their employment. There is no doubt in my mind that the answer should be yes. I, along with other MPs and elected representatives across Northern Ireland, raised those concerns and we were fortunate to be given the assurance that ENGIE was the preferred bidder: identified by PwC’s special managers as a specialist in the field. It was appointed following Carillion’s liquidation.
There is good news there again: the existing terms and conditions of the legacy Carillion contracts, including costs and service delivery, will remain. I noticed in the media that ENGIE confirmed that all staff working on the Housing Executive contracts would keep their jobs on the same pay and conditions.
We have had some good fortune in Northern Ireland, and we are pleased to report that in this debate. That is wonderful for Northern Ireland, but is it happening UK-wide? Perhaps some contributions will indicate that it is not. If it is not, it needs to be. It is time to address this. It must happen UK-wide, and if it does not, we in the House must take the lead. We look to the Minister to give us that reassurance, and I think all Members participating in the debate seek that assurance as well.
It seems to me that in a similar scenario, when the bankers messed up and small businesses paid the price, we did not do the best job in holding those bankers to account. Ensuring that TUPE happens for all existing contracts and contractors will ensure that we step up in the right way for those who are blameless and yet will carry the burden. I always say this—I am sure we are all the same—but my job here is to speak out for the wee man and the wee woman: those who are down there with big business trampling on the backs of their heels and the backs of their necks. That is what we do in the House: we speak out for those people and make sure we can be a voice for them.
There is waiving of fees and extensions of overdrafts, but how long will the banks continue with that without the guidance of this place? Has the Minister had any discussions with the banks on how they can assist and help small businesses? This is a national concern and must be addressed in this place, to stop the little man from drowning in the wake of the cruise liners that have continued to sail on through the storm that they created. We need Government intervention and Government help, and it is important that we receive that assurance today.
Enough is enough. I, for one, have no issue in supporting this motion and the thrust of why we are here today, which is to try to help those who are concerned about their wages, contracts, pensions and all the other things. They are concerned about putting food on the table and looking after their families. The contractors—the men and women who have outlaid money for materials and who have staff to pay and mortgages to pay—are the innocent. They have done no wrong but have been grossly wronged.
We are elected to this place to speak out for what is right and to ensure that we do what is right. At the same time, we ask the Government to ensure that right is done as well. We are called to bring in legislation that benefits our constituents and society as a whole, and that is what the debate represents. While the major players mopping it up in Northern Ireland have confirmed that that is the case, it must also be the case across the whole of the rest of the United Kingdom—in England, Scotland and Wales.
It is a pleasure to serve under your chairmanship, Ms McDonagh. I congratulate my hon. Friend the Member for Wolverhampton South West (Eleanor Smith) on securing this extremely important debate. She clearly has a significant constituency interest in the matter, but as we have heard, such is the reach of Carillion that no part of the country is unaffected by its demise.
I will not repeat the stories of greed, arrogance and, probably, negligence that have led us to where we are today, except to say that it is a bitter irony that many of those culpable for the current state of affairs are the least affected by it. We know the company ramped up dividends, borrowed more and more money to effectively hand it over to shareholders, delayed payments to creditors and generally behaved as if there was no tomorrow, with no thought of the consequences of its actions.
On that point, the hon. Gentleman did not mention—it is worth mentioning—the salaries and bonuses the directors were awarding each other, which should bear on our minds as we consider the wee people who the hon. Member for Strangford (Jim Shannon) described and who we should all be thinking about.
Absolutely. This is a tale of a corporate system out of control. It sends a real message about how not to run a company responsibly. I hope that some concrete action will come to prevent these kind of scandals happening in the future. Comparing the pension deficit to the bonuses paid really brings home how unfairly and avariciously certain people have behaved in this case.
While it is hoped that, in the short term, there will be some protection for jobs—as we have heard today and as I will go on to explore, there are some questions about the precise arrangements—we must not forget those who work for subcontractors and those who have already been made redundant who need our support as well.
I am told that there is an issue with the liquidators providing termination numbers to redundant Carillion staff. Some of those staff have given a lifetime to the company but have been told by the liquidator that, until that number is issued, their claims for notice pay and redundancy pay cannot be processed. Those who have received those details have been told that they may have to wait up to six weeks for the Redundancy Payments Service to actually process the payments.
As we know from the universal credit discussions we have had in here in recent times, expecting people to wait six weeks for payment after losing their job is far too long, so I do not see why we should allow that situation to occur here. I hope that, when the Minister next speaks to the liquidator, he will raise these issues and ensure that those who have been made redundant are able to access their statutory entitlements as soon as possible. Will the Minister inform us what resources have been allocated to the Insolvency Service to ensure that those payments are processed as quickly as possible?
I congratulate my hon. Friend the Member for Wolverhampton South West (Eleanor Smith) on securing this important debate. On apprenticeships, it is hugely important that apprentices are given alternative apprenticeships. However, in answer to a written question of mine, the Government said that apprentices who are not found an alternative apprenticeship will be paid after 31 January. Does my hon. Friend agree that clarity over how long they will be paid for is important, and that, when they are given a placement, a reasonable travel time is also crucial?
I absolutely agree. While there has been some progress in finding apprenticeships for some of those who have lost theirs, there are still a huge number who have yet to be found one. We should not underestimate how important it is to get people trained in those skills that we will need in the economy in the future. I hope that more effort goes into that.
On the other companies in the supply chain and subcontractors, is the Minister able to tell us what analysis he has made of the number of companies in these sectors at risk of insolvency and the number of employees whose employment is in jeopardy as a knock-on effect of the liquidation? Has he done any analysis of the numbers affected who are perhaps working in another capacity on Carillion contracts—either through agency arrangements or zero-hours contracts? They are really little more than bystanders in this process and are powerless to do anything but accept their fate. I hope we are able to do something to assist those individuals.
As we know, when a particular function transfers, it is normally the case that staff are transferred over under the TUPE regulations. No one is suggesting for a minute that that is not a preferable situation to redundancy, but it seems that there are questions to be answered about the exact basis on which people will transfer over to their new employers. There should be no ambiguity from the Government on this. People’s existing contracts should be honoured in full. We should not have state-sponsored watering down of terms and conditions. The Government should not be a willing partner in the chipping away of employee rights.
Does my hon. Friend agree that this is an ideal opportunity for the Minister to confirm that TUPE, which obviously derives from the European Union’s acquired rights directive, will be maintained after Brexit, and that voluntary TUPE in these circumstances, to protect Carillion workers, could be offered as a commitment of that for the future?
I certainly agree, and I would certainly like some clarity from the Government on a whole range of issues on the impact of Brexit. The acquired rights directive has been in place for some 30-plus years now. It is not perfect by any stretch of the imagination, but it is particularly important in situations like this.
Even if there is a full TUPE transfer, we should not pretend that it will be happily ever after. The reality is that, in the majority of occasions when people transfer over to their new employers, sooner or later that employer will look to change the terms and conditions. When they say they are changing terms and conditions, they mean they are watering them down. We have already heard from some of my hon. Friends that there is considerable anxiety about that. It is a practice that has to stop.
The Government should stipulate that any company running a contract providing public services should respect agreed terms and conditions and look to adhere to the highest standards possible that a responsible employer could adopt—proper rates of pay that provide a living wage, trade union recognition and collective bargaining rights and an occupational pension that is not paid into only when the employer feels like it but is there, as it should be, as part of deferred pay and as an essential part of the contract.
So TUPE applies a certain level of protection. It is far from perfect and often misunderstood, but, contrary to what many people think, it does not provide unlimited protection against changes to terms and conditions. It certainly has more than enough loopholes in it to allow a determined employer to ultimately do as it wishes. Because of the way in which our employment rights system works in this country, changing the terms and conditions of employees is easier to do than finding savings elsewhere. However, in these circumstances it is preferable to redundancy. Let us protect the jobs and get as many transferred as we can, but let us not for a second think that that is the end of the matter. Let us not perpetuate the merry-go-round of misery. Let us take the opportunity to say to whoever ends up running the contracts, “Please respect and protect the terms and conditions of the people who do the day-to-day work.”
The Prime Minister has said that the Government are a customer of Carillion, which is of course true, but we should be much more than a customer. We should be the champion of public services, the defender of the highest employment standards and an exemplar for the private sector of the kinds of companies that we want to see succeed in the country. Perhaps people thought Carillion was a success story at some point, but it was a success built on sand, on deception and on avarice. We should be and we can be much better than that.
It is a pleasure to see you in the Chair, Ms McDonagh. I congratulate my Unison comrade, the hon. Member for Wolverhampton South West (Eleanor Smith), on securing this debate. As a member of the inquiry into these matters, along with the hon. Member for Stirling (Stephen Kerr), I assure everyone that there will be pertinent questions tomorrow to the auditors and the Pensions Regulator. Clearly there are significant and very real questions for them as to how the company collapsed.
If a politician advocates the outsourcing model of public service delivery—for many reasons I do not subscribe to that theory—they have a duty and a responsibility to protect the workers who deliver those public services using that model. We have heard many examples in the speeches so far about the duty and responsibility that the Government should have in protecting the workers’ terms and conditions, wages and so forth. I gently say to the Minister that there is an immediate solution that he could take up now. He could agree to the provisions that can be found in the Workers (Definition and Rights) Bill, an excellent piece of legislation sponsored by me, which foresees the possibility of a company collapsing. Indeed, it was lodged and printed the day before Carillion collapsed.
A general point applies not only to Carillion, but to all sectors of the economy where there is a contractor relationship with a principal employer and where that contractor absconds, as happened in one case I am aware of. A hairdresser with a business in a Hilton hotel in Scotland absconded—to Portugal, I understand—leaving the workers there with unpaid wages and in search of answers. In the case of Carillion, where the public sector contracted Carillion to do work, the contractor should pick up the employment and wages of the workers. That can be found in clause 3 of my proposed piece of legislation, which is of course available in all good Vote Offices on the estate.
Such issues come up too often, which is why I propose legislation. Companies go bust or abscond, and leave workers exposed with nothing. We need to address that issue, so I hope the Government will take that up. I am sure the Minister will respond to that.
There should be a voluntary TUPE arrangement. Certainly in Scotland workers have been transferred to other companies to complete contracts. The hon. Member for Cardiff Central (Jo Stevens) raised the issue of why contracts were issued after profit warnings were announced. The Scottish Government did not agree any contracts with Carillion after the first profit warning in July 2017. The UK Government awarded £2 billion of contracts after that profit warning was issued, including for HS2 and for Ministry of Defence bases. The second profit warning was on 29 September and yet the Government appear to have contracted work worth £62 million after that. Then there was a third profit warning on 17 November and the Education and Skills Funding Agency awarded a £12 million school building contract to Carillion. Will the Government tell us why? After the first profit warning, alarm bells should have sounded in Whitehall about why the company had secured such work.
There is a real issue with the pension scheme. As someone who has negotiated TUPE transfers, I am aware of the provisions under TUPE. New contractors like to wriggle out of putting in as much money as the public sector did —usually to 6%—and a lot lower than what the public sector put in. Has the Minister looked specifically at occupational pension scheme provision? That will be a real issue for this Parliament to deal with. When we see the Pensions Regulator asleep at the wheel—in this case fast asleep at the wheel—occupational pensions will be a real issue. The Work and Pensions Committee looked at the issue this morning. Will the Minister make a statement today on what occupational pension scheme provision will be given to workers who have transferred?
I again congratulate the hon. Member for Wolverhampton South West on securing this debate. I hope the Government will listen to all hon. Members who have spoken today. I look forward to the Minister’s offer of a meeting with me to discuss my legislation.
It is fantastic to have you chairing this debate today, Ms McDonagh. I congratulate my hon. Friend the Member for Wolverhampton South West (Eleanor Smith) on securing it and on working so hard for her constituents. I know that her eagerness to secure this debate comes from a real anxiety about what will happen to all the workers.
What is wrong with the model of directly employed workers delivering contracts on behalf of the Government on such vital projects as school and hospital builds and prison maintenance; workers who have access to trade unions and vice versa; employers who afford rights and protections to their workers; and work that allows them to live a good life in security? Why not have a model whereby any profits made from the worker’s labour are reinvested in the wages of the workers and the projects that the nation needs? What we saw at Carillion was the absolute opposite of that.
Carillion is not only a well-known blacklister. From 2009 to 2016, it paid out £554 million in dividends—in other words, three quarters of the cash it made from operations. In the five-year period from January 2012 to June 2017, it paid out £333 million more in dividends than it generated in cash from its operations. We know that in the past six months Carillion issued three profit warnings. We also know that during that same period, as has been mentioned, and following those profit warnings, Carillion was awarded three contracts worth nearly £2 billion.
I know that Conservatives and those wedded to freedom of the market would maintain that a business does what it wants with its profits. It is up to them and there should be very little state intervention, but surely even those people—
Will the hon. Lady give way?
If the hon. Gentleman will let me finish, he might agree with what I say next. Surely even those people can see that paying out more in dividends to shareholders than the amount made in profits—paying out three quarters of cash made from operations—is not a healthy way to run a business.
I agree with the hon. Lady’s last point, but her description of what Conservatives generally believe about the marketplace is a fallacy. We believe very much in the operation of markets, but within the framework of law. Directors of companies have serious responsibilities, both legal and moral, for the conduct of their affairs. That accountability is framed by the law that regulates the marketplace.
Thanks for explaining the nature of conservatism. That was very welcome. I think the contracts made after three profit warnings tell their own story.
That way of doing business is catastrophic for workers, and damages progress on desperately needed public infrastructure. Imagine all the investment that could have been made if even half the money that went to shareholders had been invested in public projects and workers. That is why the Labour party calls on the Government to bring the contracts back in house. The situation today, with potential mass job losses, is not the fault of the workers, so a degradation of workers’ rights as a result of Carillion’s collapse—which threw 20,000 workers into a future of chaos and worry—is a price they should not have to pay.
The Government are not powerless in this situation, given that they have 450 contracts with Carillion. They were a major customer of the company, with a considerable stake in the future of the contracts and what the new jobs will be like. If there is any doubt that TUPE applies —particularly regulation 4 on protection of contractual rights and regulation 7 on protection from dismissal—I should hope at the very least for a Cabinet Office statement of practice to be issued to ensure the transfer of all employees in Carillion public sector contracts as if TUPE applied. That statement of practice should also apply to all contracts relating to central Government, local government, the NHS and all public bodies. Similarly, could the Government instruct the official receiver to transfer employees in private sector contracts as if TUPE applied? They gave an instruction to prioritise the continuation of public sector contracts, which was a good thing. It is right, in addition, to issue similar instructions on behalf of private sector workers, whose livelihoods are, as we know, no less important than those of people in the public sector.
It is extremely important that when workers transfer to a new employer, their individual contracts of employment and trade union recognition arrangements should follow them. So far, 980 workers have been made redundant and 7,500 have been transferred, but after all these weeks thousands of workers still face great uncertainty, as has been recounted in personal stories from constituencies. The Government, alongside the official receiver and special managers, must provide certainty.
The Government have said that the majority of employees who have already been transferred are on similar terms and conditions. What does “majority” mean—is it 51% or 99%—and what does “similar” mean? With three Conservative Members in the Chamber, I do not want to be accused of being overly sceptical, but the Government are hardly seen as a bastion of workers’ rights, and it is therefore unlikely that in this instance “similar” would equate to an upgrading of workers’ rights. As to those who were not transferred with similar conditions, what degradation was there of their terms?
The full scale of the catastrophe cannot just be forgotten as another failure of outsourcing, especially when, rather than resorting wholesale to an alternative model, the Government are simply allowing a similar operation to bid for contracts. That makes me very concerned about the long-term security of the jobs. How will the Government track the long-term outcomes for Carillion workers in their new employment and training places, as well as those for the self-employed and employees of subcontractors?
As the Government know, regulation 13 of TUPE, which places a duty on the official receiver and the special manager to inform and consult employee representatives in relation to TUPE transfers, is still a requirement even if regulations 4 and 7 do not apply. It is therefore important in setting workers’ expectations and giving clarity about their future. It relates to information about whether there will be a transfer—and the transfer date—as well as the legal, social and economic implications for any affected employees. Have the official receiver and special managers been complying with that duty? That is not clear. Are those representatives being informed and consulted? Worryingly, I read yesterday that Unite the union has discovered that Carillion did not pay into the NHS pension scheme in December 2017, even though deductions were made from employees’ salaries. I should like to know what happened to those pension contributions.
My final point is that there could be an argument that regulations 4 and 7 of TUPE apply in the case of Carillion. I understand that the usual position when a company is put into compulsory liquidation is that trading ceases and operations come to a complete halt. In an ordinary liquidation, priority is given to paying off creditors, and therefore regulations 4 and 7 of TUPE do not apply. In Carillion’s situation, the Government made it clear that the official receiver should instruct some of the Carillion companies to continue with their operations—especially those relating to public sector contracts—so that the services being provided by Carillion could continue without a break. The Minister for the Cabinet office said:
“Let me be clear that all employees should continue to turn up to work confident in the knowledge that they will be paid for the public services they are providing.”—[Official Report, 15 January 2018; Vol. 634, c. 624.]
The official receiver’s decision that some Carillion companies should carry on trading to safeguard and maintain the services that they are providing means that the liquidation has been conducted in the same way as an administration, in which regulations 4 and 7 of TUPE would undoubtedly apply.
The Minister shakes his head; if he does not believe me, I point out to him the d’Urso case—that was my northern Italian pronunciation and I am happy to provide the Minister with my notes afterwards. The case considered whether the Italian version of TUPE applied to transfers effected by a company that was subject to a special administration procedure for large undertakings in critical difficulty. The special administration procedure had many of the features of a compulsory liquidation. None the less, the European Court of Justice decided that the business transfers directive could apply if it had been decided that the undertaking should continue trading, for so long as the decision to continue trading continued in effect.
Sitting suspended for a Division in the House.
When you suspended the sitting, Ms McDonagh, I thought that I had done something wrong or was being outrageous, but in fact there was a Division. I was pointing the Minister to the case in Italy. I urge him to look at it and consider the application in Carillion’s case, because there are so many similarities.
Where there is a will, there is a way. The political questions highlighted by the Carillion case are crucial. The model of outsourcing to companies that essentially leak taxpayers’ money to make rich people even richer has had its day. The same taxpayers who fund the obscene wealth of the shareholders face joblessness, degradation of their terms and conditions and a race to the bottom on what rights they will have left. We know that that model has had its day, but I am not sure that the Government do. However, the critical question today is what happens to the workers, their jobs, their pay, their terms and conditions and their security. I urge the Government to take decisive and reassuring action for thousands of these workers and to answer some of the critical questions that we have all posed here today.
Let me clarify that the debate will end at 4.16 pm; I do not want the Minister to feel that he has to abbreviate his contribution.
Thank you, Ms McDonagh; it is great to have time to breathe and to think about what I will say. It is a great pleasure to serve under your chairmanship. This is only my second Westminster Hall debate as a Minister, so please be gentle with me as we go.
I congratulate the hon. Member for Wolverhampton South West (Eleanor Smith) on securing the debate. I know that she has been incredibly concerned about her constituents. We have spoken. I called her on the very day when Carillion went into insolvency. We have met and spoken on a number of occasions. I know that she brings this matter to the House because she is deeply concerned about the impact that the Carillion insolvency will have on her constituents and the people who work at the Wolverhampton headquarters.
We all recognise the impact that the Carillion insolvency has had and the weight of it. The Government have taken decisive action to mitigate the effects of the Carillion insolvency on employees and firms in the supply chain since it became clear that the company was in severe trouble. Although our No. 1 priority was to protect the vital public services delivered by Carillion, we have also sought to minimise the impact on the private sector and all the jobs that rely on it. Where private sector clients want services to continue, pending transition to another supplier, and have agreed to pay for those services, the official receiver has agreed to maintain them. Through the official receiver and the appointment of special managers, we have ensured that vital public services have been maintained.
There was some suggestion earlier of public services being at risk. We have actually seen an orderly, smooth transition. We have managed to protect the hospitals, prisons and schools—all the public services that rely on the services that were being provided by Carillion. That was our major priority, but of course we have an added interest in doing all we can to protect not only all the thousands of employees employed by Carillion, but the many thousands of jobs in the supply chain—the contractors who, through no fault of their own, find themselves in a difficult position because of the Carillion insolvency.
To date, as I think has been mentioned during the debate, 7,610 of Carillion’s UK employees have transferred to new employers and 1,141 employees have, sadly, been made redundant. I will come on to the support that we are putting in place for those who are made redundant. Carillion had more than 18,000 UK employees, and we hope that the special managers will announce further transfers of jobs and contracts in the very near future.
On 26 January, the Ministry of Justice, for example, announced the creation of a new, Government-owned facilities management company. There has been some suggestion, raised earlier in the debate, that we should transfer wholesale all of these contracts back into public ownership, back into administration by the state. Our approach has been pragmatic: when we can have a smooth transition to new private sector providers that maintains jobs and services, and returns money for the creditors—we must not forget that one of the main jobs for the special manager is to protect the interest of all those creditors owed money by Carillion—we will do so. But when it is right that we take contracts back into public ownership and management, we will also do that. We have a pragmatic rather than a dogmatic approach.
I thank the Minister for giving way so soon into his speech. I want to stress this point. The Government have essentially underwritten public sector contracts, so that they can continue, which I support. However, does he agree that that is not a usual feature of a compulsory liquidation? It is more like an administration procedure, and therefore TUPE regulations could apply.
That is the point the hon. Lady made in her speech. Let us be clear: Carillion is in insolvency, not in administration—there is a distinct difference in law. While the Government have stood behind Carillion to ensure that those public services continue to be delivered by the company during that smooth transition, in law, Carillion is in insolvency. I commend the hon. Lady on her Italian, but the point she makes is not relevant to the Carillion case, unfortunately. Later in my speech, I will explain why TUPE does not apply in this case.
The new company that I referred to, the GovCo from the Ministry of Justice, will ensure the delivery of, for example, prison facilities management previously provided by Carillion, including things such as cleaning, reactive maintenance, landscaping and planned repair building work. Those jobs have been taken in house to a GovCo. We have also seen positive signs regarding Carillion’s larger contracts.
As I said, a number of jobs have already been secured, but, as hon. Members will have seen, the media have recently reported on Serco’s and Brookfield’s interest in purchasing a number of contracts and transferring roughly 4,000 workers, although that is not yet confirmed. I understand that the official receiver and the special managers are working hard with customers to try to secure agreements, which will secure further jobs.
We also have to remember that some of these contracts are in the private sector and some are in the public sector. The Government were a customer of Carillion. We did not own Carillion. My hon. Friend the Member for Stirling (Stephen Kerr) rightly pointed out that we did not ride to the rescue and bail Carillion out. Our intention was to protect public services and, wherever possible, protect the jobs that relied on them.
The hon. Member for Barnsley East (Stephanie Peacock) has had to leave because of the Division, and I understand that. She mentioned in particular the issue of apprenticeships, which was also raised by other hon. Members. The Construction Industry Training Board, the CITB, has now conducted face-to-face discussions with all of the 1,400 Carillion apprentices and has so far found new employers for 725 of them. In addition, 180 of those were level 1 pre-apprenticeships, and those have been transferred to new training providers. The CITB is working to ensure that remaining apprentices are supported to find new employers and training providers. We are confident—the CITB is confident—that there will be opportunities and new apprenticeships for all of those apprentices who wish to continue with their studies.
As I said, we have had the question of whether TUPE should apply. While we welcome the protection of Carillion’s employees, and I fully understand the desire of the hon. Member for Wolverhampton South West to protect the terms and conditions of the staff that she represents, it might just help if I explain to hon. Members that there are over 300 companies in the Carillion group, of which around 200 are based in the UK. Currently, 27 companies are subject to compulsory liquidation proceedings in the UK. When these companies are responsible for employing Carillion’s 18,000 employees, it is simply a matter of law that some elements of TUPE do not apply. Protections for transferring employers is a well-established principle that, as we have heard today, derives from EU legislation dating back to the 1970s. However, there are good reasons why key TUPE provisions do not apply when a company goes into liquidation.
The reason why TUPE is not applied in various insolvency situations, including liquidation, is that it is considered an obstacle to rescuing the businesses and saving jobs. That has to be our priority, of course. We want to rescue and secure these jobs. A decision taken by policy makers and Governments of all colours not to apply TUPE provisions in these cases is well understood, as are the reasons behind it. As a result, regulation 8 of the TUPE regulations 2006, covers insolvency proceedings and provides that these provisions do not apply
“where the transferor is the subject of bankruptcy proceedings or…insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of an insolvency practitioner.”
That is exactly the case that we see here with Carillion.
There are two good reasons why the Government do not want to apply TUPE. First, it would undermine the intention of rescuing jobs, as I said. Secondly, to apply TUPE specifically to the present liquidation scenario would require an emergency Act of Parliament, creating a special statutory scheme for those named companies, having retrospective effects. That would cut across fundamental principles at the heart of our democracy. I am sure that no colleagues in Westminster Hall today would wish to do that. The compulsory application of TUPE to Carillion companies is not, therefore, a matter that can simply be agreed between the liquidator and the unions. There is legal precedence here that we cannot simply ignore.
My hon. Friend is giving the position as it is, which is what has brought us to this debate. However, is it not possible for the Government, in relation to the public sector contracts, to stipulate, as the customer, that certain aspects of the contract roll over to the new company, such as the voluntary TUPE that has been referred to? Could they not insist on that?
My hon. Friend makes a fair point. As we heard previously, the Secretary of State for the Cabinet Office has explicitly said that we wish to ensure that, wherever practical and possible, workers are not worse off. In fact, I can share with the House that the Secretary of State for Business, Energy and Industrial Strategy has had conversations with the special manager to implore him, wherever possible, to protect workers in that way.
However, as I said, we also have to be aware that a large proportion of these contracts are actually private sector. Of course, the legal requirements and stipulations on the special manager, in order to be able to fulfil his duties and protect the interest of the creditors, are paramount here. It would be inappropriate for Ministers or any politician to try to interfere with that. As a result of agreements that we have seen in the press and entered into over the past few weeks to purchase contracts held by Carillion, we have secured those 7,500 jobs.
The hon. Member for North West Durham (Laura Pidcock) mentioned that we are on record as saying that most employees who have transferred so far have done so on existing or similar terms. The official receiver has worked to do that. I know that she would like more details—she would like an exact percentage, but she will also understand that given Carillion’s size, complicated governance and business structure and the difficulties in relation to managing the smooth transfer of these contracts, we do not yet have those exact figures. However, I am sure they will be available to her as soon as we have them.
In her speech, the hon. Member for Wolverhampton South West raised the issue of support for employees. Understandably, this remains a very troubling time for employees and we will do everything we can to help those affected. Unless told otherwise, employees who are working will continue to be paid by Carillion during the liquidation. My hon. Friend the Member for Stirling used the phrase “justice”—he wanted there to be justice for Carillion workers. It is not their fault that they find themselves in this perilous situation. I can say to him that those employees transferring across will still be eligible for redundancy payments. So if he is looking for justice, he may find that those payments go some way to delivering that.
Through the special managers, the official receiver has contacted all employees to explain the action being taken by Government and where they can seek advice and support. For example, the special managers and the Pensions Advisory Service have set up dedicated telephone support services. The special managers have a process in place to inform employees being made redundant in a timely fashion, and to give information about their employment status.
There was some suggestion earlier about delays in people being given the required information to be able to claim redundancy. We are in close contact with the special managers, and while we cannot guarantee that everybody has had the information as quickly as we would hope, there is a great imperative in these very difficult times for workers to ensure that they get access to the money that they have a right to receive. So we are working incredibly hard to try to ensure that happens as a matter of urgency.
We are also ensuring that practical support is available from Jobcentre Plus’s rapid response service. Hon. Members might be interested to know that so far Jobcentre Plus reports that it has had 34 claims by Carillion staff and 65 claims by individuals made redundant by firms in the Carillion supply chain. So thus far we have seen a small number of people turning up at Jobcentre Plus and claiming benefits.
I think the reason for that, in reality, is that these workers are incredibly valuable. They are a skilled, trained workforce in a tight jobs market. We have seen today that we have record employment in this country—unemployment is at levels not seen for 40 years. That is a great economic success, but it means that as the jobs market tightens the workers who we are talking about are greatly in demand.
I have heard from my constituents that they have not received proper communication; I think that has been said across the different workforces. The fact that there are over 20,000 and only 20 have gone says something about the communication, which is not going to everybody.
I can honestly tell the hon. Lady that the rapid response team are exactly that. They give a report to the taskforce, which she asked about and I will come to. The rapid response team are working alongside the special managers. When people are made redundant, the team have all the details of the people involved and are proactively doing that. In addition, they are going into Carillion offices and, without causing concern, proactively advising people about opportunities and jobs that are available, and helping those people to prepare should they be made redundant.
In addition, the team are offering help with job searches, help to identify transferrable skills and training to update skills. This is a Rolls-Royce service. I can say hand on heart that the rapid response team are really excellent. If the hon. Lady has specific examples, I would be delighted to take those up on her behalf and to ensure that if somebody has been missed, we get in touch with them as quickly as possible.
Finally, I would like to set out the support that we are giving to those businesses affected by Carillion. We recognise that while the mass and the attention is on Carillion, the impact in the supply chain is huge. As hon. Members, we will probably all have people working in the supply chain in some way. As the hon. Member for Wolverhampton South West mentioned, we have set up a taskforce; I think it was set up three days after Carillion went into liquidation. The taskforce includes representatives of small business and the TUC. She referred to a letter from Frances O’Grady; Frances sits on the taskforce, which meets at least weekly. We have the Federation of Small Businesses, the Department for Work and Pensions, the Cabinet Office, the Local Government Association and the Construction Industry Training Board. We are working across Government to address the challenges and to come up with solutions that will support affected businesses.
The Business Secretary and I are in regular contact with the construction industry and all of the relevant trade bodies. I meet them weekly to properly understand and respond to their concerns. Following the Business Secretary’s meetings in the aftermath of Carillion’s insolvency, when we called in the banks to ensure that they were providing the necessary support and help to the supply chain, the banks made nearly £1 billion available. That was from lenders such as HSBC, Lloyds, the Royal Bank of Scotland and Santander in the form of loans, credit facilities and further financial support, to ensure that the contractors in the supply chain that are affected get the help and support that they need.
For those companies that may have lost money as a result of Carillion’s collapse, the most important thing is their ability to continue earning. While they may have lost sums as a result of Carillion’s collapse, by standing behind Carillion we have allowed certainty for those businesses. I assure the House that while there have been some concerns about the payment terms of up to 126 days that we saw with Carillion, the special manager has entered into an agreement that he will pay contractors still providing services to the Carillion network in 30 days. That will go a long way towards helping those businesses—small businesses, in particular—that are struggling for cash flow. Her Majesty’s Revenue and Customs is also helping businesses with its Time to Pay scheme.
The hon. Member for Ellesmere Port and Neston (Justin Madders) mentioned apprenticeships, which we have covered. The hon. Member for Glasgow South West (Chris Stephens) made a number of points, but most importantly referred to two things. He referred first to the contracts awarded to Carillion after the profit warnings. The first thing to understand is that issuing a profit warning does not mean that a business is on the verge of imminent collapse; if that were so, we would have seen the collapse of Tesco and of Marks and Spencer. It is exactly that: a profit warning to the City and to investors to say that the profits that the company is about to issue will not be as large as expected.
In relation to the award of contracts after those profit warnings, Carillion announced that it had won eight public sector contracts after its first profit warning in July last year. Three of those, for facilities management, were for defence establishments. They were actually awarded before the profit warning, but Carillion chose to make its announcements some weeks later.
Two of the remaining five contracts were awarded by HS2 Ltd to a joint venture including Eiffage, a major French construction firm, and Kier, as well as Carillion. The three companies bid together as a consortium, and as a result all shared responsibility for completing the work. After the profit warning, we asked each partner’s board for written assurances that if one partner failed, the others had a contractual obligation to pick up the work. Those assurances were given. Since the announcement of Carillion’s liquidation, Eiffage and Kier have confirmed that the contracts will continue uninterrupted and that the former Carillion employees working on those contracts have been offered jobs with those new partners.
Following the announcement of the profit warning, a further assurance came from external due diligence commissioned by HS2 Ltd. That revealed that at the time of the award in July last year, Carillion had the financial capacity to continue with its part of the contract. HS2 Ltd let the two contracts to the joint venture because it was confident that the joint venture arrangements were robust. That has proved to be the case.
The remaining three contracts were with Network Rail. They were not new contracts, but variations of contracts let some three years earlier, in 2014. Two were for electrification work. In a similar construct to the HS2 network, they were lets to joint ventures between Carillion and the electrification specialist, SPL Powerlines.
Some of the information that the Minister has given will be helpful for tomorrow’s Select Committee inquiry, and I thank him for that. When a company that is applying for a Government contract issues a profit warning, what checks do the Government put in place and what checks is a public body expected to put in place to ensure that that company is solvent? We now know that after the first profit warning, the alarm bells should have been louder than they were.
Order. I wish to point out that the debate will finish at 4.16 pm and I hope to give Eleanor Smith, as the mover of the motion, a couple of minutes to sum up at the end.
Thank you, Ms McDonagh. I reassure the hon. Member for Glasgow South West that stringent checks are consistently carried out by the Cabinet Office and across Government. That preparedness ensured that there was a smooth transition, that contracts have been maintained and that public services have not been put in jeopardy.
I congratulate the hon. Gentleman on the important work that the Select Committee has done. We have written to the Financial Reporting Council to ask it to look at the audit process to ensure that it is rigorous and fair, and to the Insolvency Service to ensure that it looks at things such as bonuses paid to current and previous directors so that, if necessary, we can claw them back.
In relation to pensions, the Pensions Regulator has oversight of pension schemes. As the Pensions Regulator is independent, it would be inappropriate for me, as the Business Minister, to comment, but I am sure the Select Committee will do further work to get to the bottom of the issue.
Finally, I reassure the hon. Member for Wolverhampton South West that we in Government have done all we can to protect public services, support businesses in the supply chain that have been put in peril and secure jobs for all the hard-working people employed by Carillion. In terms of procurement and payment for small businesses, we will learn the lessons to ensure that we protect them as best we can in future.
I welcome the fact that 668 jobs have been saved so far. Nearly 1,000 workers have already been made redundant, however, and 11,800 are still hanging in the balance—we do not know what will happen to them.
I welcome the Government’s assurance that they will look into the situation, but I am a little disappointed that they could not assure me of protection for the workers under TUPE. The hon. Member for Strangford (Jim Shannon) said that that had already been done in Northern Ireland, and I had hoped that the Minister would say that he had followed suit. Obviously, he has not. I encourage him to look at the Bill sponsored by the hon. Member for Glasgow South West (Chris Stephens) to see whether there is a way for us to do it. We do not want to be in this situation again with another company.
I thank hon. Members for their contributions to the debate and for raising concerns about the protection of the Carillion workers. I also thank the Minister for responding to me, and I hope the Government will continue to look at protecting the Carillion workers.
Question put and agreed to.
That this House has considered the application of TUPE to Carillion workers.
[Geraint Davies in the Chair]
I beg to move,
That this House has considered child-to-parent violence.
It is a great pleasure to serve under your chairmanship, Mr Davies. Child-to-parent violence is a very significant issue that, too often, is not spoken about. A parent in Chesterfield first raised the issue with me as part of a wider discussion about the paucity of support that they had received from Derbyshire County Council. As an adoptive parent, I was alarmed to learn of Adoption UK’s recent survey to which 3,000 of its 8,000 members responded. The survey revealed that as many as 63% of parents said that their adopted child had displayed aggressive behaviour. That followed Al Coates’ survey, which showed that 30% of adopters have experienced regular child-to-parent violence. The issue also affects around 3% of all families—some 330,000 children.
I will take this opportunity to highlight this important issue and invite the Minister, and all of us, to consider the extent to which current local authority interventions equip social workers and parents to tackle CPV. I will reflect on recent research in more detail and on the role that local authority funding cuts play in our ability to support successful adoptions. I will also ask whether the balance between protecting children and supporting their families is appropriately weighted. Finally, I would like to learn more about the specific steps that the Government are taking to investigate the scale of the issue and the support that they could put in place to help families.
Much of my contribution will focus on violence in families with adopted children, but clearly this is not purely an adoption issue. Families who have not adopted and do not have social services’ input or a diagnosis that explains why there are such problems can be even more isolated and alone, but my focus is predominantly on child-to-parent violence in adoptive families.
As parents, many of us worry that we are failing to live up to a media ideal of the perfect parent—I say that as the parent of a 19-year-old and a 15-year-old. As a nation, we are ludicrously time poor. The pressure on families to make ends meet and the demanding working environment that many families face, coupled with competing demands on our children, mean that modern parenting is a fraught business under the best of circumstances.
For adoptive parents, those pressures are often magnified. Three quarters of adopted children enter the care system because of abuse or neglect. Babies and children who have been victims of violence or physical, sexual or psychological abuse or have witnessed it routinely, who have been left to scavenge in bins because of neglectful or substance-dependent parents, or who have been left in the appalling situation of having to take over the parenting role at a very young age because of the inadequacy of their parent, will have experienced a level of trauma that can stay with them all their lives. Even in the womb, many children have disadvantages such as foetal alcohol syndrome or foetal alcohol spectrum disorders placed in their way. Chaotic, disruptive and disorienting experiences in the early years of children and babies, when they are at their most vulnerable, inevitably stockpiles future crises. It is a truism that hurt children hurt, and many adopted children have been badly hurt by the time they are adopted.
Adopting a child is not much like the brochures would have us believe. Adoption is not a silver bullet that takes children away from a bad situation and places them in a benign and friendly one that washes away all the scars of the past. One third of adoptive parents surveyed said that their local authority had withheld important information about their child before the adoption. Of course it is important that adopters are encouraged to come forward, and it is gratifying that despite all these problems, 88% of adoptive parents say they would still adopt and are glad they did. However, attracting adopters should never come at the expense of a pragmatic and realistic description of what life for an adopting parent can be like and of the many challenges that their children and family are likely to face. An appalling statistic that should give us all pause for thought is that children who have been adopted are 20 times more likely to be excluded from school and twice as likely not to achieve five good GCSEs.
Our starting point in countering child-to-parent violence must be to recognise the scale of the issue and ensure that it is widely discussed within the social work profession and more widely among adopter families. Parents who experience child-to-parent violence often question their own parenting and start to blame themselves. They wonder whether it is because of something that they have done, and whether if they had only taken a different strategy things would have been different. They take all sorts of steps to try to prevent it and they think it is a mark of their own failure. What they need is a support network that offers them strategies and understanding, rather than reinforcing the idea that they are to blame and that they and their families have become victims of violence as a result of their parenting.
We need a culture in which social workers realise that their work is not finished the minute the care order is signed and that adopted children need more support than other children. Supporting the family is part of that. After my wife and I adopted in 2004, we had a couple of cursory meetings in the run-up to getting the care order but, broadly speaking, that was it. After that stage, unless parents phone the social workers to say that there is a problem, they often get no further contact.
Many parents who experience violence from their children worry that if they highlight the extent of the problem, their parenting ability will be questioned and they will be taken down the route of child protection and investigations into their parenting, rather than the supportive environment they should have. Al Coates MBE—an adopter, a qualified social worker and a member of the Adoption Support Fund expert advisory group to the Department for Education—has interviewed many social workers and discovered that very few had had any formal training about child-to-parent violence.
The work of Al Coates and Dr Wendy Thorley, based on a survey of approximately 260 adopters, has led to a report called “Child-Parent Violence (CPV): an exploratory exercise”, which uncovered that as many as 30% of adopters had experienced violence. It also undermined the preconception evident in the Home Office report on adolescent-to-parent violence that this is an issue that relates to adolescence. It exposed the fact that the incidence of violence to parents is higher among seven to 11-year-olds than among children aged 12-plus. It also revealed that child-to-parent violence is at the heart of many families in crisis and is a growing problem that, like many other forms of domestic violence, is hugely under-reported. Highlighting the issue and ending the culture of parental blame will help to address that under-reporting. It is important that we all play a role in ensuring that adoptive parents recognise that child-to-parent violence is a common challenge faced by many others, not a sign of their own failure. The Government should commission or support much more detailed studies of child-to-parent violence in adoptive families.
CPV will not begin to be addressed until there is wider acceptance of the scale of the crisis in child social work. A combination of growing caseloads, shrinking budgets, higher public and Government expectations, a more violent society and more family breakdowns is stretching the system to breaking point. A BBC freedom of information request has revealed a 25% increase in long-term sick leave among social workers since 2012-13. In the 135 councils that responded to the request, 1,911 social workers had been off sick for more than a month. That mirrors my own experience and that of many adopters whom I have supported or met: when we try to pursue issues or get support, the social worker dealing with the matter is often off sick and the person who comes in instead has only a very scant knowledge of the case history. They take an immediate look at whether the child is in danger, but if that is not the case, the support the family receive is very small.
The scale of social worker absenteeism and sickness is simply unsustainable. It inevitably means that corners will be cut, warning signs will be missed and the quality of interactions with families will be diminished. An obvious impact is that social worker caseloads will grow and many of the interventions that would support families and prevent them from reaching crisis point will play second fiddle to addressing immediate crises. Children who hurt others but who are not themselves at risk of being hurt will be seen as less of a priority.
Recent research by the British Association of Social Workers showed that social workers put in an average of 10 hours of unpaid work each week to try to manage their case loads. The scale of local authority cuts makes tragedies inevitable. The Joseph Rowntree Foundation found that English councils faced a 27% cut in their spending power under the five years of the coalition Government and that the pace of those cuts has continued since then. In the early years, there may have been fat for councils to trim, but that fat has now gone. Every day, social workers battle with life-and-death decisions that undermine their ability to provide the service that their clients have a right to expect.
Councils in the areas of greatest deprivation have faced the largest cuts, which is indefensible. In recent weeks, we have seen the dam start to burst, with Tory councils in Northamptonshire and Surrey sending out warning signals about their finances. If those councils are struggling, imagine how difficult it is for councils in areas of greater deprivation. To continue to deliver spending cuts of the size currently being implemented is to accept that social worker absence will continue to rise, and more children and families will fail to receive the support they need. I make a real plea for future local government spending rounds to recognise that further council cuts will cost vulnerable children their lives and leave far too many families in crisis.
In addition to addressing the funding issues, the Government should look closely at the direction provided to social workers and to all those involved in the support of children and families. Child protection and the needs of the child are at the core of the Children Act 1989, but using them as the guiding principle often leaves families outside the room when key decisions are being made about their future.
I question whether a relentless focus on protection of the child that overlooks the needs of their families is actually advantageous to the children who we seek to protect. Often the prioritisation of social work case loads will be based on whether a child is at immediate physical risk. Often, children who are violent to their parents or siblings are not themselves seen as being at risk, even though such violence can often be the cause of an adoption breaking down. A more holistic view, which recognised violent children within a family unit as a crisis in itself, would lead to better outcomes.
Given the scale of adoptive families who are affected by this issue, as suggested by the research I have cited, there is an argument for greater counselling and therapies for children post-adoption before the crisis manifests itself, and a much more substantial commitment to adopter support would prevent families from reaching crisis point and may well save money in the long run.
The Government’s Adoption Support Fund is a welcome development, but the cap on funding and the number of councils refusing to match fund therapies demonstrate the limitations of the current approach. When the Minister responds to the debate, can she say what representations she will make to the Treasury about the scale of the financial crisis facing councils, and the difficulty that crisis places on the Home Office in supporting local authorities to keep people safe?
I was very conscious in calling for this debate that this issue goes across three different ministerial Departments: the Department for Education, which has a child social work purview; the Department for Communities and Local Government, which deals with local authorities and their funding; and of course the Home Office itself. That was why I specifically focused my speech from an education point of view, although the Government have chosen to respond to it from a Home Office perspective. Nevertheless, all those different Departments have an important role in relation to this issue and inter-departmental work will obviously be very important.
I wonder to what extent the Minister, who is a Home Office Minister, accepts that local government finances will inevitably have an impact on the quality of child social work and the outcomes for adopted children. What steps will the Government take to ensure that new generations of social workers receive better training on the occurrence of child-to-parent violence, particularly among adopters, and ensure that parents are supported and not blamed? Will there be mandatory training for child social workers on child-to-parent violence, and will future continuous professional development of child social workers place an emphasis on child-to-parent violence?
In addition, will the Government ensure that there is skilled and appropriate therapy available to children who have been removed from violent or neglectful family situations at the start of the adoption, rather than waiting for a crisis to manifest itself? Will there be an assumption that children who have experienced early trauma are likely to become violent themselves if that trauma is left untreated? Why do we wait for the crisis to grow until it is too large, when it could be more easily treated if it was addressed earlier? What steps can the Government take to ensure that the founding principles of the Children Act 1989 do not prevent the impact of violence by children being investigated because the child is not seen to be at risk?
What more can be done to ensure that the link between attachment difficulties and the education system is closer? Will the Minister commission a report to identify the scale of this issue and expressly recognise that this is not purely or even primarily an issue of adolescent violence but one that affects families with children of all ages?
Child-to-parent violence blights the lives of too many families; it must be a hidden problem no more.
It is a pleasure to serve under your chairmanship, Mr Davies.
First, I congratulate the hon. Member for Chesterfield (Toby Perkins) on raising this important issue and on doing so in a very thoughtful way. Obviously, this issue affects him and his family, given his experience of adopting children. I pay tribute to him and to everyone across the country who finds the time and space in their families to give love and support to looked-after children, and the opportunities that those children deserve.
Last week, I attended an international conference on tackling violence against children. The Swedish Prime Minister spoke very movingly of his own experience of foster care. He had been looked after by foster parents and he talked about the opportunities that they had given him, which enabled him to become Prime Minister of his country. It was the most incredible story of love, support, opportunity and ambition. Perhaps in due course the hon. Gentleman’s children will follow in the footsteps of the Swedish Prime Minister.
I am responding to this debate on behalf of the Home Office. As the hon. Gentleman has rightly pointed out, this is an issue for which several Government Departments have responsibility. I hope that he will forgive me if I respond from a Home Office perspective, and of course I will ensure that my ministerial colleagues in the Department for Education and the Ministry of Housing, Communities and Local Government respond to the specific points that relate to them.
The reason the Home Office is responding to this debate is that while of course we have responsibility for crime, we are also very conscious that child-to-parent violence is an issue that is often neglected, even though it can have a devastating impact on the families concerned. Currently there is no legal definition of child-to-parent violence, but it is increasingly recognised as a form of domestic abuse. Indeed, the hon. Gentleman spoke very thoughtfully about the impact of babies and children witnessing domestic abuse in their homes, including the impact it can have on them developmentally, not only in childhood but in adulthood.
That is precisely why the Government hope to include in the draft domestic violence and abuse Bill, which we will seek to introduce in this Session, a measure that reflects the impact that domestic abuse has on children. That will be one of the most important measures in that Bill. We want to make it an aggravating feature of any domestic abuse offence if there are children present in the home when that abuse is carried out, to try to draw out and show the terrible effect that it has on young people.
It is very important to understand that, as with other forms of domestic abuse, child-to-parent violence is not only about physical violence. It is also likely to involve a pattern of behaviour that can encompass, but is in no way limited to, psychological, emotional, economic and physical abuse. It is an incredibly complex problem that presents a number of challenges to families who experience it. Family members may feel isolated and stigmatised, and they may even feel shame for being the victims of violence at the hands of their children. They may not know where to go for help and, as the hon. Gentleman has articulated, they may worry that if they do reach out for help, judgments will be made about their parenting skills and the children may be removed from them.
That is why the Government commissioned a 2015 report, “Information guide: adolescent to parent violence and abuse”, which provides materials and advice to support professionals in the police, the health system, the justice system, the education system, youth services and so on, when someone comes to them for help. I hasten to add that although the title refers to adolescent violence, the advice does not just apply to adolescents; it can of course apply to children under the age of 16 as well.
There are also at least two charities that can offer help and support to family members who are suffering from this kind of violence, including the free and confidential helplines that are run by Family Lives and the National Society for the Prevention of Cruelty to Children. Child-to-parent violence includes not only violence by young people living in the family home, but adult children’s violence towards their parents. Sadly, that issue is similarly hidden and equally poorly understood.
Because of issues such as stigma and the worries that people may have about reaching out for help, there are no specific national statistics on child-to-parent abuse. However, we know that there are approximately 2 million victims of domestic abuse every year. Family Lives, a national charity, reported that over a two-year period its helpline received more than 22,500 calls from parents reporting aggression from their children. Also, the Office for National Statistics has shown that in the year ending March 2017 there were 11 recorded parricides, which gives an indication of how serious these cases can become and the number of families who are torn apart by this type of abuse.
Such abuse can affect all levels of society. There may be a history of domestic abuse within the house, but equally there may be other factors that exist alongside the abuse, including substance misuse, behavioural problems, learning difficulties and mental health issues. There is no single explanation for the abuse to which some parents are subjected.
In terms of the complexity, it is important to break the silence on this abuse, which is why I am grateful to the hon. Gentleman for raising the issue. Also, we know that exercises such as the recent storyline in the soap opera “Hollyoaks” have helped draw the issue to the public’s attention.
What have we done? The hon. Gentleman rightly and understandably asked for action. We have committed £920 million towards the troubled families programme, which aims to achieve significant and sustained progress for 400,000 families with complex needs by 2020. I fully appreciate that the adopted families he spoke to may not fall into that category, but none the less we have invested that significant sum of money to help families who are troubled. The programme works to support families through a dedicated key worker who works with them to draw up an action plan. It can include support for families where there is child-to-parent violence.
The hon. Gentleman asked about social care. In addition to the troubled families programme, the Government have identified that we need to support councils to identify improvements to children’s social care. We have made £200 billion available for local services, including children’s social care, up to 2020. In addition, the Department for Education has funded a number of projects with a specific focus on tackling domestic abuse as part of our children’s social care innovation programme, which is backed by £200 million. As part of the Government’s domestic violence and abuse Bill agenda this year, there will I hope be lots of national conversations about domestic abuse in its various forms. I would welcome the hon. Gentleman’s help in raising this issue so that we can see whether there are other measures we should be employing.
We are conscious that domestic abuse is not just about physical violence. It can be about emotional and mental abuse as well. That is why we introduced the new domestic abuse offence of controlling or coercive behaviour in an intimate or family relationship in the Serious Crime Act 2015. We know that safeguarding is critical to helping families where there is child-to-parent abuse, rather than necessarily criminalising the child, with all the repercussions that has for their future career prospects and so on. We want to help and support professionals in identifying and dealing with the earliest signs of abuse, to stop violence before it happens and to prevent abusive behaviour from becoming entrenched. Critically, we want to provide victims and their families with support before a crisis point is reached. That is why we have the information guide I mentioned. I encourage Members to read it if the issue has come to them through their constituency casework. It provides guidance for practitioners.
In conclusion, we must and will do more to tackle the tyranny of domestic abuse and, in doing so, promote greater awareness of the different forms it takes. Our forthcoming consultation on the domestic violence and abuse Bill, which will be launched shortly, and the package of non-legislative measures that will sit alongside that Bill provide an opportunity to transform agencies’ responses to domestic abuse, to make tackling it everyone’s business and to promote a national conversation to bring this abuse out of the shadows. I hope I have reassured the hon. Gentleman of the Government’s commitment to tackling this terrible form of abuse, and I thank him very much for raising the issue.
Question put and agreed to.
East Midlands Ambulance Service
I beg to move,
That this House has considered the performance of East Midlands ambulance service.
It is a pleasure to serve under your chairmanship, Mr Davies. The ambulance service is the glue that holds our health service together, and it does an incredible job. I have heard some harrowing examples in recent weeks of ambulance waits, but I want to start by putting that into context. Last October, my constituent Vinnie fell down stairs in the early hours and hit his head so hard that his heart stopped. The 999 call handler talked Vinnie’s partner Jo through cardiopulmonary resuscitation to keep him alive until the ambulance arrived 15 minutes later. That crew literally saved his life. Vinnie and Jo want to say thank you to those people, but they do not know their names. On behalf of Vinnie and Jo and everyone for whom our ambulance services have done amazing things, thank you.
Ambulance crews do amazing things every day, but they are struggling, especially in the east midlands. Our response times have consistently been below the average and near the bottom of the regional tables. In January, the east midlands came ninth out of the 10 regions in responses to category 1, 2 and 3 calls. On category 2 emergency calls, which have a target average response time of 18 minutes, East Midlands ambulance’s average was 37 minutes—more than twice as long.
We used to have a Lincolnshire ambulance service, which I thought provided a very good service, but we were told that the way to get a better service was to regionalise and effectively centralise. We now find that many ambulances are taken off to Leicestershire or Nottinghamshire—no doubt for a good cause—and they do not come back to Lincolnshire. Does that not underline the need for localism and local services run by local people?
To be honest, when I was at East Midlands ambulance HQ, the waiting time at Lincoln hospital was seven hours for patient handover. Unfortunately, in those situations ambulances are diverted to where patients who need help urgently can get the care they need. Part of the problem is the handover times, particularly at Lincoln.
The longest 10% of urgent responses took more than 82 minutes, which is twice the target of 40 minutes. For category 3 urgent calls, 10% of East Midlands calls took more than three hours 22 minutes against a target of two hours. In practice, that means that people who are very seriously ill or in pain are waiting hours and hours for an ambulance. My constituent, Debbie, contacted me on Saturday night at 10 o’clock. Her 82-year-old mum had a hairline fracture of her hip. It had not been diagnosed, and suddenly her mum found herself in excruciating pain and unable to move. Despite calls to 111 and then 999, there was simply no ambulance available.
It was only when Debbie called at midnight and said that her mum was passing out of consciousness due to exhaustion and pain that the call was upgraded to category 2 and the ambulance arrived 20 minutes later. By then her mum had been waiting in agony for more than nine hours. The ambulance crew apologised, but they had been on more urgent calls the whole time. Debbie and many other constituents have contacted me to ask, “Why is this happening?”
A few weeks ago, I visited the ambulance control centre at Nottingham to see the management of East Midlands ambulance calls across the whole region. It was a Friday lunchtime, but even at that time the emergency calls and urgent calls were stacking up. I listened in as people were calling back to find out how long an ambulance would take. Health professionals, families, neighbours and shop assistants were all caring for someone who was seriously ill and needed an ambulance. They were undergoing hours of pain, worry and uncertainty.
From that experience and from speaking to local paramedics and East Midlands ambulance managers, it seems that there are four key reasons for the issues. The first is our geography. East Midlands ambulance covers a huge area, from the border of Manchester in my constituency to the shores of Lincolnshire. It has the second lowest population density in England after the south-west, but also the second-lowest investment in transport infrastructure after the north-east. It is not only a large region; it is hard to get around.
Secondly, when ambulances do get their patient to hospital, they encounter some of the longest waits for transfers. In 2015-16—the latest figures that we can obtain—only 44% of handovers in the east midlands were completed within 15 minutes, compared with 58%, on average, across England. This winter, handover times in some hospitals have got much worse. At my constituents’ local A&E at Stepping Hill, ambulances were waiting for more than three hours. At Lincoln hospital, it was more than seven hours. When vulnerable people are waiting in severe pain for an ambulance, to have them queued up outside hospitals unable to hand over their patients is incredibly frustrating.
The third issue is the level of demand. In the east midlands, the number of responses rose from 222,000 in 2011-12, to 335,000 in 2016-17—an increase of more than 50%.
I thank EMAS for coming to meet with the northern Lincolnshire and Lincolnshire group of MPs last year, when we were concerned about ambulance provision. Subsequent to that, paramedic Lee Hastie gave an account to the local Grimsby Telegraph about his experiences, particularly in relation to demand for ambulance services, saying that most of his calls on an everyday basis now relate to drug and alcohol abuse. Does my hon. Friend consider that cuts to local government drug and alcohol services have gone some way to increasing the demand on our ambulance services? They are essential services that, at a community level, simply are not there any longer.
I would certainly concur with that statement. It is one of many areas in which the lack of services at an urgent level is creating an increased demand—but in no way has East Midlands ambulance service’s funding increased to cover that level of demand, as we will see later.
Part of the increase is due to the 111 service. We saw the chaos that 111 created when the coalition Government brought it in to replace Labour’s NHS Direct with a much cheaper service with hardly any clinicians. Things have improved, but at busy times the 111 service still does not have enough qualified staff to make decisions, so the call-handlers have to be risk-averse, follow their script, and call out an ambulance if there is any doubt at all.
We have seen the number of 111 calls resulting in an ambulance call-out gradually increase from 100,000 in 2011-12 to 1.3 million across England in 2015-16. That is almost 14% of all ambulance call-outs going to people who did not request an ambulance in the first place—people such as my constituent Gemma. She suffered abdominal pain and called 111 for an out-of-hours doctor to come and see her. Even though Gemma told the call-handler that if she needed to get to hospital she would drive herself there, they still sent an ambulance to her. Gemma was diagnosed with gallstones, and next time she had an incident and needed pain relief urgently she again called 111 to tell them that she knew what the problem was and to ask for a prescription. Instead, they again insisted on an ambulance and would not accept a refusal. Gemma actually drove herself to A&E because she was so determined not to use ambulance time.
The ambulance service says that it is not allowed to reassess 111 calls that have been allocated for an ambulance response, so even if it expects that it is not necessary, it cannot use its expert clinicians to provide the telephone advice and decide whether an ambulance is really necessary. I will get on to the question of resources shortly, but besides resources, my local paramedics have asked whether the ambulance service can reassess 111 calls that it is given if it is in any doubt. I put that question, from them, to the Minister.
I thank my hon. Friend for the very strong case that she is making; she is an outstanding campaigner for our region. Nottingham city MPs are very concerned about this issue; I am the only one present because my two colleagues are on other parliamentary business. We would like to see real evidence of the provider coming together with unions, clinicians and service users to try to iron out some of the issues that my hon. Friend is talking about. Does she agree that that would perhaps be a good way to manage better the resources that we have?
We can always seek to manage resources better, but East Midlands ambulance service has been seeking to manage resources for a very long time, working with Unison and the unions there.
Does my hon. Friend agree that the closure of Lincoln’s walk-in centre, despite the fact that 94% of the people who responded to the consultation said that they did not want it to close, cannot fail to have a further impact on EMAS and local services? We are told by the clinical commissioning group that it will not have an impact and that there will be other provision, but the local ambulance teams—I will come to this point when I give my speech—told me that it will absolutely have an impact. I wonder what her thoughts are on that.
Walk-in centres were established by the last Labour Government to reduce the demand on the ambulance services and to give people the services that they actually needed on their doorstep. Every cut of every walk-in centre is hugely worrying, both for patients and the ambulance service.
Demographically, patients attending A&E, which treats accidents and emergencies, not anything and everything, are the very sickest patients, or those patients requiring treatment such as X-rays that cannot be delivered in centres such as a general practice. The review into the walk-in centre, as I understand it, and as it has been explained to me, was actually done by clinicians rather than politicians. The clinicians are telling us that it will not have an effect because, demographically, the patients going to the walk-in centre are those who are relatively well. If the walk-in centre was closed, they would be making their own way to the hospital, a general practice or a pharmacy, rather than calling 999.
The fact is that walk-in centres are open late in the evenings and at weekends, and in most GP practices it is not possible to get an urgent appointment without phoning at 8 am exactly. In my constituency, people have to wait at least two weeks to get an appointment.
When I went out with the ambulance team, one of the people who called and got an ambulance was an elderly gentleman of 91 who had breathing problems. He called an ambulance because he could not get a GP appointment or get to the walk-in centre at that point. It is not always people who are desperately ill who call ambulances; lots of people call ambulances in sheer desperation because they cannot get anything else.
That illustrates the point completely. We have seen a lack of primary care services, and doctors’ appointments are far harder to get than the 48 hours it took under a Labour Government. In consequence, we have a hugely overburdened ambulance service.
Now we come to funding. East Midlands ambulance service is already one of the most efficient in all the regions. In spite of the relatively sparse population and demanding geography, EMAS’s costs per face-to-face response are the third-lowest of all the regions—9% lower than the average across England. The costs per call are, again, the third lowest and more than 10% below the average.
By any measure, East Midlands ambulance service is very efficient, with 99% of its staff working on the frontline. Almost all managers take shifts so that they know exactly what is going on. It has cut all that it can, and it has had to make cuts, because EMAS has the second-lowest funding of all the regions—8% lower than the average across England. Only the North East ambulance service, which serves a more densely populated area, has lower funding than the East Midlands ambulance service.
The funding has not kept pace either with inflation or with the increased demand—in fact, it has barely increased at all in the last six years. In 2010-11, EMAS received £160 million for patient care activities. By 2016-17, we had seen over 16% inflation and a 50% increase in activity. Funding should be at least two thirds higher—£105 million extra would be the proportionate cost. Instead, East Midlands ambulance service received less than £5 million extra compared with 2011. That is less than 3% extra funding when it needed 66%.
East Midlands ambulance service has never been well funded—our region has always been the poor relation, as colleagues on both sides of the House often concur—but the cuts over the last seven years have made it impossible for it to meet its targets, and to deliver the right standard of service and care to some of the most sick and injured people, and the most at risk. That is what the Nottinghamshire coroner concluded in May 2016. In an urgent case review, she said:
“Demand is clearly greater than the resources they have most of the time”.
That is not the fault of any of the staff at EMAS. Last summer, the Care Quality Commission found that although the service was in need of improvement, it was caring and responsive—but it could not be safe or effective. The report states that there were
“caring, professional staff delivering compassionate, patient focussed care in circumstances that were challenging due to the continued demand placed on the service.”
The increased demand for primary care, emergency care and ambulance services is not being resourced. Our ambulance service is on the frontline. Our crews do their very best, but it is tough. Yes, staff sickness is slightly higher than average at EMAS, but I am not surprised. It is not just what the crews deal with; it is the constant stress and pressure, and the distress and anger that they sometimes face when they can finally arrive.
The hon. Lady is making a very articulate and compelling case, but I think she would be the first to acknowledge that, while there may well be a resource challenge of the kind she described—she has already made that clear—there are issues around administration, management, process and protocols. She has already mentioned ambulances waiting outside hospitals for a very long time because they cannot or will not admit patients. Those are systemic problems, not just resource problems.
It might not be a resource problem at EMAS, although EMAS has been trying to fix that with staff put on especially to try to reduce the handover times at hospitals. A&E departments are struggling at absolute capacity. My local hospital had 97 A&E patients in need of a bed last weekend, and they had seven beds. The fact that the number of beds in the NHS has been reduced by 14,000 since 2010 is a resource issue. It might not be an EMAS issue, but it is very much a resource issue, and I put that to the Minister along with the issue of EMAS.
The situation is not fair on our ambulance crews. It is not fair on our patients. Our ambulance service is holding emergency care together. East Midlands is doing it with more pressure and less resources than almost anywhere else in the country. It needs support from us and it needs the resources to meet its targets. I call on the Minister to commit to that today.
Order. Five people want to speak, so I am going to impose a time limit of five minutes so that there is enough time for wind-ups. I call Dr Caroline Johnson.
It is a pleasure to serve under your chairmanship, Mr Davies. I thank the hon. Member for High Peak (Ruth George) for securing this debate, on an issue that is incredibly important to her, to me, and to all of our constituents. As a children’s doctor, I have been required to deliver full intensive care to children, particularly babies, who are being transferred in East Midlands ambulance service ambulances through the night, through the day, hurtling along in the back of the ambulance as it travels on our rural country roads, round corners and down the hard shoulders of motorways at great speed, so I understand some of what they do. It has given me a deep appreciation of the work of ambulance crews and has also highlighted to me the unique challenges and pressures that they face, particularly in our rural areas.
My constituency of Sleaford and North Hykeham in north Lincolnshire has a dispersed population, a rural road network and some NHS staffing challenges, all of which have contributed to the ambulance service failing to meet its national targets. As the overnight closure of Grantham A&E, which is just adjacent to my constituency, requires ambulances to now travel greater distances to Boston, Nottingham and Lincoln, every few weeks I receive a letter from a constituent who has waited an unacceptable amount of time for an ambulance. Indeed, I myself, as a member of the public, have been at the side of the road trying my best to treat casualties, waiting a long time for an ambulance. One gentleman died, although it is likely that that would have been the case anyway.
There is no quick fix to improving ambulance response times in rural areas. It is easy to identify and talk about the problem, but we also need to talk about potential solutions. One example would be the effective cohorting of patients when they arrive in A&E to allow ambulance crews to get back on the road sooner.
We have heard about the problems faced by ambulance crews waiting a long time to hand over in A&E, and it is right and proper that the care of patients is properly handed over before the ambulance crew leave, but it is worth noting that when a crew is with a patient, that patient is effectively receiving two-to-one care. I appreciate that paramedics and nurses have different skills, but that is higher than the dependency level provided for intensive care, where there is a one nurse to one patient ratio. Many of those patients, since they are waiting in corridors—unacceptably, I would say—are at the lower level of dependency as compared with the patient that has been taken straight into resus and received immediate treatment. So when three consecutive ambulance crews come in with three patients, there are six members of staff caring for them, and that is not necessary. One crew could care for them while the other two crews go out and see patients.
It is also worth noting that the patient who is at home is at a greater level of risk than the patient in the hospital. In the circumstance I have described, we have six ambulance crew looking after three patients in a hospital. The patients are of moderate ill health—they need to be in hospital and need to be seen, but they do not need to go into resus right at this moment. Equally, they are at a lower level of risk than the person sat in their home in a rural area of my constituency, say in Nocton, waiting for an ambulance to come, who has no access to medical care at all. If the person at home deteriorates, they cannot be wheeled round the corner immediately into resus, while being continually observed by a paramedic in the meantime.
Following my work in A&E over the Christmas period—I still practice as a paediatrician—I met the Secretary of State for Health and Social Care to discuss that point. I understand he and the civil service are looking at it, and I would be grateful for an update from the Minister on how that work is progressing. I believe that it would improve not just patient care but also the ambulance response times in the community.
The second issue I want to talk about is the type of ambulance crew. Many people are of the view that when an ambulance crew arrives, it contains the same level of skill mix, regardless of which ambulance comes, but that is actually not the case. There are highly trained specialist technicians and there are paramedics, who have additional levels of skill. There can be situations where, because we need to direct the correct crew to the correct problem—for example a particularly ill patient might need a paramedic and another patient might need a technician—there might be two crews near two patients going in opposite directions, taking longer to get to somebody. That is because they are not all paramedic crew. Although that probably makes little or no difference to response times in a city centre, in a rural area, where response times will always be longer because of the geography involved, we should increase the number of paramedics, perhaps having all paramedic crews. If we were in a position where all crews were paramedic crews, an ambulance would always go to the nearest casualty and not necessarily the matched one, which would improve response times. In addition, we can increase the number of patients who receive care en route.
We hear a lot about the golden hour—patients that need treatment within that first hour of care. If they get treatment in that first hour, we know they get better outcomes in the long term. If we are sending a technician crew who are perhaps not able to provide some of the treatments that a paramedic crew can, the patient is not getting that. Again, in a city centre where the transfer time might be five minutes, perhaps that does not matter as much as it does in a rural area, where once the ambulance has got to the patient, simple geography may mean that it takes 40 or 30 minutes to get back to the hospital.
In summary, we hear a lot about the problems that the ambulance service has. I agree with my hon. Friend the Member for Gainsborough (Sir Edward Leigh) that a Lincolnshire service would provide a better solution than one that covers such a wide geographical area as the east midlands, but I would be grateful if the Minister could look at the other potential solutions.
I have three points to put to the Minister. No. 1—will the Minister commission a report into the locations that have disproportionate numbers of ambulance call-outs by East Midlands ambulance service? I have highlighted one previously—Sports Direct in Shirebrook, which was getting more than a hundred a year. What was going on there was that the workforce was not allowed to make GP or other appointments in work time and therefore were continuing at work, fearful of taking any time off when sick, until they required an ambulance to be called. That could have been solved in very simple ways, but EMAS did not investigate the fact that there was an extraordinary level of call-out there.
A more common example is a care home that does not have properly qualified nursing staff, and therefore over-uses ambulances. I suggest to the Minister that if there are more than, say, 20 call-outs to one location, EMAS ought to be required to go in to see exactly what the solution is. The solution is not to send ambulances there expensively if they ought to be elsewhere saving lives. It is a simple process. It is amazing that that was allowed to happen at Sports Direct. The stats were there, but there was no intervention.
No. 2 is privatisation. One of the problems with EMAS—
Will the hon. Gentleman give way before he rushes from No. 1 to No. 2?
The hon. Gentleman is again making a compelling case. He is actually arguing that demand varies, and that we need to look at the character of demand, at how we respond to it, and at the drivers of demand. It is of course always about resources, but it is not just about resources. The hon. Gentleman is making that case in his typically sophisticated way.
A very wily intervention by an experienced Member. I look forward to such a commission, which I think would be very helpful to the Government and residents of the east midlands.
The absurd privatisation of the non-emergency ambulance service in the east midlands—Arriva is responsible for it in Nottinghamshire—was cross-subsidised. The £5 million that it really cost EMAS came from, in essence, ambulances that were diverted. Put simply, if there was an emergency call, an ambulance ferrying somebody routinely to hospital would be diverted, and the patient waiting would wait an hour longer. That was a rational cross-subsidisation. The moment it was privatised —sadly in 2009 by a Mr Burnham, under EU procurement rules—there was a serious deterioration. It is obvious in an area that is rural, but not just, that an ambulance going from point A to point B that could be immediately diverted into being an emergency ambulance would increase the capacity significantly. Reversing that privatisation with the freedoms we are about to have once we have left the European Union would be a significant improvement for the NHS.
No. 3, most controversially, is geography. Why is the ambulance service based on the east midlands? I am not exactly sure where the east midlands is. The South Yorkshire ambulance service operational base is actually in the east midlands—it is across the border in Chesterfield. Senior managers were clear to me in private that for certain areas, including mine, given that ambulances go to hospitals in Bassetlaw, Chesterfield, South Yorkshire, Doncaster and Sheffield, which they do—all heart attack patients in my area go directly to Sheffield and all stroke patients go directly to Doncaster—rationally we should be part of the South Yorkshire ambulance service. It makes no sense to have this historical, arbitrary divide, given that in the practical, real NHS world any business would have reorganised it in that way. The fact that the major response centre for South Yorkshire is actually in the east midlands demonstrates that point vividly. We need a bit of common sense here.
We need a reversal of privatisation. As it was an absurd Labour-inspired proposal initially, it will be easier for the Minister to agree to that and to whack Mike Ashley and other misusers of the service. Rather than simply respond to the people who are wrongly using the service, they could be, if necessary, publicly embarrassed so they change their systems. I offer those three easy options to the Minister.
It is a pleasure to serve under your chairmanship, Mr Davies. I pay tribute to the workers on the frontline of the East Midlands Ambulance Service NHS Trust. At a constituency event, I met one who had had two teeth knocked out by a patient he was trying to help. He said, literally, “It is all in a day’s work.” Those dedicated people are doing great work. I want everything I say after this to be taken in that context.
EMAS receives a call every 34 seconds. It has been keen to embrace innovations—for example, it has done work in Lincolnshire on sepsis—which complements some of the challenges we face at United Lincolnshire Hospitals NHS Trust. It is telling that six of the seven Lincolnshire Members of Parliament are here in this Chamber. Lincolnshire faces the greatest challenges, although I do not want to diminish the challenges that EMAS faces elsewhere.
Originally, we had a Lincolnshire ambulance service. As my hon. Friend the Member for Gainsborough (Sir Edward Leigh) has said, EMAS was created to fix some of the problems we had in Lincolnshire, but I suggest to the Minister that it has palpably not done that. Some of the problems relate to handover. Only yesterday, a constituent informed me that there were 10 ambulances queuing outside Pilgrim Hospital, and he has informed me that at one point today there were 11. I make that point not to criticise a single member of the ambulance service but to endorse the point made by my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson). It is clear that we face problems, and we should look at how to solve them.
My right hon. Friend the Member for South Holland and The Deepings (Mr Hayes) made a fair point when he said that there are problems with the management at EMAS. To give but one example, I have raised problems with EMAS every time I have attended health debates in this place, and EMAS has not made a single proactive attempt to reach out to explain even what it is trying to do. I suggest that the waiting times and the service we get from management indicate that the ambulance service is not serving us, as the elected representatives of patients, or patients themselves. This is a serious situation.
I have a number of suggestions to put to the Minister. First, he should support the Lincolnshire County Council manifesto commitment to create, or at least to explore, a Lincolnshire ambulance service. In various parts of Lincolnshire—particularly in my coastal, sparsely populated constituency—there is a huge drain on resources as ambulances inevitably go westwards and do not come back. A Lincolnshire ambulance service, using sensible modern technology, could achieve a great deal more than what was possible under the previous regime, and would address some of the challenges we face simply due to the rather random creation of EMAS—as the hon. Member for Bassetlaw (John Mann) has said, the east midlands is an area that does not really exist in the mind of the public.
To go slightly further, it would be good to see the Minister continuing the work that was done prior to the reshuffle, looking at what we can do sensibly to combine blue-light services. We already do some creative work in Lincolnshire with the fire brigade. We do some really important, sensible things that allow the fire brigade to save lives. Indeed, in some cases, they are saving lives that, under previous, unreformed systems, would not have been saved. There is good work to build on.
Does the hon. Gentleman agree that if we ask firefighters to extend their role, that should be properly resourced and funded and not just given as an extra job on top of what they do already?
I agree, of course, that we need the resources and reform package that will put us where we need to be. As my right hon. Friend the Member for South Holland and The Deepings has said, the issue is not solely about money—though to be fair to everyone present, I do not think that anyone is pretending otherwise —but of course proper resources are a big part of the equation.
Sensible moves on a blue-light combination would be a logical thing to do. I also think that one of the problems we face—this relates both to the issue of handover and to the number of ambulances waiting outside hospitals—is in large part due to the recruitment and retention challenges we have in Lincolnshire. A medical school in Lincolnshire would play a part in solving some of those problems. I say that in part because we need to recognise that this is a system problem, not solely an EMAS problem.
In conclusion, I was all set before the debate to stand up and say that successive Governments have not managed to get a grip on this problem—
Do I not get an extra minute?
It was a five-minute limit and I did give you some 45 seconds’ discretion.
I personally have witnessed how hard EMAS staff work. I pay tribute to their professionalism and dedication.
On 18 January my right hon. Friend the Member for Islington North (Jeremy Corbyn) came to Lincoln and we visited the call centre up at Bracebridge Heath. We saw at first hand what was happening. We were told that the single biggest problem in the increase in response times is when the ambulances get to hospital and cannot hand patients over. The day before I went out with an ambulance crew, there had been a seven-hour wait to hand over and at 7 am the next morning 22 patients were still waiting in A&E for a bed. As I have said, during my right hon. Friend’s visit we talked to ambulance crews and the handover time at hospital is causing the problem and increasing response times.
On 3 January I went out on my own with a crew—I, too, am a healthcare professional: a nurse. Ordinary people were phoning for ambulances. An elderly gentleman called one because he could not breathe and was terrified —he actually had a chest infection, so he was given a nebuliser and did not have to go to hospital, but he had not been able to get a GP appointment. We went to an old lady who had fallen and was on the floor. The paramedics dealt with her and within an hour we left her—she stayed at home and did not need to go to hospital. Our ambulance services deal with all sorts of cases.
A more personal example is my mum, who has mental health problems—she had a breakdown a few years ago. The Friday before Christmas, at half-past 4 in the afternoon, I was called from my office to go to her. I went, called 111 and got her assessed by about 6.30 pm or 7 o’clock. I did not get an ambulance until quarter to 1 in the morning. She just had to wait. There was a bed at Witham Court, but we could not get an ambulance. My mum was getting increasingly distressed—she was in a right state and I had to sit with her. If I had not been there, my stepfather would have had to deal with her, and he has dementia. I was wandering around Tesco at 2 am on the Saturday before Christmas because I had had to stay in to look after my mum—another ambulance wait.
Other examples are personal to me because I am a cardiac nurse. When my right hon. Friend the Member for Islington North came to Lincoln, we went to the heart centre. I am also aware of stuff that has come through my post bag about people with chest pains waiting two and a half hours for an ambulance. The figures for issues such as door-to-balloon time are all going up at Lincoln County Hospital because people who are actually having heart attacks cannot get an ambulance. They are at risk of going into an arrhythmia, whether it be VT or VF—ventricular tachycardia or ventricular fibrillation—because they are having a heart attack. They are not getting the treatment they need, because they are waiting for an ambulance.
Our NHS is in crisis. It is time that the Government acknowledged that. If A&E is so packed that ambulances cannot hand over, the NHS is in crisis—please admit that and let us do something about it. What is happening with EMAS is symptomatic of the situation. NHS workers are underpaid right across the board, with a pay cap, and they are understaffed. All those things work together. I feel sorry for EMAS—at the moment it is set up to fail and there is nothing it can do about that. I am sorry, but this is utterly political: why do we starve public services of resources? It is all right to say that we are giving them money, but we are not giving them enough money. When we do not give them enough money but cut taxes, frankly that is immoral.
I call Ben Bradley. Is he here? He has just walked out, has he? He was here. I am sorry about that. I will call the first Front Bencher instead.
Thank you for calling me to speak, Mr Davies. Perhaps the hon. Member for Mansfield (Ben Bradley) had a call from his lawyers.