House of Commons
Tuesday 27 March 2018
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
Foreign and Commonwealth Office
The Secretary of State was asked—
Illegal Wildlife Trade
The UK is taking a leading role in ending the illegal wildlife trade globally. The Government are funding practical action to reduce demand, strengthen enforcement and develop sustainable livelihoods in the communities affected by the illegal wildlife trade. We will host an ambitious high-level international conference in October to push for further progress.
Does the Minister agree that it is often the same criminal groups involved in the illegal wildlife trade who smuggle drugs, people-traffic and commit other nefarious acts? Does that not demonstrate why it is right that we do all we can to tackle them head on?
My hon. Friend is absolutely right to say that organised crime is attracted to the illegal wildlife trade, as it is attracted to others such as the drug trade and human trafficking. That is why this is a transnational problem, and why the world must work together to end this terrible crime.
British scientists have developed new forensic techniques to help to identify ivory poachers, including new fingerprint kits. Will my hon. Friend continue to support scientific techniques to try to clamp down on illegal wildlife traders?
My hon. Friend is absolutely right to say that having the right forensic evidence in place is crucial. Indeed, many of the projects that the UK is supporting worldwide are using that expertise to get the right forensics, so that the criminals can be prosecuted and these crimes can be tackled worldwide.
The Minister will know that this is an important international issue, but the products also land in the United Kingdom. What discussions is she having with the Home Office to ensure that we raise the level of fines for those in receipt of illegal wildlife material in this country?
The right hon. Gentleman is right to suggest that it is crucial that we work to tackle this illegal trade right across the Government, not only with the Home Office but with our colleagues in the Department for Environment, Food and Rural Affairs, to ensure that we consult on further restrictions on this trade.
The Minister will be aware of the pitiful sight of the last remaining species of some wildlife disappearing from our planet for ever. What steps are being taken to ensure that that is not replicated, particularly across the continent of Africa?
The whole world was shocked by the case of Sudan, the last male northern white rhino. He was the last of the species. This shows the absolute urgency for the world to act together to tackle this illegal crime, which is why it is so important that we host the international conference in October.
The passing of Sudan marks not only the ending of that species; we could see the end of many other species in Africa and other countries if we do not take the lead and show the world what we are doing. I have been campaigning to stop elephants disappearing, as my hon. Friend is aware. Can we make sure that we take the lead in the world?
I pay tribute to my hon. Friend and her remarkable track record of campaigning on this issue. She is absolutely right to highlight the fact that, according to the Living Planet Index, global populations of fish, birds, mammals, amphibians and reptiles declined by 58% between 1970 and 2012. It is therefore crucial that, as a world, we work together to tackle this terrible crime.
On average, the UK Border Force seized 130 kg of illegally trafficked ivory in the years from 2013 to 2016, but in 2017 the figure fell to 40 kg. Is that because the trade is shrinking or because the Government are not catching as much?
It is testament to the incredibly important work that is done by the UK Border Force and the work that we do through the National Crime Agency overseas. In Côte d’Ivoire recently, I saw the work that we are doing with the police force on this worldwide phenomenon. We need to work together internationally to tackle this heinous crime.
Following the abhorrent chemical attack in Salisbury, I have had a number of discussions with counterparts across the EU, the US and elsewhere, which has helped to foster an unprecedented, robust, international response to this reckless Russian act.
I commend my right hon. Friend for that approach. President Putin and the Russian Government should be in no doubt about the resolute response of the UK and our international allies to what remains a brazen and utterly repugnant act on UK soil. Given that we will need to continue to work with our allies, will he ensure that Russian intelligence officers, expelled from one country, will be denied entry into other countries? Will he also ensure that international co-operation is strengthened to trace tainted funds, enhance cyber-resilience and support criminal investigations into the deaths of Russian citizens in the UK and elsewhere?
My right hon. Friend makes an extremely good point. One of the conclusions that we can draw from the 23 countries who chose to expel diplomats or people whose presence was not conducive to the public good, as they say, is the importance that they attach to co-operation with our security services. He should be in no doubt that that co-operation will intensify in the months and years ahead.
Although Scotland suffered a self-inflicted withdrawal from the World cup, many fans will still travel from Scotland to the tournament, as will thousands of England fans. Following the expulsion of UK diplomats from Russia, has the Foreign Secretary approached any EU colleagues to ask for additional consular assistance to be made available to the UK citizens who travel?
I understand the hon. Gentleman’s point. We have not yet sought extra consular assistance from any other European country, and we are content with the arrangements that we have at the moment. The onus is clearly on the Russian authorities to honour their FIFA contract in full and to ensure that Scottish fans and all UK fans have a safe, enjoyable tournament.
I welcome both the domestic and international unanimity on this issue. Now that the Government support the Magnitsky Act, may I encourage the Foreign Secretary to do all that he can to learn from the Americans about how they have been able to prosecute the people who were exposed by Sergei Magnitsky? The UK is the only country that has not started criminal proceedings against such people.
I am grateful to the hon. Gentleman. As he knows, an amendment will be made to the Sanctions and Anti-Money Laundering Bill on Report, and work is going on across the Chamber to get that right. We hope that that will make it even easier for our law enforcement agencies to prosecute such people. They already have such powers, and it is important that they are allowed to get on with their job without political interference.
Will my right hon. Friend congratulate the foreign service, the intelligence services and all those others involved in putting together this exceptional coalition? Does he agree that international institutions need strengthening against Russia’s constant infiltration? Will he take steps to examine what might be done at the UN, the World Bank and the IMF to strengthen their resources against such infiltration?
I thank my right hon. Friend, who will know that we have enjoyed strong support, not just bilaterally but multilaterally, for our explanation of what happened at Salisbury. We had the NATO statement and the statements by our friends in the UN Security Council, and the EU ambassador to Russia has also been recalled.
I am afraid I must correct the hon. Lady. The UK may be leaving the EU, but we are not leaving Europe, and we remain unconditionally committed to the security of our friends and partners. As she will know, we secured strong support from the EU both institutionally and bilaterally, but it is worth observing that not every EU member chose to withdraw—expel—diplomats. Many of them did, however, and that is a good omen for the future.
Does my right hon. Friend agree that the international response to the Salisbury incident demonstrates the enduring value, reliance and quality of our NATO alliance?
I do; I thank my hon. Friend for that excellent point. NATO was one of the very first off the blocks with a powerful statement, which a lot of people then echoed.
I too congratulate the Government on bringing together a strong, impressive and co-ordinated international response to the Russian threat, but does it not point out the need for the Government to plug the gaps in the defence budget that have been identified? We really need to match our words with our actions.
The right hon. Gentleman makes an important point, which was raised many times in last night’s debate. As he knows, the Government are one of the biggest defence spenders in the whole European area, and the second biggest player in NATO. We remain committed to spending more than 2% of our GDP on defence.
Does my right hon. Friend not agree that, contrary to what some Opposition Members have just suggested, despite Brexit we will have strong foreign policy relations around the world?
I am delighted that my hon. Friend has said that, because I think that the events of the past few days have vindicated that very point. The contrast is very striking between the rather tepid response to the assassination of Alexander Litvinenko in 2006 and the overwhelming global response we have seen in the past few days.
The Foreign Secretary will be aware of calls across the House, including from the Scottish National party group leader, my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford), to tackle some of the financial measures, and that is very important. What conversations has he had with his counterparts about specific measures that might be taken?
The hon. Gentleman will know that under the Criminal Finances Act 2017, which came in last April, there is provision for unexplained wealth orders to be made against those whose assets might have been corruptly or illicitly obtained, and he can be in no doubt that the National Crime Agency and the national economic crime centre are looking intently at what avenues to explore. However, I stress that this is not something for political direction or control; we in this country operate under the rule of law.
At the end of an excellent debate on Russia yesterday, I am afraid that the Foreign Secretary failed to answer a single one of the dozens of questions he was asked over the course of four hours, so may I repeat just two of them? First, will the Government now initiate a case against the Russian state at the European Court of Human Rights for its clear extraterritorial violation of human rights in relation to the Salisbury attack?
I believe that the right hon. Lady has legal training. We must wait for the investigation to be concluded.
I do not really understand that answer, but I hope that the Foreign Secretary will give it some consideration. After all, a third of all cases currently before the Court relate to Russia, and its rulings have been used by leading opposition figures, such as Alexei Navalny, to send a powerful message about the Russian state’s abuses.
Let me ask a second question that the Foreign Secretary failed to answer yesterday. Given the justified criticism of Donald Trump and Jean-Claude Juncker for congratulating President Putin on his re-election, will the Government guarantee, for the sake of consistency, that they will not congratulate President Sisi of Egypt on his sham re-election when it is confirmed next week?
If I may say so, I think that it is a bit much to bash America and the Trump Administration today, as much as that is the right hon. Lady’s instinctive reflex. The United States has just led the world in expelling 60 Russian spies. If she had an ounce of grace, she might concede that that was a very considerable gesture in the right direction. As for any future elections that might take place, we do not anticipate the outcome of any election.
Iran: Ballistic Missile Programme
We make clear our concerns about Iran’s destabilising regional activity, ballistic missile programme and support for the Houthis in Yemen. Increased dialogue, such as my right hon. Friend the Foreign Secretary’s visit to Tehran in December and my hosting of Deputy Foreign Minister Araghchi last month, enables us to engage Iran on these challenging issues.
I thank the Minister for that response. Since the nuclear deal was signed some three years ago, Iran’s hard-liners have benefited from sanctions relief and the country has tested at least 23 ballistic missiles, while human rights abuses have continued unabated and Iran continues to finance terrorist proxies and regimes in the region, including Hezbollah in Lebanon and Hamas in Gaza, so does the Minister agree that the nuclear deal has not yet curbed Iran’s regional aggression, and how does his Department intend to rectify that?
The hon. Gentleman’s question neatly encapsulates the dilemma in relation to Iran and its future. On the one hand, it has adhered to the provisions of the Joint Comprehensive Plan of Action—to that extent, that issue of the development of a nuclear weapons capability is being dealt with—but on the other hand Iran’s activity still causes great concern. We do engage with Iran directly on those issues and they are known in the region. We believe there are better ways for Iran to demonstrate its relationship with the rest of the region, and we look forward to that.
Iran is indeed fomenting terror in the region, with funding for the Houthis in Yemen, Hezbollah in Lebanon and Hamas in Gaza, and through propping up the Assad regime in Syria. Have Iran’s efforts in this direction increased or reduced since we re-established diplomatic relations in September 2016?
What the re-establishment of diplomatic relationships has meant is that we have the ability to engage Iran directly and clearly on some of the matters my hon. Friend has stated.
What recent dialogue has the Minister or officers had on human rights, particularly the position of women, in Iran?
The method of engagement with Iran enables these things to be dealt with very directly, although not always publicly. In pressing the case for a better human rights relationship in Iran, both among its people and involving those from outside, our statement of beliefs is clear, and I am sure the direct engagement is always helpful.
Just last month, Iran dispatched an advanced drone into Israel’s airspace from Syria, which led to a serious confrontation between Israel and Iran, and provoked a concerning escalation in tension throughout the region. Does the Minister share my concern at these events and will he join me in condemning Iran for its bellicose actions, which must be contained?
Yes. One or two direct instances of activities by Iran cause great concern, bearing in mind the risk of miscalculation and confrontation in the region. Whether we are talking about the United Nations panel of experts looking at materials that have been fired from Yemen into Riyadh or the drone incursion, these things make it very difficult for Iran to establish the sort of relationships it needs with those around it, and it has to reconsider that sort of activity.
The Minister will know that cyber- attacks by rogue states are on the rise. This week, Iran has been reported to have launched a cyber-attack on British universities. Does he have any comment to make about that?
I do not have any direct comment on that, but clearly cyber- attacks directed against the UK, whether from external entities to states or from states, are not acceptable to the UK.
Never let it be said that my hon. Friend does not have his finger on the pulse of his constituents. I am sure they talk of little other than the OECD in the Stockbrokers Arms in Harpenden. This country is a founding member of the OECD, and I am pleased to confirm our strong links with it, which will continue to go from strength to strength after Brexit. I visited the OECD in Paris earlier in the month, when I reiterated our firm support for the visionary future programme.
I am glad the Minister does not underestimate the sophistication and cerebral quality of the hon. Gentleman’s constituents—that is very important.
Thank you, Mr Speaker. I shall take this back to the Stockbrokers Arms in Harpenden this evening. Will the Minister expand further on what the Government have been doing within the OECD to build up bilateral relationships within that multilateral organisation, to prove that this country is still at the forefront of international institutions?
I should point out that I was in no way saying anything untoward about Harpenden, which is indeed the most middle-class, and probably Tory-voting, town in the whole UK. [Interruption.] Dear, oh dear. As I am sure Opposition Front Benchers will be well aware, the OECD has a crucial role to play in global regulation, enabling trade and investment and driving forward a number of important G20 initiatives. In the coming months, we expect to have a renewed commitment from the OECD and its members to continue to open global markets, particularly through the trade in services, and to explore new issues, including digital trade.
The Minister will note that Hove is also middle class—it used to vote Tory, too.
In its last economic survey, the OECD said:
“In case Brexit gets reversed by political decision…the positive impact on growth would be significant.”
Does not that show that the Government’s current Brexit policy is not driving us closer to the OECD but driving us apart?
I am sorry that the hon. Gentleman feels that way, but I am pleased that the OECD is an important issue in Hove, too. When I saw the secretary-general, he assured me that UK-OECD co-operation is strong and vibrant. Naturally, we talked about Brexit-related issues and the feeling was that we had an important ongoing role to play post Brexit. Above all, what struck me was just how valued the United Kingdom remains in institutions such as the OECD. We will continue to do important work on anti-corruption—for example, in south-east Asia, for which I have ministerial responsibility, we will continue to strengthen the anti-corruption initiatives.
Will the Government assure me that, as we evolve our relationship with the OECD, it will not be to the detriment of our supporting the British overseas territories, particularly in relation to development?
Very much so. I have been struck by the initiatives within the OECD, which is a 35-member strong organisation, with another half dozen countries wishing to join it. There is a recognition that global trade requires a sense of global protocols, and I think that that would apply to the overseas territories just as much as it does to the OECD’s existing members.
Diplomatic Service: Funding
I am delighted that, as a result of conversations with the Chancellor of the Exchequer, I was able last week to announce the creation of 250 new diplomatic positions and 10 new sovereign posts, which means that for the first time in years this country has the most sovereign posts of any European diplomatic service, and more than France.
I wonder whether the Secretary of State can tell us how many of those diplomats are going to be stationed in far-off places such as Camden. More specifically, will he tell us how many are going to be stationed in Brussels and how much these new unelected Brussels bureaucrats are going to cost the public purse?
Perhaps I should have said that those 250 new diplomatic posts are in addition to the 50 extra diplomatic positions that we are putting into our European network.
Is there a possibility of using some of the Brexit dividend to further expand our diplomatic posts, particularly in the Commonwealth?
My hon. Friend anticipates developments that may unfold in the next couple of months. I do not wish to steal my own thunder, though, so he will have to contain his impatience on that.
I call Mike Gapes.
Wait till you hear what I have got to say!
There will be no Brexit dividend. The question is how we will be able to find the resources for these posts around the world, where we will have to do more bilateral work, rather than less. Is that not the reality? Is it not a fact that the Foreign Affairs Committee’s recent report pointed out that half the 50 so-called improved posts were actually smoke and mirrors?
I am afraid the hon. Gentleman is talking complete nonsense. There are 50 new posts in the European network and, in case he missed my earlier answer, 250 more globally. That allows us to have 10 whole new postings—legations, missions, embassies—around the world and will take the representation of this country to the biggest of any European power. That is a fact of which the House should be proud.
I hope that those 250 posts may have been partly the product of the continued reports of the Foreign Affairs Committee in the previous Parliament about the utter paucity of resources for the Foreign and Commonwealth Office, given the task that it now faces in presenting global Britain. How much more revenue money has my right hon. Friend been given to fund those posts?
I thank the Foreign Affairs Committee, in all its incarnations, for the support that it has given to the cause of more money for the Foreign Office. The figure that my hon. Friend is asking for is £90 million.
Diplomatic Relations: Poland
British-Polish relations are excellent and go from strength to strength. We enjoy a strategic partnership that is broad and diverse. The most recent milestone in the relationship was the second UK-Poland civil society Belvedere forum. May I say, Mr Speaker, that we remember with deep respect the Polish citizen who died in Harlow after a violent attack in 2016?
Will my right hon. Friend recognise the suffering of the Poles from Nazism and communism; their efforts, through the extraordinary Warsaw Jewish museums, to build relations with the Jewish community; and their prompt action in expelling Russian diplomats? Will he do everything possible to build relations between Britain and Poland and encourage our education system to recognise the Polish contribution to the United Kingdom?
I wholeheartedly agree with my right hon. Friend. We all have the utmost respect for the significant contribution that the 1 million Poles living in the UK make to our society. He has been very supportive of his own local Polish community and his constituents fully recognise that. May I say on this occasion that we would like to thank the Polish Government for their full and vocal support for the United Kingdom following the attack in Salisbury?
Women’s rights are human rights and they include reproductive rights. Poland already has some of the most draconian abortion laws in Europe, with illegal and potentially unsafe abortions estimated to be in the tens of thousands each year. This weekend, we saw thousands take to the streets to protest against a further crackdown. What representations have Ministers made to their Polish counterparts about these worrying laws and how are the Government promoting reproductive rights, including access to safe terminations, more widely?
I recognise what the hon. Lady says but, obviously, countries across Europe have different laws on abortion. However, where they breach the sort of human rights that she is describing, we will, of course, always make representations when we meet Ministers from other countries.
Will the Minister join me in recognising the contribution made by the million Poles, particularly those who served with RAF pilots and mechanics on the Spitfire in Birmingham? Will he apologise to the community for treating the rights of EU citizens in the UK as bargaining chips during the negotiations on our exit from the European Union?
It is with deep regret that I must say to the hon. Gentleman that he belittles the respect that we have for the Polish community. I have a significant Polish community in my own constituency, in Melton Mowbray, and their contribution during the war remains deeply recognised and appreciated.
The security situation in Afghanistan remains challenging as recent terrorist attacks have highlighted. It is clear that a political and diplomatic settlement is the only way to achieve lasting, sustainable peace. We warmly welcome President Ghani’s recent offer to the Taliban of talks without preconditions. As I made clear at the UN Security Council in January, the UK’s enduring commitment to Afghanistan is unwavering.
Bearing in mind the extraordinary sacrifices that our country has made over many years in terms of the lost lives of our military personnel and the billions of pounds of taxpayers’ money that have been spent trying to bring peace to this country, we are clearly very interested in ongoing political developments. What additional help is my right hon. Friend giving to the Afghanistan Government to bring about a political settlement in that country?
As I have said, the Taliban cannot win militarily and therefore a political settlement is the only way to achieve that sustainable peace. Through the Prime Minister’s own special representative for Afghanistan and Pakistan, we have participated in a range of meetings. Any peace process will, inevitably, take time. One thing that I have been particularly encouraged by is the sense that a number of central Asian states—Kazakhstan, Tajikistan, and Uzbekistan—are looking to play an important part in economic development in Afghanistan. Without that economic development, there will not be the progress that we so dearly want.
I very much welcome the additional money that is going to the Foreign Office and congratulate the Foreign Secretary on achieving that. Can he explain why the number of posts in Afghanistan will be falling? Will he reverse the decision that was initially set out? Why is he setting out priorities that put Chad over other places? Will he explain the prioritisation that he is intending to use for these additional missions?
Obviously, when we had thousands of troops in Afghanistan there was a very, very large diplomatic presence. Yes, it is true to say that that presence has reduced somewhat, although having visited Kabul myself last October, it is very evident that we have a lot of very hard-working diplomats on the ground. The other point, as my hon. Friend will be well aware, is that inevitably, because we are ensconced in Kabul rather than having a presence in parts of Helmand region, there is perhaps less need for the overall numbers within Afghanistan. It is also important to point out that we are looking across the globe. I look particularly, in the region for which I have ministerial responsibility, at places such as the Pacific islands, where we work very closely with Australia and New Zealand to try to increase our head count, and at the Association of Southeast Asian Nations.
Turkish Military Operations: Syria
I discussed Afrin with the Turkish Government last week in Ankara, and stressed the importance of humanitarian assistance and protection for civilians. We welcome the progress made against Daesh in Syria. However, violence continues across the country and the humanitarian situation is dire. None of these challenges can be sufficiently tackled without progress on a political solution under the UN Geneva process.
As the Minister knows, it is often said that the Kurds “have no friends but the mountains”. Many times in this Chamber we have praised the Peshmerga and the bravery of the Syrian Kurds in taking on ISIS. Are we going to abandon them to the Turks? What more can we do?
Apart from changing the aphorism to include the right hon. Lady as a friend of the Kurds as well, I would say that the situation there is complex between the various parties. We recognise the concerns that Turkey has about terrorism against its borders, but we have been very clear in stressing that there should be a de-escalation and a political settlement of the issues that affect it.
Christian Aid is saying that there are now 98,000 internally displaced people in Afrin. What assessment has the Minister made of our relationship with Turkey on this matter?
As I indicated, the conversations I had in Ankara last week covered humanitarian assistance and the need to be able to get in to provide that, although the situation remains one of some risk. Afrin has a number of improvised explosive devices and booby traps, which has made progress and humanitarian access difficult. I made very clear the concerns about both humanitarian assistance and the protection of civilians in any ongoing incursion in the area. We stress the need for a de-escalation as quickly as possible.
I call Bambos Charalambous. [Interruption.] I thought that the hon. Gentleman wanted to ask a question. I would not want him to be afflicted by shyness and reticence.
I will wait for a later question.
If the objective is to roll back Daesh, then surely the Kurdish community have done that more than any other. Is not what Turkey is doing therefore counterproductive to that objective? Is that something that we should expect from a so-called NATO ally?
I made the point very clearly that progress against Daesh must continue and that there should be no risk of forces being diverted in order to deal with other issues, rather than continue the pressure on Daesh. The Turkish Government are well aware of this risk but stress the importance of dealing with terrorism. There should be a different settlement with other aspects of the Kurdish community, which must be included in an overall settlement in relation to the future structure of Syria.
Earlier this month the Syrian crisis entered its eighth year. Are we getting any nearer to an international solution?
I wish I could say yes, but that would not be entirely correct. The efforts being made by Staffan de Mistura, whom I also spoke to over the weekend, deserve our full commendation and support, but it is a difficult process. On the ground, there is the determination of the regime and its allies to continue their attacks against both the civilian population and others in the enclaves and areas that they are attacking now. If the regime would co-operate fully with the Geneva process, which it should do, these attacks could end instantly and the political process could be changed overnight.
It was simply appalling to see the victorious militias backed by Turkey rampaging around Afrin, looting shops and houses, and tearing down the city’s Kurdish cultural heritage. May I ask the Minister what that vandalism has to do with what the Foreign Secretary described as Turkey “protecting” its “legitimate interest”?
I cannot speak in any way for the conduct of Turkish forces or anything of the like. As I said to the House earlier, our aims in Syria are coherent: lasting defeat of Daesh, and political transition to a Government who protect the rights of all, including Kurdish communities and all minority groups. All activity that affects the Kurdish community should remember that the ultimate destination of Syria will depend on Kurdish communities feeling part of it, without the risk of terror across its borders, and that should be considered by all.
The Commonwealth is a unique global framework. Its members are home to a third of the world’s population, with a combined GDP last year of over $10 trillion. That shows the extraordinary potential of the Commonwealth summit in London next month. We have a fantastic programme and agenda that includes the discussion of cyber, free trade and free trade deals, how to rid the world’s oceans of plastics and how to ensure that every girl in the world gets 12 years of quality education.
Given that this is the first Commonwealth Heads of Government meeting in London for 30 years, will the Foreign Secretary join me in celebrating Her Majesty the Queen’s remarkable leadership of this unique global partnership? Does he agree that this is a great opportunity to promote two very good causes—Malaria No More and Vision For All—across the Commonwealth, alongside what he said about promoting trade and increasing cyber-defences?
Absolutely. I pay tribute to my hon. Friend for all the work that he has done. He led a very good debate on the Commonwealth last week. He is quite right in what he says about halving the incidence of malaria, which is a further objective of the summit. He is also right to pay tribute to the absolutely central role of Her Majesty the Queen. The summit has an extraordinary turnout. Virtually every single one of the 53 Heads of State and Government is coming to London, and there is no doubt that the draw is not just our city or our country, but the chance to see the Queen herself.
We certainly value our relationship with Sri Lanka, although I perfectly understand the hon. Gentleman’s points about human rights. He can be in no doubt that we will continue to raise those points in our discussions with Sri Lanka.
Will my right hon. Friend confirm that the upcoming Commonwealth summit is an opportune moment for us to demonstrate the strength and diversity of this unique family of nations?
I passionately agree. [Interruption.] “Say no”, say Labour Front Benchers. That is their attitude. Is that not extraordinary? “Say no”, says the noble and learned Lady, the Baroness, whatever it is—I cannot remember what it is. [Interruption.] Nugee. What an extraordinary thing. The Commonwealth is an institution that encompasses 2.4 billion people and some of the fastest growing economies in the world. We have an unrivalled opportunity to embrace them here in London, and we are going to do it.
Order. I do not want to be unkind or discourteous to the Foreign Secretary, but I say on advice, as the Clerks swivel round to me, two things. First, we do not name-call in this Chamber. Secondly—I am dealing with the matter, and the right hon. Gentleman will listen and benefit from listening—we do not address people by the titles of their spouses. The shadow Foreign Secretary has a name, and it is not Lady something. We know what her name is. It is inappropriate and frankly sexist to speak in those terms, and I am not having it in this Chamber. That is the end of the matter. No matter how senior a Member, that parlance is not legitimate. It will not be allowed, and it will be called out. I require no chuntering from a sedentary position from any occupant of the Treasury Bench. I have said what the position is, and believe me, that is the end of the matter. I hope I have made the position extremely clear to people who are not well informed about such matters.
FIFA World Cup
Mr Speaker, may I crave your indulgence to prostrate myself before you and to apologise for any inadvertent sexism or discourtesy that you may have deemed me to be guilty of? I heartily tender my apologies to the right hon. Member for Islington South and Finsbury (Emily Thornberry) if she was offended by what I said. I meant no harm, and I apologise unreservedly if I have offended her feelings.
Following the abhorrent chemical attack in Salisbury, the UK Government have engaged closely with our international partners on this and other issues, but the holding of sports events and the choice of venues is a matter for the relevant sporting authorities—in this case, FIFA.
I thank the Foreign Secretary for his gracious apology. As far as I am concerned, if I can use the expression again, that is the end of the matter.
I thank the Foreign Secretary for his response, but the fact is that sport and politics do mix. Who can forget Jesse Owens at the 1936 Olympics in Berlin or the sporting boycotts of the despicable apartheid regime? Surely the Foreign Secretary sees the profound inconsistency between the very welcome retaliatory measures that our Government and many other Governments have taken and us all trotting off to Russia in a few months to provide Mr Putin with a smokescreen for what he does and how he behaves.
There are no plans to boycott the World cup or to try to get a boycott by the England team—that is, after all, a matter for the Football Association and not the Government—nor is there any desire to punish England fans. As the hon. Gentleman knows, there will be no attendance by Ministers or members of the royal family, as the Prime Minister told the House on 14 March. As he knows, several other countries have decided to put in place the same measures.
English football fans were targeted by Russian football gangs in the Euro 2016 tournament, and many were left with life-changing injuries as a result. There are concerns that those Russian football gangs have links to President Putin’s Government. Will the Foreign Secretary be updating travel advice for the 10,000 fans who are planning to travel to the World cup this summer?
I am grateful to my hon. Friend for her question. The travel advice has been updated. Fans should be aware of the possibility of political tensions between the UK and Russia and should be vigilant but, above all, should stay in touch with us and look at the Be on the Ball website.
Promoting Education in the World
Promoting access to a quality education is a moral imperative and firmly in our national interest. As a passionate feminist and someone without a sexist bone in his body, the Foreign Secretary is an advocate for education and has discussed that with the Secretary of State for International Development and the Secretary of State for Education, among others.
I do not mean to be unkind to the Minister, and I know she will not take it amiss. The Foreign Secretary does not need to be defended by her, and I know she would not argue with the Chair; she would come off rather worse.
In Nigeria alone, there is an enormous market for A-levels through to university education. What help is the Minister providing to enable us to tap into that market?
I pay tribute to my hon. Friend for his work as a trade envoy to Nigeria. I can tell him that the Prosperity Fund global education programme is due to start this year, aiming to improve standards of education and increase UK exports, and Nigeria will be one of the countries involved.
My immediate priority is to help to mobilise international support following the horrifying event in Salisbury, and I am greatly encouraged by the response so far. I am also preparing for the Commonwealth Heads of Government meeting in London next month, which will be one of the biggest summits this country has ever hosted and a unique opportunity to renew the Commonwealth and take forward the priorities of global Britain.
This week, the Yemen war has entered its fourth destructive year, and yesterday, the International Rescue Committee launched a new report showing the devastating impact of the conflict on Yemen’s health system. What are the UK Government doing to put pressure on the Saudi regime to pay £2 billion into Yemen’s central bank, as promised in the pledge it made in January?
The hon. Gentleman raises a subject that is at the very top of our concerns in the Foreign Office and across the Government as a whole. I assure him that we are working with all our friends and partners to try to persuade everybody involved in the Yemen conflict—particularly, of course, the Saudis—to get to a political process. In the meantime, we have been instrumental in getting the Saudis to open the port of Hodeidah to allow not only humanitarian but commercial traffic to get in and relieve some of the suffering that is unquestionably taking place there. I share his sense of urgency.
Fisheries licensing is generally a matter for the Governments of the individual territories; only in the specific case of South Georgia and the South Sandwich Islands does the Secretary of State give advice on licensing in respect of foreign policy. In the last round, three of the six licences were given to overseas territories.
The Foreign Secretary will be aware of the case of Professor Clara Ponsatí, whom the Spanish authorities want to extradite. Does he agree with the principal of the University of St Andrews, who has said that
“there are legitimate arguments that Clara is being targeted for standing up for her political beliefs”?
The issuing of a European arrest warrant is a matter for proper judicial process, not for political interference.
What does the strength of the Russian reaction say about the influence of the British Council?
With great respect to my right hon. Friend, I prefer to look at the strength of the global reaction to what Russia has done and the corresponding influence of the United Kingdom on such deliberations.
Next Tuesday will mark two years since Nazanin Zaghari-Ratcliffe was detained in Iran on trumped-up charges, separated from her young child and thrown into jail. What steps is the Foreign Secretary currently taking to obtain her release so that she does not spend yet another year separated from her family?
As the House will know, we have a number of very difficult consular cases in Iran at the present time, and every effort is being made on behalf of each of those—each of those—individuals. All I can tell the hon. Gentleman is that none of those cases really benefits from public comment at this stage.
With CHOGM coming up, does my hon. Friend agree that if Zimbabwe held free and open elections, that would give it a route back to the Commonwealth and, indeed, give what used to be the breadbasket of Africa free trade agreements with the rest of the world?
I assure my hon. Friend that, when I visited Zimbabwe recently, that was indeed the message I was able to convey to the new President.
As the hon. Gentleman knows well, the situation in Gaza remains of deep concern. It is a wretched situation. We continue to make representations to all parties who have an involvement with the governance of Gaza to improve the conditions. It is more than just one particular group, but we do make representations to the Israelis about the possibility of improving steadily the position in relation to Gaza. Nothing will be settled until we get the agreement we want on the two-state solution.
Last month I was part of an Inter-Parliamentary Union delegation to Albania, where Ministers emphasised how important the security links are between our two countries. That was further re-enforced at a follow-up meeting with the ambassador. What plans do the Government have to further links with Albania?
We work very closely with Albania, particularly on organised crime, and all the more so as we approach the very important western Balkan summit, which we will host here in July this year.
The hon. Gentleman raises a very good point. We will certainly make sure that in the discussions on health, which as I said earlier form a large part of our Commonwealth proceedings, that issue is raised.
In the Democratic Republic of the Congo, where 7.7 million people face severe food insecurity and 2 million children are at risk of starvation, the level of emergency has been put to number three, which is the highest level. The European Commissioner for Humanitarian Aid and Crisis Management says it is getting worse by the day and that it is not business as usual. What can Her Majesty’s Government do to work with others both on humanitarian aid and on possibly increasing the number of peacekeepers for security?
My hon. Friend rightly raises the most appalling humanitarian situation. He will be aware that in Geneva—a week after next, I think it is—there will be a big pledging conference to raise money for a humanitarian crisis that the United Nations estimates is going to need at least $1.7 billion of aid in the coming months.
I was at the Pakistani national day celebrations at the weekend as well. I think the hon. Gentleman will understand that there are good reasons why it is the UK Government’s position, and has been in the 70 years since Pakistan and India were formed, that the Kashmir issue should be determined by those two countries. There is not a role for Britain to interfere or intervene. Ultimately, peace will only come when those two communities themselves can find their way to work that out. Clearly, it has to be an issue for the Kashmiri people.
Now the Prime Minister has put some backbone into the Foreign Office, is it not about time that we took some action against the Ecuadorian embassy? How long are we prepared to allow this situation to go on, where, as the Minister of State said in previous questions, a man is avoiding lawful arrest?
It is of great regret that Julian Assange remains in the Ecuador embassy. It is of deeper regret that even last night he was tweeting against Her Majesty’s Government for their conduct in replying to the attack in Salisbury. It is about time that this miserable little worm walked out of the embassy and gave himself up to British justice.
The UK Government have welcomed and congratulated the new President, Mr Ramaphosa, and we are looking forward to his visit to the UK next month for the Commonwealth Heads of Government meeting.
In terms of the Commonwealth, will the Minister explain further how Global Britain will lead to furthering economic ties with our Commonwealth friends, and not just diplomatic ones?
My hon. Friend makes an excellent point. Of course, a large part of the Commonwealth summit is to talk about trade and prosperity and the opportunities that exist. As I said earlier, some of the fastest-growing economies in the world are in the Commonwealth—now growing, though I do not wish to make any invidious comparisons, substantially faster than the EU, though we intend to trade very much with both of them.
We continue to engage with a significantly important country in the region. Human rights form part of the dialogue with Egypt at all times. Internal matters are a matter for them, but I assure the hon. Lady that the relationship has to be strong to deal with exactly the sort of issues that she raises.
Will the Secretary of State join me in reiterating that the issues this House and the international community have with Russia are with Putin and his cronies, not the long-suffering and hard-pressed Russian people, who are victims in this themselves?
My hon. Friend makes a very important point, which is made repeatedly by Members across the Chamber but cannot be made often enough. Our quarrel is not with the Russian people. We hold out the hand of friendship to the Russian people. They are not ringed with enemies. Our dispute is with the Kremlin as it is currently managed and the currently disruptive manner of Russian policy.
It might help if I say that I keep speaking to the World Health Organisation in relation to the availability of vaccines, and we are pretty confident that the vaccines are there. I also spoke yesterday to UNICEF about the ability to get them through. We are pressing for the consolidated plan that it needs to do that. There is a conference on Yemen coming up shortly, but we press every day to make sure that the cyclical issue of cholera is indeed dealt with.
The trade out of poverty all-party parliamentary group, which I co-chair, is soon to release a report on trade and investment intra-Commonwealth. Will my right hon. Friend read that report and champion that agenda at the forthcoming CHOGM summit?
My hon. Friend makes an excellent point, because the job of the Commonwealth summit is not just to promote trade between the UK and our 53 Commonwealth friends, but to promote intra-Commonwealth trade, and that is where some of the biggest opportunities lie.
I can tell the hon. Gentleman that our efforts have been directed at building an international consensus to ensure that there is a multinational, multilateral body to give the Rohingya refugees the confidence and security that they need to make a safe, dignified and voluntary return to northern Rakhine.
There are growing international concerns about Germany’s intentions to build an undersea gas pipeline directly to Russia. Does the Secretary of State share those concerns, because this will put at risk the energy security of our key NATO allies in central and eastern Europe?
I recently met the head of Naftogaz, the main energy company in Ukraine, and we are fully aware of the issue my hon. Friend raises. We will look at the issue of Nord Stream 2 and the pipeline in the light of what has happened in Salisbury.
Turkey’s actions in Cyprus’s exclusive economic zone do not create the right climate for reunification negotiations to recommence. Will the Minister join me in condemning Turkey’s actions and call on it to withdraw its warships from Cyprus’s exclusive economic zone, where they have been since 9 February?
We fully recognise the rights within the economic zone, which the hon. Gentleman mentioned, and fully support the right to drill for oil.
Last night, I and many colleagues across the House attended a huge demonstration to say “enough is enough” to anti-Semitism. What more can my right hon. Friend’s Department do to strongly send out the message to the Jewish community around the world that Britain is determined to stamp out this ancient hatred?
It is absolutely vital for everybody in this House to send out a very clear message that anti-Semitism anywhere is intolerable. I look to people on both sides of the Chamber to do that.
Our silence over—indeed, our tacit support for—the wholly unacceptable and Franco-esque crackdown on democracy and human rights in Catalonia by the Spanish state is shameful and indeed makes us complicit. Will the Minister please rethink, speak to his Spanish counterparts and urge them to draw back from their counterproductive actions?
I do not agree with the hon. Gentleman’s interpretation of what is happening in Catalonia. We fully support the Spanish Government in upholding the proper workings of the Spanish constitution.
Will the matter of refugees and the global refugee crisis be on the agenda for next month’s Commonwealth meeting?
We will of course discuss refugees and the refugee crisis.
This week we learned that Spanish secret police have been operating in several EU countries. The Foreign Secretary and the Prime Minister have referred to the expulsion not of diplomats but of spies and intelligence officers. To the Government’s knowledge, how many foreign powers currently have spies, intelligence officers and secret police agents operating in the UK?
I invite the hon. Gentleman to speculate himself on the answer to that question, because we do not discuss intelligence matters.
Last month, Impactt’s audit of the Qatari supreme committee, which is responsible for the World cup, highlighted significant positive progress in areas relating to workers’ rights. What efforts will the British Government make to support further progress and promote its spreading to neighbouring states?
I happened to see the Qatari organiser of the World cup just a couple of days ago. They gave an impressive presentation on what they had sought to do to improve not just workers’ rights but workers’ welfare, not just now but looking forward to the final construction phase. Concerns have been well expressed, but my sense is that the Qatari system understands that very well and is working hard to produce a good and safe World cup.
With your permission, Mr Speaker, I would like to make a statement about the future of the west coast main line, our plans for the integration of track and train on our railways and our plans for the transition to the operation of High Speed 2 as it opens up in 2026.
I have already set out for the House our plans to bring the operation of track and train together on a day-to-day operational basis around the country, with the creation of new alliances between Network Rail and the train operators on south eastern and midland main line and the strengthening of the existing alliance arrangements on south western and southern. I have also set out our plans for a new partnership between the public and private sectors to operate the east coast main line.
Today I want to explain how this approach could start to inform the development of the west coast main line and HS2. I am also today publishing the invitation to tender to be the new west coast partner, which, subject to their delivering on their commitments, will operate the route until 2031 and will work with HS2 Ltd to pave the way for the opening of HS2. The west coast main line is one of the busiest mixed rail routes, if not the busiest, in Europe: it carries commuter traffic to six of our biggest cities and express trains between them; it provides essential intermediate services to places such as Milton Keynes, Coventry, Warrington and Preston; it is an essential link to north Wales, Scotland and Ireland; and it is also one of our busiest freight routes. It is this complex mix of traffic that is a key part of the case for building HS2 so that we have the capacity to meet these growing needs in the future.
The west coast franchise has been very successful in recent years, with high passenger satisfaction and substantial revenue growth for the taxpayer. I intend the new contract to build on that, up to and including 2026. There is already a close working relationship between Network Rail and the train operator, and I intend that to deepen under the new contract with the new operator. After that, however, the way in which we run the railway will change. After 2026, the express services will start to move off an increasingly congested part of the existing network and on to HS2. Brand-new and more frequent trains will provide additional capacity on faster services, and space will be freed up on the existing routes for improved services to other destinations. That will require a carefully managed transition as initial services provide travel to Birmingham and then, gradually, the HS2 network provides more and more of the inter-city service.
I want to explain today how the new contract will ensure that that smooth transition takes place, and to set out what we are working towards. I should emphasise that final decisions on the transition and the operational details are years away, but I think it right that, as we publish this new invitation to tender, we start to look towards what that end point could be. For example, HS2 could be an integrated railway operation, in charge of both its infrastructure and its services. That would be akin to what is provided on some Japanese high-speed lines, and would accord with the Government’s strategy of bringing together track and train. It could also be structured as a public-private partnership. There will be other options that we should explore before final decisions are made.
The exact shape and end state of the organisation does not need to be decided now, but I am very clear about one thing. I want HS2 Ltd to become a strong British organisation, potentially capable of not just building but operating a successful railway here. It should also become a strong international champion for the United Kingdom, as the organisation that runs Manchester Airport has done. Manchester Airports Group is a strong and effective organisation that has expanded in the UK, running first-rate operations here, and is now doing so internationally. It has proved itself to be effective at managing major projects and delivering good customer service. Today’s announcement, however, is not about creating a long-term organisational model for HS2. As we move into the 2020s we will need to prepare for the introduction of services, and through this new arrangement my Department is paving the way for that introduction.
The winner of the competition will help to design the new HS2 services, develop a new customer offering to take advantage of 21st-century technology and revolutionise the way we travel on high-speed rail, and provide input for my Department and HS2. It will run the existing west coast main line services until HS2 passenger services are introduced. After that it will continue to run successor services on the west coast main line until 2031, albeit to a different set of timetables and priorities, with a refocused service aimed at those intermediate locations. Between now and the start of HS2 services, it will also help to plan the introduction of the express trains to the new line and the move from one line to another, and help to put in place all the customer-facing resources that are necessary for the delivery of an excellent service on day one. If it performs strongly, it will also operate services on behalf of HS2 for a limited period after 2026. During that period, my Department will be closely involved with operations to ensure that the envisaged connectivity benefits of HS2 are realised.
The contract also includes a number of safeguards such as restrictions on branding, transfer of intellectual property and requirements for collaboration with HS2. That means that, while we will harness the innovative thinking of the private sector, no one bidder will be able to create something that only it could run in the future. The operator will also work with the Department and HS2 to consider the options for the end state, including what would be required for the transition to fully integrated operations undertaken by an eventual combined organisation. That short-term arrangement will be very similar to the modus operandi on Crossrail next year after it formally begins services as the Elizabeth line for Transport for London.
Throughout this period, the new operator will also deliver a high-quality experience for passengers and continue to drive growth on the existing west coast main line. Passengers will benefit from enhanced compensation for delays of more than 15 minutes, fares and ticketing systems that are simpler to understand, and the introduction of an accessibility panel to advise on all aspects of the way in which the railway is operated. It is important to ensure that all passengers are placed firmly at the heart of all planning decisions.
What I am setting in train today for the West Coast Partnership are our plans to keep industry-leading services on the west coast until HS2 enters operation, to ensure that the first HS2 services are delivered with the help of an experienced operator that has been working hard to plan for their introduction, and to use that approach to help to inform decisions on what the final shape of the organisation should be. I believe that that is the best way of ensuring a smooth transition to what will be an exciting new future for our railways, and I commend my statement to the House.
I thank the Secretary of State for advance sight of his statement, but I am perplexed as to why he has come to Parliament to announce a set of administrative arrangements. There are so many pressing rail issues that the Secretary of State should be bringing to the House, not least the promise to come back to the House about future arrangements on the east coast, which was of course due weeks ago, rather than to announce invitations to tender for rail franchises. If this House spent all its time looking at every franchise, we would not get through any other business. The statement is simply thin gruel. Once again it sets out vague aspirations and possible options. Yet again it is evidence that the Government will not set out a strategic direction, but instead just delegate decisions to the private sector.
There are huge questions about the recent history of track and train alliances. That did not work on the south-western railway; it failed. Why will it be any different under this partnership? Today’s announcement about an announcement is setting the course of the Government’s real priority, which is privatisation of the infrastructure: a partnership with a private company, but extending its grip into the infrastructure, too.
Why would the Secretary of State bring the profit motive back into safety-critical parts of the railway? We must never forget why Labour brought Railtrack back into public ownership: it was for the safety of the great British public. None of us on the Labour Benches will ever forget the past, and how private profit was the objective. With private, we know that the objective is to put money into the shareholders’ pockets, not to invest in the public. This is why Labour’s plan to rescue the railways and bring them back into public ownership is more imperative than ever; the public demand it. Labour would never take such a risk with public safety, nor with public money.
Last month’s supplementary estimate report said that the Department for Transport’s rail revenue from train operators was down nearly £250 million this year and a Treasury bail-out of £60 million was needed. That is hardly evidence of a system working, is it?
Franchising has completely failed, with 13 direct awards and extensions to contracts. The west coast, however, is the jewel in the crown of the rail network. The Labour Government spent £9 billion upgrading it, but now the Secretary of State wants to flog off the family silver before it is even in public hands.
The UK railways have the best safety record in Europe; will the Secretary of State’s plans guarantee this excellent safety record? The UK railways’ safety record has been based on a rigorous risk management system; how will these plans ensure that the risk management approach will continue across the whole network? Is this not a return to the bad old days of Railtrack?
Of course, the railway is about the growth of our economy, and the Secretary of State is handing over responsibility for the economy of the north to these private companies; no wonder people do not believe in the northern powerhouse. Why will the Secretary of State not do what the last Labour Government did in 2009 and take this franchise back into public ownership? That is the best way to preserve the taxpayers’ money and the public interest.
Labour’s integrated public rail will benefit the economy, the environment, the Treasury and the public. We look forward to the right to run our railways again.
This is the first time that I have been told off for being informative to the House about what we are doing. We are publishing today a pathfinding franchise agreement that will pave the way for Britain’s most expensive and most substantial new railway for more than 100 years, and I am explaining to the House how we are approaching the issue of making that transition. This does not seem to me to be something I should not be informing the House about, but I am always surprised in this place.
The trouble with Labour is that it just thinks everything private is bad; it seems to be a completely ideological statement. After many years when the Labour party took a relatively common-sense approach to the balance between public and private, it has now walked a million miles away from that: everything private is bad, and it wants to nationalise everything and drive investment out of this country. Let us take an example. Labour cannot explain to us, in its plans to renationalise the railways, what it would do with what will by then be approximately £19 billion of privately owned trains on the network. All the new trains that are coming now and all the new trains that are being delivered in the future are privately owned. Where will the money come from to pay for those, and to pay for the new trains in the future? We get no answer at all from Labour on any of that.
The hon. Lady talked about safety, and safety is paramount in this country. We have an excellent regulator, and an excellent chief inspector of railways who does a very effective job, in my view, of holding the public and private sectors’ feet to the fire to ensure that we maintain safety standards on the railways. That is something that will continue for the future. She also asked about the northern powerhouse. Let us look at how little investment in the railways took place in the north when Labour was in power. We are replacing every single train in the north, and I have just announced a £3 billion upgrade to the trans-Pennine rail line. We have done upgrades to the Calder Valley line and electrified the line between Liverpool and Manchester. We are currently electrifying the line to Preston. Those are things that never happened under Labour. The replacement of every single train in the north of England is something new or nearly new. None of that happened during Labour’s 13 years in power.
The hon. Lady wants to take the west coast main line back into public ownership, but that is a railway line that is performing well and has very high levels of passenger satisfaction. The last thing we would want to do is to hand it back to the Government. Let us allow it to carry on succeeding. That is what we are aiming to do. We are setting a path that will lead us to what I hope will be a fantastic new world for Britain’s railways when HS2 opens after 2026.
I thank the Secretary of State for his statement. It will be welcomed across my constituency and throughout Cumbria, as will the introduction of Sunday services, starting in May, which will connect us to the west coast main line. Will he tell me what economic advantages this will bring to Copeland and to Cumbria?
The difference that HS2 will make is that it will provide far more capacity and better connections across the whole country. Whether you are coming to London from Cumbria, Manchester, Liverpool or Birmingham, or travelling to points in between, there will be more capacity, faster trains and better connections between intermediate places. That is so important. I am delighted about the arrival of the Sunday services in my hon. Friend’s constituency. She and I stood at Seascale station while a Pacer train chugged past, and she will be delighted to know that in a few months’ time that Pacer train will be in the scrapyard.
I thank the Secretary of State for giving me advance sight of his statement, but it really is lacking in detail. He said that he had already set out plans for a new partnership for the east coast main line, but I suggest that the plans for that line are still unclear. We need a lot more information on that. He also said that the congestion on the west coast main line and its links to Scotland and other areas underpinned the business case for HS2. That raises the question of why HS2 is being built only as far as Crewe, and why a north-south link is not being constructed at the same time.
The Secretary of State has detailed possible methods of operation, but he has said that they do not need to be decided on now, so what are the timescales for deciding future methods of operation? Will he confirm that the public sector will be involved and will be allowed to bid? When will we know the new timetables and priorities for the west coast main line? What will be the bid status for companies that have failed in existing franchises? The existing west coast main line contract was supposed to look at the remodelling of Carstairs Junction, so will he give us a progress report on that? Will he also tell us what discussions he has had with the Scottish Government on the existing underfunding of the rail settlement to Scotland, and on the impact that that could have on the west coast main line?
What tender appraisal lessons has the Secretary of State learned from existing failed franchises? What checks and balances will there be to ensure that we do not see further compensation disputes, conflicts of interest and armies of cost consultants involved in these franchises? What west coast main line upgrades will there be north of Crewe? I note that the current proposals will mean that new HS2 trains will run more slowly north of Crewe than the existing Virgin trains do. That would be an unacceptable performance measure, so will he tell us what upgrades are planned for north of Crewe? Lastly, his Department has already needed £60 million from the Treasury to balance the books this year because of the failures in the existing franchise system. How sustainable will the future franchises be?
On that last point, there was a revenue issue last year around Govia Thameslink Railway and the completely unnecessary strike action taken by the unions. I am happy that that railway is now mostly back to normal and I hope that we will not have that issue again. The hon. Gentleman asked about the east coast main line. I will come back to the House when it is the right moment to do so, when we are ready to set out the approach that we are going to take. It is important to ensure that that is dealt with on a value-for-money basis but also on an operational basis, to ensure that passengers are not affected by the trouble on that route at the moment.
The hon. Gentleman asked about timetables on the west coast main line. That will come from the bids that are tabled for that particular route, depending on how the bidders plan to enhance services. The invitation to tender starts today, and we will start to get the proposals back during the course of this year. Of course, no one can bid for a franchise without a passport, and that will continue to be the case. He also asked about the funding level for Scotland. I simply remind him that the Government have provided more than would have been provided under the Barnett formula. Scottish Members normally argue for the Barnett formula, except when it is inconvenient for them to do so. The reality is that they should be glad to get anything more than the Barnett formula, because that is what they always argue that Scotland should receive.
The hon. Gentleman asked about learning lessons from failure. As I said in my previous statement on the east coast main line, we have tightened the risk-sharing mechanisms and we will be watching this particular franchise like a hawk to ensure that it is financially solid and robust. He also asked about the speed of journeys to Scotland. Of course, HS2 will reduce journey times to Scotland. There is an issue north of Crewe because the new classic-compatible trains are not tilting trains, and that is something we will have to address as we go through the 2020s, but the reality is that journey times to Scotland will be reduced as a result of HS2 arriving. That is part of delivering better services right across the country and, crucially, delivering jobs right across the country. That will happen all across Scotland, Wales, Northern Ireland and England.
I congratulate my right hon. Friend on his statement. What he has outlined will mean a smooth transition to the national network upgrade that HS2 will deliver. Will he give the House a little more information about what the announcement will mean for passenger rail fares on the west coast main line?
It is really important that HS2 does not become a premium service that today’s passengers cannot afford to travel on. Our expectation is that fare structures will stay broadly similar, and it is certainly not my intention to create a situation where HS2 suddenly becomes much more expensive than the west coast main line is today.
There was not actually much new information in the Secretary of State’s statement, but it is clear that this invitation to tender is late, because it was expected in November last year. Will he explain the reason for the delay and its implications? Can he confirm that the award date is still November 2018, and that the new franchise will still start on 1 April 2019? Will he tell us whether the delay will have any wider impact on the Department’s rail franchise schedule?
We do not expect this to have a significant impact on the franchise schedule. As the hon. Lady knows, we have just put in place a direct award to tide us over because of the delay. Things might be slightly late, but we are broadly in line with our original timetabling plans. It is important to get these things right. Also, given that the franchising team has had quite a lot to deal with lately, it is important to ensure that they have the time to get the detail right. That is what we have been seeking to do.
I am grateful to my right hon. Friend for his statement. Will he explain how, as the plans proceed, the economy of the north-west will benefit from the improved connectivity, particularly around the hub at Manchester airport? Will he tell us how that will improve the economy in the Greater Manchester area as well?
The hub around the airport is going to be particularly important, and it is very much on my mind as we develop phase 2b of HS2 and move towards the development of Northern Powerhouse Rail, where there must be a strong connection with the airport. The other benefit of the investment will be that it will create the space for more commuter services around Manchester. I know that there is significant congestion there—I have seen it in my hon. Friend’s constituency—and we need to provide better commuter services into Manchester, and indeed into Birmingham, Leeds and London. That is one of the things that HS2 will do, by taking the existing express trains off the existing routes.
Is the Secretary of State aware that if no changes are made to the proposals for HS2 as it goes through Derbyshire, 1,000 jobs will be lost at McArthurGlen, which is not far from South Normanton, and that more than 30 houses will be knocked down at Newton in my constituency? I have been working with the people at Newton in order to find alternatives, so will the Secretary of State meet the Newton people with a view to seeing whether there are any decent proposals for tunnelling, rather than knocking the houses down, and for ensuring that the jobs at McArthurGlen are safe? Will he give us that assurance today, so that I can make arrangements with the Newton people to come and take part in discussions?
As I have said all the way through, it is not possible to do something on this scale without having an adverse effect somewhere, but we will always do our best to minimise the impact. We are also always willing to have a dialogue with Members from across the House about such situations, so I will of course have that dialogue. I want to try to ensure that we do not adversely affect centres of major employment, so either the HS2 Minister or I will happily pursue a conversation with the hon. Gentleman.
Stafford and Stoke-on-Trent currently have direct, high-speed services to Liverpool and Manchester respectively. However, the HS2 proposals mean that high-speed services from Stafford and Stoke will end at Macclesfield, so we will lose our direct connection with the northern powerhouse. That is unacceptable. Will the Secretary of State consider the situation again and see how its effects can be alleviated?
I am aware of the situation, and the important thing to say is that we are a long way away from detailed timetabling. I share my hon. Friend’s view about terminating at Macclesfield, and I have told HS2 Ltd to do some work on that. We have to get the timetabling and the flow of services right, and I do not want anywhere to be disadvantaged by the transition.
As a former chair of Manchester airport, I thank the Secretary of State for his kind words about how it has been run. One reason for the airport’s success is that it has been careful in choosing its private sector partners over the years. Will the Secretary of State therefore explain why he is allowing private companies that have not honoured their contractual obligations in franchises to compete for important lines?
There are two points to make when talking about potential long-term private partners. First, the arrangements at Manchester airport have worked well. It is still majority-owned by local authorities, but it actually operates as an independent business with private shareholders. It is a good example of a public-private partnership, which may well be the way forward for HS2 Ltd. That does not mean that the organisations that are running franchises are those that might end up as private partners in the future, because we are looking at a different type of model for the future. Secondly, as for future bidding, as I have said before, I will fulfil my legal obligations, but I will also be as careful as possible to protect the interests of the railways and of passengers.
I welcome the announcement of the invitation to tender for HS2 and the benefits that HS2 will be bring the region. Will the new model be used when the Southern franchise is broken up and re-tendered? Is there a timescale for that?
The current Southern franchise will continue until 2021, and we are working through what the structure should be when it is re-let in a different form. I intend there to be a much closer alliance between Network Rail and the private sector, following a similar kind of model to that which we are using with Southeastern. It is necessary to bring the day-to-day operation of the track and trains together to improve performance. We have done some of that already on the Southern franchise, which has helped to make a difference, and that should continue.
When the Secretary of State talked about Labour spending, he seemed to forget the £8 billion invested in the west coast main line. When Labour took over back in 1997, the line was in a dreadful state, and it is so good today because of that Labour investment. The Secretary of State said several times during his statement that public satisfaction is high, that it is doing well and that it is well run, so what are his reasons for wanting to change it?
The hon. Gentleman asks, “What are the reasons for wanting to change it?”, but we are moving from one franchise to another; we are not looking to make massive changes to how the west coast main line currently operates. When it comes to 2026 and the arrival of HS2, that is a different situation. I am not talking about selling or privatising the infrastructure. Post-2026, we will have a separate network with its own infrastructure, and the question—it is not one for me, but for my successors—will be, “What is the best way of running that railway?” I have set out several strong options today, but the Government’s policy is that bringing together the operation of the track and trains—integration on the railway—is the best way of creating an efficient and effective railway.
We know that the Secretary of State is desperate to get from his home in Surrey to his seat at Old Trafford more quickly, so why are the Government dragging their feet when it comes to funding for the station at Manchester airport and the east-west alignment negotiations at Manchester Piccadilly station?
The biggest challenge in getting to Old Trafford on a match day are all the roadworks on the M60, which are due to our investment in the motorway network, and all the roadworks around Old Trafford, which are down to the support we are providing to Manchester to invest in the extension of the Metrolink.
The hon. Gentleman will be aware that Network Rail and Manchester City Council are in detailed discussions about Piccadilly, and we are close to moving forward with desperately needed improvements to the two platforms, and I want that to start soon. As for the airport, we need a really good hub station at the airport, and we are now working through how best to take the Transport for the North proposals for Northern Powerhouse Rail and create a deliverable programme. The first bit of that starts next year with the upgrade of the TransPennine route.
Does the Secretary of State agree that working with private sector partners on the west coast main line has delivered huge improvements to reliability and customer service? Will he reassure my constituents that any operational changes that have been outlined or envisaged today will not have a negative impact on their service?
That is my goal. The thing is that I am very much in favour of the public sector and the private sector working together in partnership, and I have talked about that in other parts of the rail network. The difficulty is that the Opposition do not seem to want the “private” bit at all—everything has to be public. Both sectors bring strengths to the party, and the working partnership that exists today between Network Rail and Virgin Trains on the west coast main line has delivered significant performance and customer satisfaction improvements over the past few years.
Virgin-Stagecoach is not the first, not the second, but the third train company to walk away from the east coast franchise mid-contract, stating that it could only run it for a short number of months. I came running over to the Chamber today in eager anticipation of hearing the Secretary of State say that he was going to set up a directly operated rail company along the lines of the model we had in 2009, which delivered £1 billion back to the taxpayer over six short years. Will he tell the House what he is doing to get the east coast main line franchise back on track, delivering for passengers, staff and taxpayers? Will he ensure that no announcement is snuck out in the middle of the recess?
When we are ready to make an announcement about the future, I will come to the House to do so, and I have said that several times. We are ensuring that we get things right. As I have said before, we have been preparing the alternative operator of last resort for some months. When we are ready to take things forward, I will say so.
The hon. Lady compares the situation with what was there previously, and I simply remind her that, notwithstanding the financial problems in the franchise, it has a high level of passenger satisfaction and is running more trains, employing more people and delivering more money to the taxpayer. The problem is that there has been not enough success, not a lack of it.
In the previous Parliament, the Department was so focused on HS2 that it took its eye off the real challenge facing our country: getting people to and from work in the south-east of England. Will the Secretary of State guarantee that he will not make the same mistake again and that the Southern rail fiasco will never be repeated?
We are slightly in the hands of militant trade unions deciding whether they want to cause trouble, because the analysis of what went wrong showed it was almost entirely down to the action of the trade unions. However, I have also said on many occasions that the unions were not the only issue on that line, and I hope he accepts that performance has improved, but it needs to carry on improving. We need a broad-ranging programme of renewals, because there are still too many track and signal failures, which is why we have set aside the biggest block of funding—£20 billion—for renewals in the next control period. Some of that will flow to the hon. Gentleman’s line, but it will also go around the country to deal with similar issues elsewhere.
Following the excellent question from my hon. Friend the Member for Wakefield (Mary Creagh), may I pick up on the issue of Virgin-Stagecoach and the east coast main line? In a matter of weeks or months the Government will have to make a decision for passengers in our constituencies in Yorkshire and elsewhere, so can the Secretary of State tell us when a decision will be made, whether there will be penalties for Virgin-Stagecoach for walking away from the contract, and whether he will keep on the table the very sensible option of bringing the line back into public ownership?
I have said clearly that I am not simply evaluating, but preparing for two options: one is an operator of last resort controlled by my Department, and the other is a not-for-profit direct award. I will make that decision shortly, and when I do I will come back to the House. It is not just about being ready to make a decision; it is also about knowing whether whichever option I choose is ready to happen. It is as much about preparation as it is about deciding. When we are ready to take that step, we will do so. The reason I am taking the time to get this right is that I do not want passengers—the hon. Lady’s constituents—to notice any change from one day to the next. They are the most important people in this.
We of course welcome any investment in rail, but HS2 must not be allowed to soak it all up. The Government have an incoherent approach to electrification, which has been indefinitely delayed in Oxford and abandoned on the lakes line and the midland main line. Meanwhile, the Government have been pulled up again on air pollution. Why do they not follow their own lead on cars and move away faster from polluting diesel engines?
A central part of our strategy on the roads is hybrid cars, and a central part of our strategy on the railways is hybrid trains. The biggest difference we can make in getting people off the roads and on to rail is to ensure that we expand capacity, and that is what we are doing, with longer trains, new and reopened routes and new stations across the country, creating a better environment for people who want to travel by rail. It is the biggest programme of investment in our railways since the steam age.
The Secretary of State lauds the benefits of reduced journey times between London and Glasgow, but that is not the full picture, because we know that, as a result of the HS2 investment, journey times between Glasgow and Manchester will actually increase. How can this be benefiting all regions of the UK when journey times between Britain’s second and third biggest cities will be increased? Is it not yet another example of putting the profit motive over the real national interest?
This has nothing to do with the profit motive; it has to do with whether or not trains tilt. We need to ensure, through timetabling and planning after HS2 is opened, that we deliver the best possible outcome for all the services and all the destinations it serves. It is not a question of the profit motive or the private sector; it is a question of technical capabilities and how we deliver the best possible outcome.
Further to the question from my hon. Friend the Member for Wakefield (Mary Creagh), my constituency neighbour, can the Secretary of State confirm that Virgin-Stagecoach will be allowed to rebid for the east coast franchise when the contract is put out to tender, because that appears to be verging on the ridiculous?
I think that the hon. Lady has misunderstood our plans. From 2020 we are going to do things completely differently on the east coast main line; we will not be using the current bidding process. We are shaping a public-private partnership. It might be a public-private partnership that brings investment in digital rail, and it might have a completely different corporate structure. We are working through that longer -term plan now while preparing to put in place the intermediate arrangements. It is not a question of who will or will not be allowed to bid, because we have not even decided what the process will be.
It is disappointing that the Secretary of State has today said nothing about the burning issue in the north: poor connectivity between east and west. I am sure that he shares my concern that there is no direct service between Hull and Liverpool, or between Hull and Manchester airport, and that from May trans-Pennine services running from Hull to Manchester will be slower. Will he agree to meet me and key stakeholders from Hull to discuss what he can do to improve connectivity in the north?
I and my ministerial team are always happy to meet to discuss services to the great city of Hull. The hon. Lady is not entirely accurate, because I did refer to the announcement I made a month ago about the start of the £2.9 billion investment in the trans-Pennine upgrade, which will start next spring.
The Minister will know that £1.2 billion was overspent on electrification between London Paddington and Swansea, and he knows that is not the only transport infrastructure project in relation to which the National Audit Office has found overspending. How confident is he that safeguards are in place for future infrastructure contracts for the east and west coast main lines, along with HS2, to prevent overspending that needlessly costs taxpayers millions?
It is always possible for technical problems to arise, as we are seeing in Bolton at the moment, but I think that lessons are being learned. Lessons are certainly being learned from the Great Western main line, which has not been run on an acceptable basis—it has been subject to reviews by the NAO, the Public Accounts Committee and the Transport Committee. I can assure the hon. Gentleman that Network Rail and my Department are seized of the need to ensure that that does not happen in future.
Northamptonshire County Council
With permission, Mr Speaker, I would like to make a statement about the independent inspection report on Northamptonshire County Council. Everyone in the House, regardless of party, appreciates the crucial role that local government plays at the frontline of our democracy, delivering vital services on which we all depend and helping to create great places to live, and, in doing so, making the most of every penny it receives from hard-pressed taxpayers to secure better outcomes, all of which builds confidence and trust between local authorities and those they serve. That is why the situation in Northamptonshire County Council is of such concern.
Prior to my instigation of the report, there were signs that the situation in the council was deteriorating. External auditors had lodged adverse value-for-money opinions in audit reports, suggesting that the council was not managing its finances appropriately. The former leader resigned in May 2016, which also signalled the need for change. As late as last year, the Local Government Association conducted a financial peer review, which concluded that there were issues with delivering the Next Generation reforms and, again, with the mismanagement of finances. The then chief executive, Paul Blantern, resigned in October 2017.
Those reports, along with concerns raised by district councils in Northamptonshire and by hon. Members who represent local constituencies, prompted me to act, as I was concerned that there were potentially fundamental issues within the council. On 9 January I informed the House that I had concerns regarding the financial management and governance of the council. I therefore decided to exercise my powers under section 10 of the Local Government Act 1999 to initiate a best value inspection of the council. I appointed Max Caller, an experienced former chief executive and commissioner, to conduct the inspection and report on whether the council was complying with its best value duty.
Mr Caller submitted his report on 15 March—I placed a copy in the Library of the House so that everyone could see what he had found and his recommendations. Before I go any further, I would like to thank Mr Caller and his assistant inspector, Julie Parker, for their dedication and focus in conducting such a thorough and prompt review.
When I commissioned the best value inspection, I asked the inspector to consider four things in particular: first, whether the council has the right culture, governance and processes to make robust decisions on resource allocation and to manage its finances effectively; secondly, whether the council allowed adequate scrutiny by councillors; thirdly, whether there were strong processes and the right information available to managers and councillors to underpin service management and spending decisions; and fourthly, whether the council was organised and structured appropriately to deliver value for money.
I have reflected on the contents of the Caller report. It is balanced, rooted in evidence and compelling. The inspector has identified multiple apparent failures by Northamptonshire County Council in complying with its best value duty—failures on all counts. While I recognise that councils across the country have faced many challenges in recent years, the inspector is clear that the county council’s failures are not down to a lack of funding or because it is being treated unfairly or is uniquely disadvantaged compared with other councils. His report concludes that
“for a number of years, NCC has failed to manage its budget and has not taken effective steps to introduce and maintain budgetary control”.
Furthermore, the complex structure of financial support meant that oversight was difficult and accountability was blurred. The report says that Northamptonshire’s Next Generation approach, which envisaged outsourcing many of the council’s functions, had no
“hard edged business plan or justification to support these proposals”.
“made it difficult to ensure a line of sight over costs and operational activity”
“made it impossible for the council, as a whole to have any clarity or understanding as to what was going on.”
Similarly, the inspector found that Northamptonshire County Council used capital receipts to support revenue spend
“without documentary evidence demonstrating compliance with the Statutory Guidance and Direction.”
Furthermore, until this February, there was no report to full council on the proposed projects and their benefits. He says in his report:
“Savings targets were imposed without understanding of demand, need or deliverability and it is clear that some Chief Officers, did not consider that they were in any way accountable for the delivery of savings that they had promoted.”
On the question of scrutiny, the report says:
“The council did not respond well, or in many cases even react, to external and internal criticism. Individual councillors appear to have been denied answers to questions that were entirely legitimate to ask and scrutiny arrangements were constrained by what was felt the executive would allow.”
I want to emphasise that the report also indicates that the hard-working staff of Northamptonshire County Council are not at fault and have worked hard to provide quality services.
With all this in mind, it is clear that I must consider whether further action is necessary to secure compliance with the best value duty. In doing so, I want to reassure the residents of Northamptonshire that essential services will continue to be delivered. The inspector is clear:
“The problems faced by NCC are now so deep and ingrained that it is not possible to promote a recovery plan that could bring the council back to stability and safety in a reasonable timescale.”
“A way forward, with a clean sheet, leaving all the history behind, is required”.
I am therefore minded to appoint commissioners to oversee the authority, using my powers under section 15 of the Local Government Act 1999. From day one, I propose that they take direct control over the council’s financial management and overall governance. Getting these basics right must be the first step in stabilising this authority. I also propose giving them reserved powers to act as they see fit across the entirety of the authority’s functions if they consider that they must step in. My officials are writing to the council and to the district councils today to this effect, and they can make representations on this proposal. I will consider any representations carefully before reaching a final decision.
The Caller report makes a clear recommendation on restructuring, and notes that there are a number of options available. So, in addition, I am inviting Northamptonshire County Council, and the district and borough councils in the area, to submit proposals on restructuring their local government. I would like those councils to think about what is right for their community and the people they serve, and to come forward with proposals. This invitation and the letter to Northamptonshire that I mentioned earlier have been published today, and I have placed copies in the Library of the House.
It is clear to me that any proposals from the councils should seek to meet the criteria for local government restructuring that I have previously shared with the House. They are that the proposals should improve local government; be based on a credible geography; and command a good deal of local support. I will be particularly interested in hearing how the councils have consulted with their communities to ensure that Northamptonshire’s future is truly locally-led.
The findings of Mr Caller’s inspection report on Northamptonshire County Council are extremely serious, which is why this Government are prepared to take decisive action to ensure that local people receive the high-quality services they need and deserve, and to restore faith in local government in Northamptonshire. I commend this statement to the House.
I thank the Secretary of State for advance sight of his oral statement and for bringing to the House a much-awaited response to the sorry crisis in one of his own party’s councils.
The best value inspection of Northamptonshire County Council of 15 March makes very sorry reading and is an indictment of not only mismanagement locally, but eight years of intransigence and austerity nationally. The Secretary of State will know that Northamptonshire’s problems have been building over a number of years, yet the council bragged about its “pioneering” approach to council services, running them as a business and operating “almost like a PLC”, according to the former chief executive. It did not take long before it became clear that just like the public sector, the private sector cannot deliver adequate services when there is still too little funding.
In 2015, the Local Government Association warned that forcing councils to spend reserves to plug funding gaps—something the Secretary of State’s predecessor, Sir Eric Pickles, used to demand of all councils—would be a “reckless gamble” and
“would put local communities on the fast-track to financial failure.”
As we have heard, back in September last year, the LGA conducted a financial peer review, warning that Northamptonshire would be the first to collapse. I am not sure whether the Secretary of State had read that report because he was soon cutting the ribbon at the new £53 million headquarters, as the authority was preparing the paperwork to declare itself bankrupt.
Worse, the Local Government Chronicle has suggested that there are already at least 10 authorities preparing to issue section 114 notices, and now the National Audit Office has warned that one in 10 councils with social care obligations will have exhausted their reserves within the next three years. So can the Secretary of State tell the House: what contingency arrangements have been put in place should other authorities follow Northamptonshire over the cliff edge?
I hope that the Government will learn from the failure in Northamptonshire. Even now, we are still learning more; we found out just this week that the ex-chief executive was paid more than £1,000 a day, while people were losing their jobs and services. That is why it is so crucial for commissioners to be sent in. The problems at Northamptonshire are so deep-seated that the residents of the county should not expect more of the same mismanagement from the Tory councillors who have driven it into the ground.
The Secretary of State says that he is minded to appoint commissioners. The Labour party has been calling for that for some time. Can he give a timescale—when will he make a formal decision? Should he decide to appoint commissioners, how soon does he expect them to be in place following that decision? Does he expect that their remit will be as extensive as that recommended in the report? If he does, he will have our full support.
On the budget, it is clear that Northamptonshire’s problems continue. Creative accounting may have got the county through the year end and through the budget setting for 2018-19, but Northamptonshire’s finances remain in a precarious state, and the principal pressures in children’s and adults’ services remain serious issues for the authority. What certainty does the Secretary of State have that Northamptonshire will be able to meet those cost pressures in the new financial year without additional central Government resource? What level of direct budget monitoring will be taking place by his officials in the Ministry throughout the year and will he be recommending that Northamptonshire undertakes additional in-year budget-setting exercises should it need to?
We give a cautious welcome to the reorganisation of local government in Northamptonshire, but changing lines on a map does not, in itself, resolve the deep- seated problems facing local government. In asking Northamptonshire’s councils to make suggestions to him, does the Secretary of State agree that any proposals for new councils must have the widest possible degree of consent from the communities they seek to represent? What resources will be made available to the new authorities to start them off on a sustainable footing? Does he envisage a Northamptonshire residuary body that will be established to take on the historic problems associated with the county’s finances, so that the new councils can start with a clean slate? And what assessment has he made of the financial capability of unitaries to run the functions of local government in Northamptonshire?
Northamptonshire is the first but it will not be the last. Given the assessments by the NAO and the Local Government Chronicle that other councils will follow Northamptonshire in the coming years, what assessment is the Secretary of State making and what resource is he going to make available to ensure that that does not happen? This is what happens when a Government have created a £5.8 billion gap in local government funding. Everyone is saying that social care is on its knees and when children’s services need an additional £2 billion. Local government cannot be allowed to collapse on this Government’s watch.
I thank the hon. Gentleman for his comments, but I must say that I do not think he listened to a word of my statement. Once again, he appears to have come to the Dispatch Box with a pre-prepared statement. It is clear that he is very disappointed indeed by the report because it is not what he wanted. He wanted a report that he could use for party political purposes, so that he could play his favourite game, political football—a game that has no respect for the people of Northamptonshire.
The hon. Gentleman wanted to claim that what has happened in Northamptonshire was due to a lack of funding. He did not listen to what I said in my statement and he clearly has not read the report. He comes to the Dispatch Box having not even read the report—and he calls himself the shadow Secretary of State for Housing, Communities and Local Government. Had he read the report, he would have seen that the independent inspector is crystal clear that it is not an issue of lack of funds; it is to do with poor governance and poor financial management.
The hon. Gentleman must have been very disappointed that the report did not allow him to make his party political arguments. I noticed that he conveniently ignored the history of local government interventions, so let me remind him: in 2001, Hackney, Labour-controlled; in 2003, Hull, Labour-controlled; in 2008, Stoke-on-Trent, Labour-controlled; in 2009, Doncaster, Labour-controlled; in 2014, Tower Hamlets, Labour-controlled; and in 2015, Rotherham, Labour-controlled. Perhaps he can detect the pattern, but if he cannot, let me help: all those councils were Labour-controlled. He has conveniently ignored that.
The hon. Gentleman did manage to get round to a few questions, so let me try to answer them. He asked about the timescale for the decision that I am considering on sending in the commissioners. It is a “minded to” decision at this point. I will take representations, as I rightly should, up to 12 April, after which I will make a final decision. If the decision is to send in commissioners, they will be in place by the end of April.
The hon. Gentleman asked whether there will be more funding for the council. As I have said, the inspector has said that lack of funding is not the issue. Simply to give the council more funding would be to reward mismanagement and would clearly be wrong.
The hon. Gentleman asked about reorganisation. It is of course necessary to consider reorganisation, because that is one of the inspector’s central recommendations. I do not want to predetermine the outcome. The inspector has recommended two new unitaries. We are open-minded about the proposals and I will consider them carefully, to a timeframe that allows us to look at them properly and to make sure that any options are consulted on properly.
Finally, I suggest kindly to the hon. Gentleman that, if he wants to come to the Dispatch Box and be taken seriously, can he listen to my statements in future, instead of appearing and talking about fiction?
I thank the excellent Secretary of State for his statement and agree entirely with its content. I share the sense that the shadow Secretary of State, the hon. Member for Denton and Reddish (Andrew Gwynne), does not seem to have read the report. Had he read it, he could not possibly have considered the situation to have anything to do with funding.
We must look to the future. Does the Secretary of State agree that the locally led initiative for the new structure must come from people locally and must come urgently? Can we ensure that we look into whether the council’s having a cabinet system rather than a committee system was one of the reasons for the failure? The new authorities should have not a cabinet but a committee system.
I thank my hon. Friend for all the work that he has done and continues to do to help his constituents in Northamptonshire, which he has demonstrated so ably again now. I agree that any reorganisation must be locally led, which means including the districts and local people themselves in any consultation. I heard what he said about the cabinet system; I am sure those are the kinds of things at which we will look carefully.
Will the Secretary of State confirm exactly how many local authorities have contacted him to warn him of a current or impending financial crisis?
I am not aware that any local authority has contacted me, and I am certainly not aware of an impending financial crisis. That is not to say that local authorities do not contact the Department all the time, with all sorts of issues and concerns, as they should, because that is why the Department is there.
As a former leader of Derbyshire County Council, it was particularly disappointing to read in the report of the local mismanagement, which the report indicates is obviously the cause of the crisis in Northamptonshire County Council. Notwithstanding that, does the Secretary of State accept that the pressures on adult care nationwide are such that both fairer funding and the tackling of health and social care integration need to be Government priorities in the years ahead?
I thank my hon. Friend for the work that he has done and continues to do for the people of Northamptonshire. He is right to raise the pressures being felt by Northamptonshire County Council and many other councils, particularly on adult social care and children’s social care. He will know that at last year’s spring Budget there was a record settlement, with an additional £2 billion going into adult social are. Looking to the long term, that is exactly why we have the Green Paper, and I hope that he will provide input into that process.
The Secretary of State talks about being crystal clear. What is crystal clear is the mess that Northamptonshire County Council finds itself in as a result of the incompetence and mismanagement of local Conservative politicians. Will he therefore issue an apology to the electors of Northamptonshire, on behalf of the Tory party, for the mess that they have found themselves in?
First, I highlight the fact that the new leader of the county council has made an apology. I say to the people of Northamptonshire that what they are looking for and have contacted us about, either through their MPs or directly, is decisive action, and that is exactly what they are getting from the Government.
The inspector’s report is clear about the issue of national funding, but in any event the shadow Secretary of State, the hon. Member for Denton and Reddish (Andrew Gwynne), and the Labour party voted against the local government finance settlement, which gave extra money to local government in Northamptonshire. I welcome the robust steps my right hon. Friend has taken to address the concerns that we Northamptonshire MPs have raised. When it comes to reorganisation, I note that any proposal has to be bottom-up—it has to come from local government in the county. Will he keep in mind the importance of the reserves that have been diligently accrued by the districts and boroughs being spent in the areas in which they have been accrued; the need for strong area representation; and the committee system, which I think would be hugely beneficial?
I commend my hon. Friend’s work for his constituents in Northamptonshire. For that matter, I also commend the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Northampton North (Michael Ellis), for the work that he continues to do. I commend the interest that they have both taken in the report. I very much agree with the issues that my hon. Friend the Member for Corby (Tom Pursglove) raised, particularly in respect of reserves, which of course belong to those local councils and districts. That will not change in any reorganisation. When the proposals for reorganisation come through, it is important that all the options are looked at properly so that we get the best outcome for the people of Northamptonshire.
I am sure we all accept that the failures of Northamptonshire County Council are not necessarily down to a lack of funding altogether, but we cannot ignore that all councils throughout the country are under big financial pressure. Core central Government funding will be cut in half over the next two years and almost phased out completely by the end of the decade. There is not yet a plan in place for how it is all going to work out. When will the Minister set out a long-term financial future for councils?
I say gently to the hon. Lady that, if she wanted to see local authorities get more funding, she should have voted for the local government financial settlement. With that vote, we increased funding for local councils throughout England in real terms for the next two years. I believe she did not vote for that.
I have some experience of unwinding creative accounting in local authorities, but the serious business that I am concerned about is the decision that was made to use capital funds for revenue funding. What action is my right hon. Friend taking to make sure that that does not happen, not only in Northamptonshire but in other local authorities? Will he review what is going on elsewhere in the country to find out whether other authorities are involved in such creative accounting?
My hon. Friend makes a good point. He will know that there are legitimate ways for local councils to use capital for resource, but under very strict rules. What the inspector has highlighted here is his concern that those rules were not followed, and that does require further work, which is exactly what we are doing.
If this situation is not due to a lack of funds, then, obviously, it follows that the Secretary of State’s position is that the council has enough funds to fulfil its statutory obligations, which includes providing a comprehensive and efficient library service. Currently, the Secretary of State for the Department for Digital, Culture, Media and Sport is formally investigating a complaint about the cuts, which means that the council is not providing a comprehensive and efficient library service. Therefore, does the Secretary of State for Housing, Communities and Local Government agree that those cuts should be stopped and that the Secretary of State for DCMS should report as quickly as possible on whether that complaint should be upheld?
The hon. Gentleman has highlighted the fact that it is the responsibility of DCMS to look at the statutory requirements around libraries. I will make sure that my right hon. Friend, the Secretary of State there, hears his concerns.
I thank the Minister for his statement and agree with his recommendations on what is a sad day for Northamptonshire. We now enter quite a dangerous period between the Secretary of State’s statement and the potential sending in of commissioners when, perhaps, some wrong decisions can be taken by the county council still in existence. May I ask him to look at three things: first, the sale of the Angel Square headquarters, which, if it goes through, could saddle future authorities with a 25-year rental liability; secondly, sending in the Government’s library taskforce to sort out the disgraceful proposed closure of 21 libraries in the county; and, thirdly, liaising with the Home Office to transfer the fire service as quickly as possible out of the county council before further cuts are levied?
Again, let me thank my hon. Friend, who represents a constituency in Northamptonshire, for all his work and caring concern. He has raised three very important matters. On the question of the headquarters, he will know that Northamptonshire is an independent council—independent of central Government—that has to take its own decisions, but we are very alive to that situation and we are in touch with the council. It knows that there are certain requirements that it must meet. I am sure that if anything happened, it would be something that the commissioners would want to look at carefully. On the library, it is the responsibility of DCMS, but we are in touch with that Department, too. I will certainly get in touch with the Home Office on the other issue that he raises.
The Secretary of State continues to use core funding as a way of masking the eight years of cuts that have been levied on councils across the country. Even the Local Government Association says that it does not correctly represent the cash that is available to fund public services, so will the Secretary of State please stop using that number? But what I wish to ask is this: when will he meet trade unions? As he talks about reorganisations of districts, councils and county councils, there will be a number of staff who face a period of uncertainty and insecurity in their work. It is only fair that they, as well as elected Members, know what is happening during this process.
I must tell the hon. Gentleman that core funding is absolutely correctly used, because that is what it refers to—all the different sources of funding that local authorities have. If I am not mistaken, I think that that approach was actually determined by the previous Labour Government, and so I would have thought that he would welcome that. He mentioned the role of trade unions. As I have said, if there is any reorganisation—and I think that it will certainly be looked at now—then of course everyone should be involved. If trade unions have certain concerns, they should raise them during the consultation period. My understanding at the moment is that the local trade unions have come out in favour of a unitary system.
I commend the Secretary of State for his swift action with regard to Northamptonshire Council. Does he agree that this shows the importance of an open and transparent culture in local government right across the country?
I very much agree with my hon. Friend. Indeed, the independent inspector, Mr Caller, has highlighted the importance of culture and how, in this case, it failed. It is something that we need to keep in mind in the future with regard to other councils, and certainly as we reorganise this one.
So, we have a Conservative Secretary of State and we have a Conservative council that is in a mess. Can the Secretary of State tell us how things got to this point on his watch, and does he think that there are any other Conservative-controlled councils that are not fulfilling their responsibilities?
I have only a few things to say to the hon. Lady: Hackney, Hull, Stoke-on-Trent, Doncaster, Tower Hamlets and Rotherham.
As someone who used to have responsibility for my local council’s finances, I know that swift action has been critical, so I commend my right hon. Friend for taking it and for his open mind on what the new local government arrangements might look like. As he approaches this issue, will he make sure that the voices of local residents and existing councillors at district level will be taken into consideration as he plans that reorganisation?
I can give my hon. Friend that reassurance. As my hon. Friend the Member for Kettering (Mr Hollobone) has just said, this is a sad day for the council. Residents will reflect on this, but it is now important that we make the most of this difficult situation and that, when we have that reorganisation, we ensure that we listen to local residents, including, of course, the borough councils.
During the local government funding settlement statement, I asked about local government funding, and the response that I got from the Chief Secretary to the Treasury was that local government had plenty of reserves. She pointed out that it had £23 billion of reserves that could be used. First, has that set a dangerous tone to local authorities that they should be spending their reserves? Secondly, does the report suggest that the privatisation of services has meant that councils cannot properly control them?
No on both counts.
I also commend the Secretary of State for his swift action in response to this problem. I am pleased that the inspector has said that these problems are not centred on funding. Is the Secretary of State concerned that there are other councils at risk of not being able to meet their best value duty, and what steps is he taking to identify such councils?
If we had concerns that a level existed similar to the one that materialised in Northamptonshire, I certainly would have taken action by now. That is not to say that there are not councils that we are working closely with, that we are keeping an eye on and that we provide advice to. It is important that we continue to operate in that way, that we continue to have a high hurdle for intervention, but that we do not fail to intervene whenever necessary.
GKN: Proposed Takeover by Melrose
With permission, Mr Speaker, I will make a statement about the current takeover bid by Melrose plc for GKN plc.
Following the announcement of the bid, I spoke to the chief executives of GKN and Melrose to understand their plans, and I have done so again as the bid timetable draws to a close and changes have been made to the original terms. My quasi-judicial role requires me to treat all parties fairly and so I should disclose that I have also had a briefing with the chief executive of Dana Incorporated, which has been proposed as a partner in a transaction with GKN.
As hon. Members know, the long-standing British manufacturing and engineering company GKN is subject to a current takeover bid from the British company Melrose plc. One of the most important features of the British economy is that we have a vigorous market for corporate control. Business are kept competitive and efficient by the possibility of the current management being replaced by another set of managers if, in the view of their shareholders, they are underperforming and the company could be better run. However, uncomfortable that constant threat may be for incumbent managements, it is an important one, and acts against complacency and inefficiency, and so is in the interests of employees, customers, suppliers and taxpayers as well as shareholders. It is worth reminding ourselves that shareholders include the pension funds on which millions of working men and women rely for a comfortable retirement.
There are strict and limited grounds for ministerial intervention in proposed mergers. The limited exceptions apply where one or more of the three public interest grounds are engaged. These are those of national security, media plurality and financial stability. The Enterprise Act 2002 gave powers focusing narrowly on those grounds to refer a bid to the Competition and Markets Authority. Such a reference is possible until four months after the completion of a transaction.
I will make such an assessment following receipt of advice from the Ministry of Defence and other agencies on the final terms of a bid, if it is successful, and I will inform the House immediately if an intervention is launched.
However, beyond that formal statutory role, I am concerned to ensure that significant takeover bids shall not act against the interests of our economy, employees, or the broader set of stakeholders. It has long been recognised that companies and their directors have duties that extend beyond current shareholders alone. Indeed, section 172 of the Companies Act 2006 sets out a requirement for directors to have regard to, among other things, the interests of the company’s employees; its business relationships with suppliers, customers and others; and the impact on the community and the environment. In my view, this establishes the principle that we expect interests broader than pure shareholder value to be taken into account by directors, and also in the attitude of the Government.
In the past, some takeovers have had consequences for these groups that were not only deleterious but were at odds with the indications given during takeover bids. For this reason, a new regime was established whereby bidding companies can make legally binding commitments as to their intended conduct in the event of the bid succeeding. Having established this regime, I believe it should be used in takeover bids where the interest of stakeholders is engaged, as is clearly the case here. GKN is a valued employer, directly and through its supply chain, and it plays an important role in Britain’s automotive and aerospace sectors. Through its research and development, it has a vital role to play in our industrial strategy. It benefits from Government-sponsored contracts and participates in sectors that enjoy active engagement from Government-sponsored R&D programmes. It also carries responsibility for a large number of pensions that depend on GKN’s prosperity to fund the pension scheme, which is currently in deficit.
Melrose’s business model is based on acquiring, improving and selling businesses to new owners after a small number of years. While this approach can have advantages in terms of efficiencies, tensions can arise between it and the need for long-term investment and stability for important relationships. With the deadline for the offer period closing on Thursday, and without prejudice to my use of Enterprise Act powers—which, as I said, operate according to a longer timetable—I believe that Melrose should set out more clearly its intentions towards wider stakeholders and, specifically, make commitments concerning them in a legally binding form before the opportunity is lost with the closure of the offer period.
Accordingly, I wrote to Melrose yesterday asking it to set out clearly its proposed commitments, including on maintaining the business headquartered and listed in the UK; maintaining a UK workforce and respecting their employment rights, as well as engaging closely with their representatives; continuing to pay tax as a UK taxpayer; continuing to invest in R&D programmes that are crucial to our industrial strategy; investing in the training and development of the workforce, including in apprenticeships; treating suppliers well, including the prompt payment of suppliers; and making arrangements for current and future pensioners that are to the satisfaction both of the trustees and the independent Pensions Regulator.
In addition, stable ownership and financing is an important part of the underpinning of trusted relationships that particularly characterise the defence sector. That stability is also important for research and development partnerships, which, by their nature, endure over many years, whereas Melrose’s model has been built on short-term ownership. I have therefore sought a legally binding commitment from Melrose to greater continuity of ownership specific to the defence-related businesses and to excluding the option of a short-term sale of this business without the prior consent of the Government. I have also made it clear that in the event of a successful bid, the Ministry of Defence would look to require a legally binding commitment relating to the management of any defence contracts. It is important to emphasise that these would be voluntary commitments by the company, over and above questions of the use of Enterprise Act powers. But I do think it is right that these wider issues of public concern should be addressed by Melrose before the bid closes formally. Melrose has earlier today given a response to my letter that I will place in the Libraries of both Houses, alongside my letter.
Subject to the powers that I have described, it is for shareholders of GKN to decide which management team they wish to run their company. But my strong belief is that where broader interests are at stake, and having established a new regime in which legally binding commitments about the future can be given, they should be used before the opportunity to do so expires. I will continue to keep the House up to date at every phase of these proceedings. The House can be assured that I will carry out my responsibilities seriously, meticulously and fairly in representing the public interest in the future of such an important company. I commend this statement to the House.
I thank the Secretary of State for today’s update. Sadly, however, the letter sent by the Government yesterday and the response by Melrose offer very little certainty and raise even more questions.
First, it was on 8 January 2018 that the board of GKN received a preliminary and unsolicited proposal from Melrose to acquire the entire share capital of GKN. Melrose put in its formal offer on 1 February. Concerns about Melrose’s plans had been raised by trade unions, Members of this House and the media for months, yet it took until 26 March for the Government to write to get some assurances from Melrose. So why did the Secretary of State wait until the last minute?
My second question concerns the enforceability of the assurances themselves. Which of the assurances and commitments given by Melrose in its letter of 27 March are actually legally enforceable and binding, because on my reading of the letter, it seems that very few are? Specifically, can the Government confirm that the commitments given under the heading “Takeover Panel enforceable undertakings” are indeed enforceable and will be enforced by the takeover panel? Can the Government also confirm that all the commitments below the paragraph headed “Long-term commitment” are totally unenforceable? What powers do the Government have to enforce any of the empty promises from page 2 onwards that are not post-offer undertakings? My discussions with the takeover panel suggest that enforceability is indeed limited to the areas referred to in Melrose’s letter under the heading “Takeover Panel enforceable undertakings”. I must also express concern regarding the “flexibility” that Melrose requests in relation to any offers it receives to sell the aerospace division prior to 2023. What will the Government do to protect this business and, indeed, the other elements of the business that are not even referred to in Melrose’s letter? Do we take their omission as a clear indication that they will not be protected?
My third question is about the substantive content of the assurances. Why did the Government not ask for or receive any post-offer undertakings on maintaining or increasing employment at GKN over a 10-year period? These can clearly constitute post-offer undertakings under takeover code. Indeed, when SoftBank took over Arm Holdings, it promised to increase the total number of UK Arm group employees to at least double the total number as at the takeover date. It is also not clear why Melrose did not include UK tax residency as a post-offer undertaking. Similarly, I would argue that many of the things that the Government asked for were weak and meaningless. For example, when the Government asked for the maintenance of a UK workforce, what did they actually mean? Is one employee in the UK enough to fulfil this condition? Similarly, on investing in the training and development of the workforce, how much, and by what time?
My fourth question concerns the Secretary of State’s powers under the Enterprise Act 2002 to block the bid on national security grounds. It would be helpful if he confirmed that Melrose has indeed waived the condition to get the approval of the Committee on Foreign Investment in the United States. More importantly, the Secretary of State still has the powers to block this on grounds of UK national security, so will he confirm unequivocally today whether he will do this?
Finally, there are reports that merger arbitrage funds are planning to accept the Melrose offer, but as they are holding derivatives of GKN shares, they will not pay stamp duty on the transaction. Will the Secretary of State undertake that if Melrose does indeed proceed with this offer, the Government will investigate all share dealings to ensure that the correct stamp duty has been paid?
If the Government think that today’s weak, late and unenforceable assurances from Melrose are sufficient, then they are deeply mistaken. There is nothing to assure workers, nor to put to bed concerns about our industrial strategy and national security. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) so eloquently stated recently, GKN is a jewel in Britain’s industrial crown that employed generation after generation. It needed a Government prepared to fight for its future, and I am afraid that the response so far has been far less than adequate.
Everyone in this House, on both sides of the Chamber, agrees that GKN is a very important company that is crucial to vital R&D work and employs thousands of people across the country. That is why I consider it important, over and above my statutory powers—I have explained very clearly that this is without prejudice to the use of those powers—to encourage the bidder to set out much more clearly than it has done so far its intentions on many of the matters that the hon. Lady mentioned, such as research and development, being based in the UK, and a commitment to the length of tenure of this very important aerospace business. That seems to be an appropriate action at this stage in the proceedings.
Of course, this is a contrast to the sorry situation that arose—there are Members in this Chamber who will remember this—during the time in which the hon. Lady’s party was in government, when Cadbury was sold to Kraft and a plant that was expected to be kept open was closed forever. In response to that, when we came into government a regime was established that allowed legally binding undertakings to be given. I have said repeatedly in this House and to hon. Members that, given that that regime exists, I expect it to be used. I was not satisfied with the degree of commitments that had been given so far by Melrose, so I think that it was the right step, over and above my statutory powers, to set out those concerns in writing and to invite Melrose to respond to them.
The hon. Lady knows very well the statutory powers that I have. Again, they were passed when her party was in government, under the Enterprise Act 2002. The question of national security is a quasi-judicial one that will be addressed separately. It is not a subjective decision that I can take. It has to be based on a clear assessment. I make the commitment that I will take that assessment meticulously. There is a closing window for this bid, and it is right to use that window to obtain statements as to Melrose’s intentions.
The hon. Lady asked questions about the enforceability of the commitments. Melrose has said in its response that it is in discussion with the takeover panel. I regard that as the best way to lodge the commitments, so that they are enforceable with severe penalties, including contempt of court, if they are broken. The takeover panel monitors the adherence to the commitments after the event, were the bid to be successful. On security, the hon. Lady also asked about the company’s conversations with the US Administration. It is the case that the company took a decision to waive that condition.
The hon. Lady asked a question about commitment to the workforce. I have met the trade unions twice now. I specified in my letter to Melrose that I expected it to make a commitment to deal fairly with the trade unions in order to ensure that the future of the workforce is taken seriously, in lockstep with the trade unions. That is important. She also made a point about the avoidance of stamp duty. Clearly, any taxes that fall due ought to be paid.
I hope that the hon. Lady and the House—whatever their assessment of the bid—would, in recognition of the powers available, think that it is the right step to approach the bidder at this stage, before the timetable closes, in order to set out in a way that can be enforced for years to come, undertakings against which it can be held to account. That is the basis of my letter to the company.
I thank the Secretary of State for his statement. Like many colleagues, I have a constituency interest in the matter. As he knows, because he has been kind enough to meet me, the global headquarters of GKN is in Redditch. Some 260 people, many of whom are my constituents, have been told that their jobs will go if this takeover goes ahead. I welcome the commitment that he has been given by Melrose to maintain the UK headquarters for a five-year period. What does he understand that this would mean for my constituents in Redditch?
It is important that we recognise the benefits and valued presence of GKN in many parts of the country. It is a pivotal UK engineering firm, with a long heritage. The commitment that I obtained from Melrose was for that to continue, and that is what it has set out, but it is for shareholders to judge the decisions that the future management may make.
I thank the Secretary of State for advance sight of his statement. He is right to seek undertakings at this stage, because the concerns are many and varied, including: taxpayers’ money being used in GKN’s programmes; defence contract concerns; and the location of GKN’s headquarters. Another concern is security of employment, as Melrose is not known for its hesitation in stripping out what it sees as unimportant to its aims. There are concerns about training, research and development, and the long-term security of sensitive intellectual property, and there are written concerns from the Pensions Regulator that the pensions of employees could be seriously weakened by the proposed takeover.
I understand from the Secretary of State’s statement that he will place Melrose’s response in the Library, but will he give the answers to my questions in the House today? Is he confident that the Melrose line of, “Buy, improve, sell” is not in actual fact likely to be, “Buy, strip and sell what is left”? What detail will he require to be satisfied of this, or is it, in Melrose’s words, to be done “in good faith”? If the Secretary of State for Defence is to receive assurance for his “serious concerns”, will he come to the House to confirm that he is happy with the answers given? Will the Secretary of State outline the mechanism by which Melrose will guarantee that jobs will not be shipped abroad, and that the pensions of GKN workers will be fully funded? Finally, will he assure the House that he will intervene if any of the questions asked about the many concerns that are left remain unanswered?
I have set out in terms in my letter to Melrose and in my statement that, in many respects, the model of short-term ownership—especially for assets connected with defence purposes, in which long-term relationships are important—is in tension with the model of these industries. That is why I set that out, outside the statutory determination that I have to make. I suggested that the commitments that Melrose makes are legally binding. The takeover panel provides one mechanism for that, which I commend, but there are other ways in which the undertakings could be made legally binding.
The hon. Gentleman asked about the assessment of the Ministry of Defence. At the close of the bid—when all of the facts are known, including what has been said this morning—the Ministry of Defence and other agencies will make an assessment and advise me on whether there are grounds for an intervention in the interests of national security. I have made a commitment to this House that I will take that expert advice seriously and meticulously, and will make a decision when I have it before me.
On pensions, Melrose and GKN have been in discussion with the pension trustees and with the Pensions Regulator. It is for the Pensions Regulator to determine whether the arrangements are satisfactory for the interests of not just current, but future pensions.
Many of my constituents have bitter memories of the promise made to keep open the Somerdale factory site in Keynsham when Kraft took over Cadbury, under the previous Labour Government. That factory site is now closed and is a housing estate. What commitment can the Secretary of State give to my constituents that this will be different, and that these legally binding commitments will be properly enforced this time?
My hon. Friend makes an excellent point. I have visited the site he mentions. That situation was a breach of the indications given during the bid, which is why this regime of legally binding commitments was introduced. It is my view that such a regime exists not simply to be available in principle, but to be used in practice. The force of the law applies to adherence to those commitments in a way that sadly was not the case with Kraft and Cadbury.
May I ask the Secretary of State why it took until three days before shareholders had to vote on this bid for you to write to Melrose to get some assurances, which are frankly pretty limited? It is too late in the day now for you try to drive a harder bargain—not you, Mr Speaker; you would drive a very hard bargain. The Secretary of State says it is still possible to call this in, but the takeover has been hanging over GKN and its employees and wider stakeholders for more than two and a half months now. What more information do you need to gather to decide whether to call this in? When will the Secretary of State finally make a decision on whether or not to call this in? It is too late now, isn’t it?
Order. Before the Secretary of State replies, I say this with great courtesy to the Chair of the Select Committee. It was in fact raised at the morning briefing meeting which I chair, accompanied by the Deputy Speakers and senior procedural advisers, that there has been an unhealthy tendency recently for Members to start using the word “you”. In case people observing our proceedings wonder what the fuss is about, “you” refers to the Chair, and debate must be conducted, as ordinarily the hon. Lady would do, through the Chair, and Members are referred to in the third person. There is good reason for that: it preserves the basic civility of our exchanges. I accept that it was accidental—the hon. Lady, in her passion, got carried away—but we must now return to good order, exemplified, I am sure, by the characteristic courtesy of the Secretary of State.
I would say to the Chair of the Select Committee on the point about the statutory grounds that it requires an assessment when all facts are known of the implications for national security. That will come to me, and I will make a decision on that basis once the bid has closed. I observed her Committee’s scrutiny of the bid and of GKN itself. She asked for commitments to be given beyond what is statutorily required. I think she was right to do so. She was not satisfied with the response to that. I would have thought she would welcome the opportunity of my using my influence at this stage, before the bid closes, to push the company further to state clearly in the public domain, so that people can make a decision, very important matters concerned with the length of ownership and the investment in research and development that go beyond the commitments made to her Committee. I think it is welcome that they are in the public domain. It is now for shareholders to decide, and I will make a decision on my statutory powers when I am in receipt of the assessment from the security authorities.
I welcome my right hon. Friend’s statement and congratulate him on it. I know that he and his Department have done lots of work over recent times on this very important issue. That will provide some comfort to thousands of GKN workers in my constituency, but obviously there is still a process to go through and an end to reach. Does he agree that it is vital that we continue to protect our sovereign defence manufacturing capability, not only on the grounds of national security and our ability to produce platforms and equipment to defend ourselves, but post-Brexit, in terms of exports, global Britain and all that?
I completely agree with my hon. Friend. This has been a successful business, and whether we are talking about the defence industries or the aerospace sector, these are areas of British strength in which we expect and want to see improved export performance around the world. For all the reasons that he describes, it seems important, before the opportunity is taken away through the closing of the bid, notwithstanding the fact that these are voluntary undertakings, to press the company to make clear its intentions.
I led the battle against the Kraft takeover of Cadbury. That was wrong then, as the Melrose takeover of GKN is wrong now. The commitments that have been given—less on research and development, no guarantee that it will all be done in this country, five years on aerospace in a sector that typically thinks 15 years ahead, and no guarantees on Driveline—are simply not good enough. Those are “guarantees” that do not go far enough. This cannot be the last word. I have two questions. First, will the Secretary of State be seeking further undertakings from Melrose? Secondly, can he confirm unambiguously that, if advised that there are defence and strategic grounds that merit it, he will intervene and block this hostile bid?
Given the hon. Gentleman’s experience of Cadbury and Kraft, he will know that there was no possibility of taking any legally binding undertakings as to their future behaviour. We saw the consequences of that, as my hon. Friend the Member for Kingswood (Chris Skidmore) said. I have been very clear with the House that what has been extracted from the company by way of commitments is without prejudice to my statutory powers. Of course I will make the decision seriously, following expert advice from those concerned. In terms of commitments, the bidding company made certain statements in response to the Select Committee. It has made further statements in response to my letter. I dare say that the views of Members expressed today will be heard by both companies concerned and can be taken into account in the remaining days of the bid.
I welcome the Secretary of State’s statement. The shareholders include many of my constituents, who are relying on pensions from GKN. Can he reassure me that any decision taken by his office will be in the interests of all the people who are relying on those pensions for a comfortable retirement?
I have been very clear with the company and in my discussions with GKN that the welfare of current and future pensioners is extremely important. We have a Pensions Regulator, which has the ability to scrutinise and advise on these matters, and the trustees are independent of the company. As I said in my letter, the pensions arrangements should be to the satisfaction of both.
One of the most pressing issues when there are major corporate changes in an employer is pension security, as the Secretary of State just outlined. Can he expand on what assurances have been given? Has he looked at the British Steel scheme, where members transferring to the Pension Protection Fund have been told that if there are processing delays by the Government, they may lose some of their pensions? Will he or another Minister meet me urgently, as the deadline on that issue is tomorrow?
I would be very happy, either by myself or with a colleague, to meet the hon. Lady. For matters of pensions, including steel pensions, the Pensions Regulator is quite rightly there to operate independently of Government and of the companies, to ensure that fair decisions are taken. That is a good arrangement, but I am happy to arrange the meeting she asks for.
I welcome the Secretary of State’s statement. In relation to the defence contract, is he aware of Melrose talking to the Ministry of Defence? What information will he seek from the Ministry of Defence in coming to a decision on a quasi-judicial basis in relation to whether there are national security concerns?
I am grateful to my hon. Friend for his question. My understanding is that there have been discussions between the Ministry of Defence and Melrose. Should the bid be successful, the MOD and other agencies would then need to form a view as to any consequences it had for national security and advise me accordingly.
I have a constituency interest: the GKN Innovation Centre lies in Abingdon. Under the 2002 Act, the Minister is able to test whether or not such takeovers are in the public interest, but only for very specific things. Does this not show us that we need to look again at the public interest test, so that it can look at things such as the industrial strategy and the UK’s capability to deliver R&D?
R&D was one of the important matters that I specified in my letter about which it is in the public interest for commitments and assurances to be given. Commentary has been made on that, and the hon. Lady will want to study what has been said, in particular about Abingdon. The tests for public intervention are long standing, consistent and required by European law, and they relate to financial stability, media plurality and national security. For many years, they have limited the grounds for intervention, which is why it seems right and appropriate, where there are wider issues of concern, that I should use my ability to write to and press the company to be clear about its intentions.
What manufacturing industry in the UK needs is long-term, patient investment, as exemplified by companies such as JCB, Rolls-Royce and Toyota—all in the west and east midlands. What we see in this case, however, is a company willing to come in for a few years, make short-term gains and pass back all that money to shareholders, with very little investment, which is not in the long-term interests of the UK economy. I accept that the Secretary of State is limited in what he can do now, but will he take another look at this whole issue and at where we can promote long-term, stable investment in manufacturing? That is precisely not the approach exemplified in this case.
Such long-term commitments and partnerships are important, which is why they were among the concerns I raised with the bidding company, although it is obviously a matter for shareholders to decide. It is fair to observe that GKN has also proposed to make some changes to the ownership of its activities on the automotive side. My hon. Friend is absolutely right about our commitment to the very successful focus of our industrial society on the automotive and aerospace sectors, and I expect the owners of GKN—whether the existing management or an alternative—to maintain that very deep involvement in a very successful set of arrangements.
The Melrose commitment not to sell the GKN aerospace division before 2023 falls well short of the investment cycles of 20 to 40 years needed in the aerospace industry. It also fails to meet the concerns expressed by companies such as Airbus about the security of the long-term availability of the products they need. Will the Secretary of State commit to take whatever action is necessary, including blocking the bid, to preserve this division?
The hon. Gentleman, who formerly chaired the Select Committee, went through the experience of Cadbury and Kraft and knows there is no ability to extract commitments on these matters. I know from speaking to him about this that he thinks the use of the new powers is a step forward in that respect. When it comes to investment in the future, it is for shareholders to compare the approaches offered by the management. He knows very well the powers I have and the regime I operate under, but, as I have told the House, on the grounds that I can consider, I will look very carefully at the advice I am given on the question of national security.
I welcome the statement from the Secretary of State and the undertaking he has secured from Melrose in the event of a successful bid. GKN has long been an important employer in Telford and many of my constituents are GKN pensioners, so does my right hon. Friend feel comfortable with Melrose making special dividend sweeteners to shareholders of over £1 billion while making only a small contribution to the pensions deficit?
It is paramount that the interests of pensioners should be secured. I have said very clearly that I expect the Pensions Regulator and the trustees to be satisfied in relation to both camps—GKN or Melrose—that pensioners’ interests are being considered and protected, and that must of course come before the pay of executives.
Has the Secretary of State received a commitment from this particular company, which is well known for short-term investments, on longer-term investments? In the defence industry and in manufacturing in general, everybody—and I have worked in the defence industry—knows that any project runs beyond five or possibly 10 years, so such a commitment is needed to guarantee employment in this area. Has he been given any such commitments?
I agree with the hon. Gentleman, who knows the industry well and with whom I have discussed this matter. That is why I consider it important to request and advise the company to be clear about its commitment to research and development. In its reply to me, it has made some statements about that, which he and others can evaluate, along with some specific commitments about the level and nature of R&D. His description of the need for such a commitment to research and development is absolutely right.
Most of the undertakings that Melrose has given in answer to the questions that the Secretary of State put to it will expire after five years. As the Secretary of State has already heard, lead-in times for the aerospace and defence industries can be five, 10, 15 or 20 years, and Airbus has said that Melrose’s business model may threaten its ability to continue to be a customer of GKN. Does the Secretary of State consider the undertakings given by Melrose to be satisfactory or sufficient answers to the questions he has asked?
It is not for me to evaluate the competing bids, given that I may have a quasi-judicial role in determining whether to intervene. However, I thought it was right to set out the areas on which I would invite the bidder to state its intentions so that those intentions are clear not only to shareholders but to this House, including the hon. Gentleman, and members of the public, and they can make their own assessment.
I have constituents who work at the GKN plant in Luton, and I recently met trade union representatives who are understandably concerned about the future. Older Members in the Chamber, of whom I am one, will remember that hostile takeovers, merger mania and short-termism were core factors in the devastating era of asset stripping and deindustrialisation that led to the disappearance of vast tracts of British manufacturing and to our current yawning trade deficit. The Government are paying at least lip service to an industrial strategy, so will the Secretary of State now make that strategy real by stepping in to save one of our most historic and valuable manufacturing companies by simply stopping this takeover?
The hon. Gentleman is aware of the regime under which we operate. I hope that he agrees that it is right, before the shareholders make their final decision, to encourage the company to set out more clearly than it has done its future intentions, not only so that that information is known, but so that, where it makes commitments, were it to succeed, it can be held legally to account for those.
The Secretary of State specifically referred in his statement to the importance of the defence sector. However, the reply from Melrose to him, which I have looked at, states in one short sentence that it
“will execute a deed of undertaking in favour of the Ministry of Defence”.
One legal point of view is that that is a weak legal basis to base that on. Will he or the Secretary of State for Defence come to the Chamber at an appropriate time to give their response to that letter and indicate whether they intend to take action under the Enterprise Act 2002?
When I receive the appropriate advice and make a decision as to whether an intervention is required, I will of course inform the House.
I thank the Secretary of State for his statement. He rightly raises the importance of GKN to our defence sector. In his statement, he said that
“in the event of a successful bid, the Ministry of Defence would look to require a legally binding commitment relating to the management of any defence contracts.”
What assurances has he had from Melrose about the protection of GKN’s intellectual property and classified contracts, particularly in relation to their sale to countries that we see as a security threat? Not only would that be a threat to UK security, but it would hinder our future co-operation with our “Five Eyes” partners in developing new technologies.
These are all precisely the issues on which Melrose is required to reach agreement with the Ministry of Defence, for all the reasons that the hon. Gentleman states.
The Secretary of State perhaps has a somewhat nostalgic view of what shareholders might do in the interests of this company. From the litany of disastrous takeovers in years gone by, it is clear that shareholders often do not act in the best long-term operational and industrial interests of British industry, and we need to challenge that in this House in redefining company law. Given that Melrose’s practices are at odds with the ambition of GKN, will the Secretary of State consider whether the five-year time limit is long enough? Does he agree that we should consider reforming company law to ensure that shareholders genuinely act in the long-term industrial interests of British industry?
I hope the hon. Gentleman will reflect that this is the first time a set of concerns outside a Secretary of State’s statutory powers has been laid before a bidding company, with the ability to discharge them through legally binding undertakings. I was very clear that section 172 of the Companies Act embodies a range of commitments that go beyond those just to shareholders. I hope the hon. Gentleman would agree that, by taking the action I have, I have reflected the wider concerns that exist.
Many of my constituents in north Bristol rely on work with GKN and its largest supplier Airbus, including for the A400 military aircraft carrier. Both the Secretary of State and Airbus have said that a short-term approach to ownership is not compatible with the long-term interests of the defence sector, so if the Secretary of State will not intervene in this hostile takeover, will he seek to extend the five-year period, which we have heard is not long enough? In doing so, will he speak with Airbus about what the appropriate length of time should be?
The decision in terms of the implications for national security has to be taken under advice. I think I have been clear to all Members that that is not a subjective decision. It has to be based on the formal advice that I take from the expert agencies involved. I set out in my letter to Melrose that I thought it was necessary for it to set out its intentions with regard to the period of ownership, specifically in relation to aerospace. Without that we would have been in the dark as to its intentions. It is helpful to know what that period is and for it to be legally enforceable. The suggestion is that only with the consent of the Government could it make any change before then.
May I press the Secretary of State? The F-35, F-18, Chinook and Black Hawk helicopters are all defence contracts with which GKN is involved. What assurances did he seek from Melrose in relation to those contracts? I think all of us in this House are worried about the implications for defence, were the bid to be successful.
The hon. Gentleman, who served as a distinguished Defence Minister, knows that these are squarely in the field of national security, for which there are statutory powers on which I will be advised by the Ministry of Defence and the agencies. What I have been discussing today are areas that are outside that statutory regime. There is still a very profound public interest that Melrose should set out its intentions. That is what it has done and that is now in the public domain.
You, Mr Speaker, have a well-known prowess on the tennis court. If I had a fraction of those skills, I would have made it for the beginning of the statement, but I did at least beat the delivery of the statement, so I am immensely grateful to you for calling me.
The Secretary of State talks about the role of the Pensions Regulator. He does not know, I do not know and no pension trustees know on this deal which is the best longer-term buy to go for. Will he put forward and defend the strategic interests of pensioners by waiting for the Pensions Regulator to report to him on where the long-term interest lies, and block the deal if the strategic interests of pensioners are not met?
I am grateful that the right hon. Gentleman made it for the statement. The role of pensioners is of course very important and it is why I set it out there. The Pensions Regulator, as I understand it, has been in discussion with the trustees, and it is for the Pensions Regulator to form its view. The right hon. Gentleman knows very well that media plurality, financial stability and national security are very specific grounds. They do not include, in terms of that statutory regime, the consideration of pensions, but I set out in my letter that I expect that the trustees and the Pensions Regulator should be satisfied that either proposal will operate in the interests of the pensioners.
Points of Order
On a point of order, Mr Speaker. I seek your advice on how to get Foreign Office Ministers to respond adequately to Members’ questions, especially when life is at risk. Liam Colgan, from Inverness, has been missing in Hamburg since 10 February and his disappearance is causing his family enormous distress. Despite writing to Ministers a month ago and raising the matter with the Leader of the House in this Chamber, the response still fails to answer the specific questions his family have asked with regard to the support they require to find him and bring him home. How can I get answers from the Ministers on behalf of his family?