Wednesday 13 June 2018
[James Gray in the Chair]
I beg to move,
That this House has considered a review of the business rates system.
Thank you, Mr Gray, for being in the Chair for this important and timely debate.
Almost every day, we learn of a chain of retail stores or local businesses closing its doors, resulting in job losses, people’s lives being thrown into turmoil and empty premises along our high streets. The Centre for Retail Research has said that 10,000 stores will close this year alone, amounting to 384,000 jobs that are forecast to be lost over the next four years—unless, of course, the Government take urgent action now.
Businesses face many challenges at this time, not least the cost of property rental, and that leads into the issue of business rates. I would like those issues be addressed in today’s debate and I look forward to hearing the Minister’s response, because it is time for action to rescue businesses from the current crisis.
Front Street in Acomb once bustled with an array of independent stores serving the west of York. Those premises are now being exploited by foreign investors who are charging extortionate rents, which in turn is driving up the rentable property value, and thus business rates. Today, empty units line the street. York’s city centre is following suit, as are towns and cities up and down the country. This cannot continue to drag on.
The ever-inflation-busting rental levels have over-inflated the local property market. That is exacerbated by the empty property tax loopholes, resulting in units being left dormant, further blighting our beleaguered high streets and letting the owners of those properties off the hook.
The Valuation Office Agency has made its calculations based on this overheated market and set excruciatingly high business rates, as determined by the Government. When I hold business meetings across York, everyone feels that they have been failed by the business rates system, and as the situation gets worse, they want to know why the Government are forever providing sticking plasters when major surgery is required.
In York, where the retail sector accounts for 13% of employment, the toll is being felt. However, it is not only the retail sector that is affected. The hospitality sector employs 2.9 million people across the UK and although it pays 10% of all business rates, the sector’s share of turnover is just 3%—as the sector puts it, it has made an overpayment of £1.8 billion.
Other businesses are also being impacted. In the last couple of years, I have witnessed major employers—employers employing hundreds of people—leaving the city of York, citing excessive business rates as the root of their decision, and moving to areas with lower business rates. The 2015 valuation took a particular toll on businesses in York. We have had increases as high as 600% for pubs and retail outlets, including a bicycle shop in the city. Our city centre is changing dramatically, with the loss of national chains. High rental rates and business rates are to blame.
My hon. Friend is making an excellent speech setting out the key concerns for retailers and other businesses. Does she agree that the average £3,600 increase in rates for small shops over the next five years is contributing to the demise of high streets up and down the country?
My hon. Friend makes an excellent point, because it is the small retailers that are really struggling to survive, and it is an issue of survival in the current age. Of course, business rates are at the heart of the decision by businesses as to whether to remain open or close.
Other organisations have been brought to my attention that are even worse affected than those with the 600% increases I have cited. For instance, there are organisations that have had rooftop solar panels installed and then seen their business rates rise by as much as 800%, and all for doing the right thing. The Valuation Office Agency is discussing similar measures for battery storage, all at a time when green energy and microgeneration should be promoted; instead, people are being deterred from doing their bit for the environment.
Let us remind ourselves that business rates are set by multiplying the valuation rate—that valuation rate is based on the market rental value, as if the property was being placed on the open market—by a multiplier set by Government. In England, that is 49.3p, or 48p for small businesses. It cannot be raised by more than the rate of the retail prices index, or the consumer prices index from this year.
There are certain relief schemes in place, three tiers of arrangements to reduce the burden on small businesses, and an array of different arrangements for charities, rural businesses and community sports clubs. Last April, temporary relief was also introduced, with an additional relief fund of £300 million, which was to be shared between local authorities around the country over four years. Pubs with a rateable value above £100,000 were given relief at a flat rate of £1,000, which is subject to current state aid rules. I would like the Minister to examine that specific issue. There are also relief schemes for fibre infrastructure, local newspapers and empty properties.
York received £788,000, but the local council’s governance of the money provided by that fund has been extremely poor. It started with an application process in May to provide grants to businesses that were struggling and that could guarantee—that is, guarantee—they would be sustainable. However, because businesses were unable to give such an assurance, they were unable to apply. In December, the council therefore changed its mind. All businesses with premises that have a rateable value under £200,000 and that had experienced a business rates increase of over 12.5%—except for national chains and local government premises—automatically received a discount, meaning that the council did not even consider hardship issues; the discount was an automatic entitlement. The Government should have provided far better guidance for councils that were handing out taxpayers’ money; the councils really did not have the understanding of what was required of them to support businesses.
This year, York will receive £383,000; next year, it will receive £158,000 and the following year just £23,000. That tapering leaves businesses in an incredibly vulnerable position, without any long-term solutions being provided by the Government. Businesses are crying out for such solutions.
York is not unique, but it does provide the Government with an excellent case study as to why the business rates system is failing. I will provide some examples of the systematic problems that my city is facing.
Retailers in high-value rental areas pay the highest rates, whereas companies selling goods on the internet from warehouses in low-value rental areas pay the lowest. For example, Amazon is the largest retail business in the UK, with a warehouse of 65,000 square feet outside York. In York, Amazon pays £1.4 million in rates. Marks & Spencer in York city centre is seven times smaller in size, but it still pays £500,000 in business rates, or about a third of the amount that Amazon pays.
The smallest stores pay the most. For example, in York city centre small shops pay up to £950 per square metre, whereas larger companies benefit from a special larger store rate of £110 per square metre. If all companies in York paid the same as small businesses in York, Marks & Spencer would have a rateable value of £9 million and Amazon would have a rateable value of £61 million. Across the sector, the perception has grown that the Valuation Office Agency gives large companies favourable treatment to avoid lengthy and costly disputes, and clearly small businesses are suffering.
The comparison between what is paid by large out-of-town and online retailers and what is paid on high streets is extremely well drawn. Does my hon. Friend agree that the problem is that unless something is done—and it can only be done by the Government—to create a fairer business taxation system to even up the situation between online and out-of-town retailers on the one hand and the high street on the other, high streets and their communities will continue to suffer, and anybody who works in those areas, and their families, will be put under pressure? This issue has to be dealt with urgently, and the Government must intervene to address the problems of unfair business taxation.
The point my hon. Friend raises is the point of this debate. The reality is that we are talking often about independent business in which families have invested, maybe for generations, building it up and building a reputation, only to find that the competition from online sales and out-of-town stores is challenging. In addition, such businesses then have the weight and burden of business rates to pay on top of high rental values for their properties. The sums simply do not add up, and it is driving them out of town.
That situation is why we are seeing so many closure notices on shops. Some shops have been part of communities for decades and are sadly no longer there. That is certainly true of York. Our communities are losing their identity as a result and that is changing what happens in our town and city centres. I could relate so many stories from York of how independent shops have disappeared to be replaced by vertical drinking establishments and other such premises. That changes the whole context of our city. It is vital that we get on top of the business rates issue.
We have to recognise that businesses are penalised when they try to do the right thing, as equipment adds to the rateable value of business premises. Companies are penalised for making improvements to their businesses. Labour’s manifesto promised to exclude all new investment in plant and machinery from future business rates to encourage investment. We want to see employers investing in the future of their business, but they are deterred. If that investment would put up their rateable value, why take those steps when they are already struggling?
Businesses often have to invest in CCTV because of rising crime rates. In doing so, they can help the police by providing footage to help catch offenders, but they are then penalised for doing the right thing and helping tackle crime when their business rates increase due to that investment. Does my hon. Friend agree that that is an anomaly that must be looked at?
My hon. Friend makes an excellent point. When people try to improve their community, and not just the business itself, that increases the rateable value. Business rates are built on that premise. In York, a company installed air conditioning. That might seem an obvious thing for a business to do, but doing so increased the rateable value by £275. That business now sees air conditioning as a negative, rather than a positive for itself, its staff and the public.
We have to be honest: business rates are an extremely antiquated system that is not fit for purpose in our globalised digital age. The UK now has the highest level of online shopping in the world, and it is essential that the duty that is paid catches up with that reality. We know that online shopping is increasing because when we go to our high streets, the stores that shoppers want to engage with are no longer there. There are also the wider trends we see across the world.
We need to ensure that we invest back into our city centres to revitalise them and ensure that they keep their identity. That is especially important for a city such as York, which has such a great heritage and attracts 7 million people a year. We want to ensure that people continue to come to our city not only for all the wonderful attractions, but to utilise the vibrant shopping area it once was.
Last April, following the revaluation, the average small shop was hit with an extra £3,663 in rates over the next five years, while many large online retailers saw their rates fall. Large supermarket chains saw a 5.9% reduction in their rateable value. There is huge inequality within the retail sector. Pubs are also being put at risk. They pay 2.8% of the total rates bill, yet contribute only 0.5% of the rate-paying business turnover—an overpayment relative to turnover of £500 million. That figure will increase by 17% by 2021-22.
It has been cited that the transitional relief scheme has been of detriment to some businesses. For instance, House of Fraser saw a 10% rise in business rates last year. As has just been announced, it is looking to close 31 stores, of which 28 have been negatively impacted by the relief scheme. It is clear that huge inequality has grown with the advent of large out-of-town retail centres and the online industry. The business rates system simply does not work in the modern age.
Reform has been called for, not least by the Business, Innovation and Skills Committee, as was, which in 2014 recommended changes to the business rates system. The Committee called that system
“a significant barrier to innovation.”
It recommended a Government review of the system to examine the questions
“whether retail taxes should be based on sales, rather than property; whether the retail sector should have its own form of taxation, calculated in a different way from other businesses; and how frequently the revaluation of Business Rates should take place.”
Since those recommendations were made, York Retail Forum has not been idle. It has carried out a thorough piece of work to look into the alternatives, and it has concluded that the best way forward for its businesses is to have a turnover tax. The Centre for Retail Research has come to the same conclusion. Clearly, if that formula were to be adopted, there would need to be tapering to address businesses with a high turnover but low profits, such as small convenience stores.
Local entrepreneur Phil Pinder, who chairs York Retail Forum, has looked at the figures. When just a 1% levy is placed on all online and high street businesses, the resultant revenue exceeds the current total raised by business rates. Governments gain, small businesses gain, local economies gain, high streets are revitalised, and tax-dodging multinationals such as Amazon have to pay up. While the benefits for Government would be the same, introducing a turnover tax would be like handing thousands of pounds to small businesses and would help them to invest in developing their businesses and employing more staff.
Equally, a profit-based levy would provide for a fair system: the more profit, the more a business would pay proportionately. That is favoured by many businesses, as they believe that nothing could be more equitable, and certain exemptions would not be required. With either model, there could be some tapering, so that those with the greatest returns paid more and those with the least paid less. Social interventions could be made—for instance, some relief for those who invest in microgeneration of energy. There is scope to use the system to drive forward our future economies. Either way, we need to find a new way to bring in revenue from businesses to replace the business rates system—perhaps through another non-domiciliary, property-dependent levy. Whichever system is used, it would clearly be a lot easier to operate, to collect revenue and to reinvest in communities and business growth.
One other point that I must raise in today’s debate is that the Valuation Office Agency is not fit for purpose. It has lost staff; its IT systems are creaking; its programme capability is questionable, having failed businesses; its “check, challenge, appeal” system is not thorough in responding to the grievances of businesses; and its time delays are causing more difficulty for businesses that are already struggling.
That brings me to my key point: the Government have prevaricated for far too long over business rates, and we have on our hands a serious crisis on our high streets. Last year, in the light of the business rates crisis, many of us in Parliament gathered momentum to call for change. On 8 March 2017, a business rates review was announced by the Chancellor. Since then, I have continually asked questions about when that review will begin, and have been passed from pillar to post—from the Ministry of Housing, Communities and Local Government to the Department for Business, Energy and Industrial Strategy, and from there to the Treasury. That resulted in my having to raise a point of order with the Speaker to identify who was responsible for what, and even then, discussion ensued on the Government Benches.
Businesses are saying that they cannot wait any longer, and the daily announcements of closures testify that that is the case. The Government have to get on and start their major review of a new business levy. In introducing today’s debate, I am calling time on this broken system on behalf of businesses in my city and up and down the country, and asking the Minister to carry out the following with immediate effect.
First, I ask the Minister to open a complete review of a new business levy system to report in the autumn, with recommendations being made in time to be implemented in this year’s Budget. Secondly, I ask him to open the consultation to all businesses across the economy and to commence the review before the summer. Thirdly, I ask him to identify some case studies to gain an in-depth understanding of why the current system is failing. I suggest York would be a good case study for the Minister to look at, and I am sure other colleagues would be helpful in advising why their communities would provide good examples too.
Fourthly, I ask the Minister to look at the offshore rental market and its impact on our high streets and businesses, and at the extortionate rents that people have to pay. There is often no connection between the local community and the offshore business entrepreneurs who seek to reap as much revenue as they possibly can, at the expense of the high street. We need reparation there, too, because that feeds into the business rates crisis that we see today.
There is an existential crisis on our high streets as they are drained of the vital enterprises that give life and character to our communities. There is no scope for further delay. I urge the Government to bring a laser focus to this issue, and I call on the Minister to act. I trust that he will be willing to meet me and other hon. Members to help move the issue forward for the sake of our communities. There needs to be a radical reform of the system. The Chancellor said it was his desire to move away from a bricks and mortar-based system. The review was promised in the Conservative manifesto, as well as in ours, so progress should not be delayed. Time is running out.
I trust that the Minister will respond clearly to the matters I have raised and tell us what actions he will take to secure a new business levy system that is in place in time for an announcement in the autumn Budget.
I congratulate the hon. Member for York Central (Rachael Maskell) on securing this important debate. Anyone looking into this Chamber from outside will be surprised by the lack of Members taking part in this debate on an important issue—a non-political issue, almost, that affects all of us and our high streets all over the country. Perhaps Members feel that there is no point in rehearsing the arguments because they will not change anyone’s mind and the Government will do nothing. I know better than that because I consider the Financial Secretary to the Treasury, my right hon. Friend the Member for Central Devon (Mel Stride), to be a personal friend of mine, as well as a neighbouring Member of Parliament in Devon. I know he cares as passionately about his high streets in Crediton and elsewhere as I do about mine in Exmouth, Budleigh Salterton and Sidmouth.
The hon. Member for York Central made extremely good points and I wholly concur with her. I went with a company I am no longer involved with to the Valuation Office Agency, and it was a truly horrible experience—we saw overwhelmingly underpowered officials there. I know it is an arm’s-length body, but I urge my right hon. Friend the Minister to look at the VOA and some of the decisions that it makes, because it is crippling some of our companies. The onus seems to be on the companies to disprove what the VOA asserts, which can leave companies paying outrageously high rates for many months when in fact they and the VOA know that in the end they will get a rate rebate.
My right hon. Friend—unlike many others in the House, unfortunately—comes from a business background. He is a successful businessman, so his sympathies lie naturally with the business community. We face what I described in a public meeting I had in Sidmouth a couple of weeks ago as an unhappy coincidence: an unhappy coincidence of people’s behavioural patterns when purchasing goods. I am a living example. Without making a gender-based remark—well actually, I am going to make a gender-based remark—I think the majority of men probably shop more online; I certainly do the majority of my shopping online. There is a gravitation towards that, coupled with the issue of business rates and the perfectly hideous decisions by successive Governments to be too loose in granting planning permission to out-of-town megastores. That has not been mentioned so far this morning, but it is also partly responsible for the desecration of many of our high streets.
We should not be Luddites. We cannot turn the clock back. We should remember that many mews houses were used for horses 100 years ago, but they are now converted and life moves on. Patterns change and the pattern of life accelerates, so we should move with the times. Interestingly, a recent report showed that the loss of shops on the high street is actually less than the public’s perception. None the less, it is a major issue.
I pay tribute to the dogged determination of a local reporter, Beth Sharp of the Sidmouth Herald, who, along with Alistair Handyside, who does so much for tourism in the south-west and rightly got recognised in the Queen’s birthday honours list, helped organise a very good meeting I went to with some of the retailers in Sidmouth. It is clear that the unhappy coincidence of events is having a negative effect. A hotelier at the meeting, Mark Seward, said that his rates have increased by 244% in a decade—they are now £17,000 a month. That is what he has to make before he pays any of his suppliers and before he pays the living wage to his employees. Before he does anything he has to pay money straight out.
It seems to me that we have not moved with the times. I had an interesting meeting with the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the hon. Member for Rossendale and Darwen (Jake Berry), the other day. We talked about what new initiatives might come from the Government in relation to our high streets. The accepted wisdom now is that the Mary Portas review addressed some of the problems, but did not go far enough, and we now need to look at things in a different way. There are things that we can do.
In the meeting in Sidmouth, I gave an example. Some time ago I went to a shop in Sidmouth that sells kitchen utensils. I said, “How is business?”, and the shopkeeper said, “It’s terrible. Business is terrible,” so I asked why. I said, “Surely when it rains all the tourists come in here.” He said, “Yes, all the tourists come in here. Historically, they would have come in here, looked at all our kitchen utensils and thought they were marvellous. Then they would spend a little more time here. They would buy and then go home with these wonderful things.” He said, “Now they come in out of the rain and look at all the stock. They see something they like—a nice kitchen utensil to better stir their concoctions at home—and what do they do? They whip out their iPhone, take a photograph of it and then go home and buy it online.” The shopkeeper said, “I am becoming a shop front for these products that I have had to buy anyway, which are now being bought online and undercutting me.” He has to pay the rates and Amazon or eBay do not, or not on the same scale, and that seems to be the kernel of the problem.
Then there is an issue where we have to tread carefully. I am very proud of some of the charities that I am involved with. I am vice-president of the West of England School and College for those with little or no sight—WESC—based in Exeter. I opened its charity shop in Sidmouth and I am proud that it can raise money in that way. We would all support charity shops. The problem is that charity shops now often sell new stock. Historically, charity shops sold things that we gave them. As a charity shop, it does not pay rates. Now they sell brand-new products often totally identical to those in the shop next door, but they can afford to charge less because they do not pay any rates. As part of a wider review we have to look seriously at charity shops. Perhaps the number of charity shops should be fixed at a certain percentage or perhaps there should be other ways of making sure they do not compete with those who are still obliged to pay rates.
There are practical things that the Minister and the Government can do. First, business rates are easy to collect, but they are no longer fit for purpose because of the changes in shopping behaviour. I agree with the hon. Member for York Central that we have to get smarter in how we tax online retailers. That is extraordinarily difficult, whether we call them tax avoiders or tax evaders—there is more than a semantic difference there. The point is that they are dominating the virtual high street, and it is manifestly unfair that there is no levy or taxation on them.
If we could come up with some smart way of taxing such people, we could either do away with business rates for or seriously support high street retailers; the issue is not just about keeping shops open in our town centres, but what the community looks like. We have already suffered from identikit high streets, where every other shop is now a coffee shop. I am pleased to say that in Sidmouth and some of my other towns, such as Budleigh Salterton, there are still individual retailers. That is the way forward. Towns have to rediscover local retailers and offer something other than multiple chains. Clearly we need to look at finding a way of applying a levy to online retailers.
Secondly—this has been done in towns and cities up and down the country—we need to look at how we can shrink the retail space. We have to accept that we will not turn the clock back on how people shop. Very often the retail side of a town is too big for the town’s needs. We need to look at how we can shrink the retail part of a conurbation, which has been done successfully in some places.
On the back of that, we need to look at planning and how we can make it much easier to convert former retail premises to residential premises. It is my contention that if we made some shops residential again, we could have starter homes and bring young families into the town. That would mean that there was a night-time community, which would in turn give birth to other things, such as 24-hour retailers, wholesalers or cafés. That would bring people back into the heart of town centres. That seems to me to be a way forward.
We also need to look at the thorny issue of parking. Very often, towns were designed not for cars, but for the old horse and cart. We need to be smarter about how we get people in and out of towns and how they can park. There needs to be much greater flexibility—perhaps two hours’ free parking. Again, that is a problem for district councils, because that is one of the ways they raise money. We need to look at that as well.
We need to get much tougher with our planning regarding huge, out-of-town, American-style shopping conurbations, which I personally think despoil the countryside in an American-style way. We need to find a way to make it more attractive for huge retailers to come into our towns. That can be done without having a huge, hideous store. It can be done very cleverly, and has been up and down the country. We should be aware that big high street retailers such as Marks & Spencer are changing their entire shopping policy not through choice, but for survival. They are closing their stores down and doing more online because that is the prevailing mood. If that does not underline the issues and challenges, nothing else will.
This combination of things is hugely important: shrinking the size of the town; making it easier for premises to become residential; helping councils to allow people to come into the town and to park; looking at taxing the online retailers; and looking again at the rating system. Changes in the 2017 spring Budget meant that businesses with a rateable value of less than £15,000 would not pay the levy, but based on the way it is calculated, bigger stores have to pay.
I will say one final thing to the Minister. We cannot turn the clock back. The Portas review went so far. We now have to act very quickly to ensure that we preserve and enhance our high streets in the way that I have set out. Another issue, which we get the whole time, is that people hate having services taken away from them. What used to be our post bags, and are now our email inboxes, are highly active if something is being taken away from the local community—if the local shop, library or bank is going to close.
It is perfectly clear to me that more banks will close up and down the country as we move towards cryptocurrency, blockchain and so forth. The whole way of doing banking is going to change. We cannot stand in the way of that and say, “We must have the same services we’ve always had.” That will be a commercial choice made, quite properly, by commercial banks. More and more banks will vacate the high street. In turn, that will give birth to other things so that people can do their financial transactions. I do not know what that will look like, but something will replace them.
Given that we know that that is coming down the line, we have to act now to pre-empt it. I very much hope that the Minister will, with his Treasury colleagues, fulfil what we said in the manifesto we would do, and speak to other Ministers about having a wholesale review based on the Portas review, looking at how we can preserve our high street and help struggling businesses.
If it goes on like this, frankly there will not be any retailers at all; they will just close one after the other. I do not wish to be alarmist. As I say, the figures are not as bad as people think, but certainly in Sidmouth we have lost two or three in the last few weeks, and are set to lose more. The fact is that no one is replacing them. We need to be cleverer, and think in a lateral way to ensure that, yes, we tax people properly, but that businesses grow and remain accessible to our residents.
It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for York Central (Rachael Maskell) on securing this important debate about the relevance of business rates to our local communities, and the impact that they may be having on them.
I may approach the debate slightly differently, from a local government perspective, because I have the privilege of chairing the Housing, Communities and Local Government Committee, which has looked recently at business rate retention. The Committee will also look at the future of the high street in an inquiry for which we are taking evidence.
First, I am pleased that the motion moved by my hon. Friend is about a “review” of the business rates system. I think that is important. I wish to begin by saying that I hope we end up with a review rather than a complete abolition of the system. I am sure that the Treasury will be the first to say that abolishing taxes and starting again has slight dangers attached to it, in terms of a complete dislocation. Reorganisations on that sort of scale rarely go well.
I would also argue that property tax is quite important. We tax many things in this country. Nobody particularly likes taxes, but taxing property in some way is quite an important element of our overall taxation system. Of course, households pay a property tax—through council tax at one time. Some of us have been around in various forms of representative government long enough to remember when we had a rating system that covered both domestic and non-domestic properties. The change was made when the poll tax was brought in, and business rates were effectively nationalised and council tax came in instead.
Secondly, we have to make it clear that business rates are an important source of local income for councils. Councils have a Government grant, council tax and business rates—that is basically it. They can raise certain charges, but those are their meaningful sources of money. I would strongly argue, and the Committee has, that over time we should find more ways for councils to raise money at a local level, so that local people can see accountability and the direction between the money they pay and the services that they get. However, that wider discussion is for another day.
The issue is becoming more important because in 2020 the Government intend to move to 75% business rate retention from the current 50%. Some pilots are doing 100% around the country. Increasingly, it is not about merely the totality of business rates, and what is raised in a local area is extremely important for that council. The Finance Bill before the election was going to move to 100% business rate retention. I am disappointed that we have stopped at 75%. The Government say that they will look in the future to moving to 100%, but that makes it even more important that we do not just tear it up and start again.
I urge my hon. Friend and colleagues to consider the importance of continuing the pilots for retaining 100% of business rates, which many local authorities in the pilots find very effective. The Berkshire unitaries all have a one-year 100% retention, and they very much wish to continue that. If the Minister considered that, I am sure it would be greatly appreciated in our county.
That was a very helpful intervention. It shows that some very interesting things are going on at a local level. Very often, ideas begin in local government, are tried and tested at a local level, and then are moved on to the whole country. It is very important that we do not simply say that now we want to move away from the whole system, and leave those valuable lessons unlearned and unapplied.
The other point is that there is the capability for even more local control of business rates. In the days when we had domestic and non-domestic rates, councillors set the rates. They were nationalised when the poll tax came in and the control for setting the rate in the pound was moved to national level. That is an argument that we have had on the Select Committee. I would like to move towards more local control eventually and the system is at least capable of doing that. Business rates are also easy to collect and difficult to avoid, and we should see that as quite a strong benefit of the system.
The right hon. Member for East Devon (Sir Hugo Swire) raised some very pertinent concerns about the impact on high streets, which we see whether it is a village, a small town or a major city. We see derelict shops and the change that is happening. The Select Committee is therefore taking evidence in an inquiry on what high streets are going to look like in 2030. We are trying to look ahead to see what change is happening and whether people are planning for it.
A good point was made about the planning system. We ran an inquiry a few years ago on the high street, and it was stark then that very few councils seemed to be adapting their local plans in recognition of the change in shopping habits. Everyone can see it happening, but nobody seemed to be recognising it when they were looking at what town and city centres would be used for in the future. That will be an issue to address.
I know business rates are an issue for some small retailers, and I will come on to a couple of points we ought to address, but I suspect that that is sometimes an excuse when the real issue is the change in shopping habits. People are just changing what they do. Whatever shopping centre it is, people are simply choosing not to go there, or, as has already quite rightly been said, they go to have a look and then buy online. About 30% of retail shopping is now done online. There cannot be that degree of change without an impact on the retail floor space needed. All the signs are that that is going to continue, and I am sure it is one of the issues we will address in our inquiry.
We are also going to look at some of the things being done by retailers and the property owners, such as the company voluntary agreements that are coming out now as retailers try to negotiate their leases effectively, with a bit of pressure. The retailers did sign up to those leases and there are reasons why they did, sometimes on a long-term basis. We are going to have a look at the issues there as well.
We will also look at revaluations, but we have to remember that revaluation is a zero-sum game: it simply changes who pays what and does not actually raise more money. I am not saying that some centres and high streets are not disadvantaged, but somebody somewhere is probably gaining in the system, which is something that we have to think about.
Two points that we have to look at were powerfully raised by my hon. Friend the Member for York Central. In terms of retailing, the change in shopping habits is to businesses that by and large pay very little in business rates. That is absolutely fundamental if we are going to review the system. How do we get from a system that is a bit archaic and a bit stuck in a particular rut, to a situation where we can charge more for those big online retailers, and indeed the out-of-town shopping centres that were mentioned? Why do they pay relatively so little in rates, compared with the often smaller shops on the high street?
My hon. Friend is making some excellent points. Does he agree that we need to make sure that we incentivise British businesses that trade in this country and make sure that they cannot be undercut, whether on the high street or online, by companies that are directly importing and often avoiding customs and other charges by doing so?
It is important that we look at those issues in wider taxation. I am not sure we can quite go there this morning, but we certainly need to look at whether we can tax some of those major companies—we know the international conglomerates of online shopping without necessarily having to name them—on the turnover that they have in this country rather than on the profits that they declare, as they move those profits into the lowest- tax countries. Of course that is what happens.
There is a wider tax issue about how we deal with some of those online companies, but in terms of business rates, the unfairness between them and retailers on the high street is very stark, as with out-of-town shopping centres. It always seems unfair. I have a major out-of-town shopping centre in my constituency, Meadow Hall, which provides a great service to people, is incredibly well used and provides a lot of jobs, but nevertheless the rates paid there are not comparable with those paid by many shops in the high street.
We also have to bear it in mind that business rates are not just about retail. Commercial, manufacturing and other businesses pay rates and there are some disparities. One point we picked up was that where manufacturing industry innovates and improves, it gets an increase in business rates on that improvement. There is something odd about taxing improvement in that way. We should also look at that. There are some other strange things, such as hospital trusts trying to claim exemption from business rates, or lower rates, under charitable status. I mean, come on—that is about moving money from one bit of government to another! The hospitals are saying they are not going to pay, but then local authorities do not get the money. The Government have to sort out those issues. There are some nonsenses around.
If there is a review and there are changes, we have to be very clear that, if the Government legislate for those changes nationally, there is a mechanism to compensate local government for any money that it loses collectively. After 2020, that is going to be quite a challenge. My understanding is that when the 75% retention of business rates comes in in 2020, local authorities will receive only council tax and business rates, which will then be redistributed in some form. There will not be a central Government grant, so if central Government are going to compensate local authorities for any change to the business rate system that reduces the amount of money in total going into local authorities, how will they be compensated? That is a challenge we all need to think about.
I thank the hon. Member for York Central (Rachael Maskell) for securing this debate. It is one that I wanted to secure, but I was not successful, so I am glad to have the opportunity to contribute again on the subject. The Minister might just groan when he hears me speaking again—he has heard the issues several times before, and I was glad to raise them in last week’s Opposition day debate.
I agree with my right hon. Friend the Member for East Devon (Sir Hugo Swire) that the Minister is engaged and keen to resolve this issue, and I understand how complex and difficult it is, so I will not be unfriendly in my remarks, but I want to reiterate some points I have made before, as well as bring up an issue that Cornish colleagues have been concerned about, but which has not gained any traction here in Westminster.
Issues with business rates lead me to believe that the system must be scrapped. One reason for that is the significant housing issue in Cornwall. It is a real challenge to provide and retain houses for local families and for people who live and work locally and who want to work at the hospital or in public services perhaps, but who just cannot secure the housing they need.
Everyone who lives in a house, unless they are on some sort of benefit, pays council tax, but if someone has a property that they own and which they choose to use as a holiday let, it can be registered as a business and they can avoid paying council tax altogether and then claim small business rate relief. I live in a three-bedroom house and I pay £1,600 a year to live in that property; I contribute, as lots of families do. A property next door is paying no council tax whatever, so it is not contributing.
We have a cross-party campaign in Cornwall on this issue. The real tragedy is that it is possible for a second-home owner to advertise his property as available for rent and also claim small business rate relief. Other Cornish colleagues and I have been raising that issue since we were first elected in 2015. I do not think the Government are fully engaged and fully understand the challenge that that poses for a community such as Cornwall, which needs every penny it can get. There is an opportunity for the Government to close the loophole and collect more tax, completely fairly. I urge the Minister to look at that again and to give his Cornish colleagues some cheer when it comes to trying to address our housing problems.
On the high street, my constituency also has shops that have closed since Christmas. There are lots of reasons, which include ridiculous parking increases and an obvious change in customer behaviour, but there are also business rates. In the 2016 review, St Ives saw quite dramatic increases, along with London and the south-east and other areas. It was a significant shock to many businesses.
I have examples that show that the way business rates are calculated does not make any sense. It is not clear why one shop should pay one amount while the shop next door pays something completely different. If we could understand the business rates arrangement, and if it were equitable, perhaps it would not be such a problem, but some shops have no idea why they are being charged such sums, and the check and challenge process does not help them.
Behind the headlines about the big retailers and multiples, a number of small businesses are closing or threatening to close. I have said previously in this place that about 11 businesses have told me that they do not believe they will see it out to the end of this year. Their problem is that they own their building or have a stake in it, so they have to carry on paying business rates even if they can no longer function as a business. That is a depressing message to send to what we used to describe as hard-working families.
The issue of business rates is complex; it is not just about consumer behaviour and people choosing to shop online. I disagree with my right hon. Friend the Member for East Devon. I can barely work out how to enter my card details online, so I tend to go to a shop when I have a spare moment.
Let me give examples of what is happening in my constituency. In Penzance, No. 8 has 90 square metres and is paying £14,750 a year. No. 8A, a similar property right next door—I cannot tell the difference between them—has 88 square metres, so 2 square metres less, and is paying £18,250. The Valuation Office Agency has not been able to explain the difference between them. The Minister has been engaging and helpful, and has asked about that. My office is working up a few examples of that nature so they can be investigated and studied. In one sense, I am being fairly unhelpful, in that I am raising an issue about which the Minister has already invited me to give him details. We are doing that and will get them to him soon.
In Helston, Betfred has 132 square metres and pays £13,500 a year. Next door, an independent deli in a much smaller building of 123 square metres—I would love to show hon. Members the photos—is paying £16,250. We have done everything we can to support that shop with the Valuation Office Agency, check and challenge, and the local authority, and to try to get it some help. It has had a small reduction, but the bottom line is that the owners get out of bed in the morning and have to find that money before they do anything else. They cannot understand why Betfred—a multiple next door, with a much bigger shop front and, sadly, a busier shop—is paying £3,000 a year less.
In St Ives town itself, there is a fudge shop of just 20 square metres that pays £13,750. St Ives fudge is world renowned, so it is understandable that people want to shop there, but that does not justify the fact that the Government or the Valuation Office Agency have decided that for just 20 square metres it needs to pay nearly £14,000 a year. There are lots of examples in St Ives town of what seem to be arbitrary increases.
I recognise that the Government have introduced lots of measures to try to support such shops and have enabled local authorities to offer help, but we have not seen the benefit. One pub in St Ives has had real help from Cornwall Council, but those other shops have been left to find the money month in, month out. The problem with St Ives—this is the nature of the high street in a popular town—is that an entrepreneur who wants to make a go of running a shop in the town centre will have to pay whatever rent is required, because that is what the absent landlord asks for, and there are few other options. They last perhaps nine or 12 months. When they leave, the rent goes up, and a new aspirational person comes in and tries to set up a business there. Their short lifespan has an impact on the business rate valuation, and on all the other shops, which might have been there for 100 years. Since Christmas, we have lost the local fruit and veg shop and all sorts of other businesses that served the community for 100 years or more.
The real tragedy is that, previously, holiday makers would flood to St Ives and buy what they needed for the week. Now they arrive and the truck from the local supermarket, which might be travelling from Truro, will turn up and deliver all they need for the week, above the very grocery shop that would previously have sold to them.
That is about consumer behaviour, but the real challenge is that business rate charges are not equitable. More than a year ago, I got the Valuation Office Agency to come to St Ives to meet a room full of concerned business owners, and it refused to comment on any individual business. All it did was explain how we could do the check and challenge. Those businesses are in a busy part of town, so they might be expected to be financially successful. The owners work extremely hard day in, day out to make their businesses work—often, they do not have time to jump through the hoops, although many of them did—only to be told they are paying the right amount of money.
I want to ask for three things. First, we should review the review. I know we have another review, but we need to look at what happened 18 months to two years ago, and at why some shops and retailers saw ridiculous increases. We need to do something quickly to address that now, because those businesses are going out of business.
Secondly, the point about local authorities keeping the money from business rates is important, but town and parish councils also need support, because there is often a double devolution situation, with powers shunted down without money. In Helston, the town council—it would be great to have a pilot, along with York Central—would love to grapple with its town, make it vibrant and support the high street, but it has no money to do that.
If we are not going to get rid of business rates, it would be great to allow town councils to retain 1% or 2% of the business rates collected. For Helston, that would be about £200,000 a year, which would give the council the power to transform the shopping experience on the high street and support the very people who are spending that money. I know that 1% or 2% is a lot of money, but it is quite a small chunk of what is collected and would give the towns a fighting chance.
Finally, I recognise that the Government need to collect the 2.4%—
It is 24%.
Is it 24%? Golly! I know the Government need to continue to collect that money, and I am absolutely in favour of the transaction tax. A high street business should pay the same rate on an individual item as an out-of-town store or an online store pays. There must be a way to make taxes fair. There must be a simple way to make tax digital that enables the Government to continue to collect the money they need while ensuring the system is fair for all those who seek to sell items to customers.
I am grateful for the opportunity to speak in the debate, and I appreciate that the Minister is listening and wants to resolve the difficulties that high streets face.
It is a great pleasure to speak in this debate. I thank my hon. Friend the Member for York Central (Rachael Maskell) for securing it and allowing the very thoughtful discussion from all parts of the House to take place.
I am chair of the all-party small shops group, and I worked for the Union of Shop, Distributive and Allied Workers for longer than I care to remember before coming to this place, so retail holds a very special place in my heart, especially the small businesses that generate the employment that we need, but businesses and employment are under pressure.
We have heard from colleagues from across the House about how the 2015 valuation hit small businesses particularly hard. One convenience retailer in three saw an increase in its rateable value, as I mentioned earlier, and small shops have seen an average increase of £3,600 over five years—an average of more than £700 a year. That really hits their profit margins, which in most cases are already under threat due to changing shopping habits.
We have all heard about the need to support high streets up and down the country, from the city of York to high streets in rural areas such as in Devon, Cornwall and my own area of High Peak. I echo the sentiments of the hon. Member for St Ives (Derek Thomas) about businesses as holiday lets, which is an issue in the Peak district and elsewhere in the country.
Retail is not the only issue. In my area, pubs in particular have seen a huge increase in their business rates due to the change in how they are valued and the turnover basis. For example, the Anglers Rest, a community pub in the small Peak district village of Bamford, was on the verge of closing down but the community came in, took it over and brought that beautiful building back to life. It is one of the only services in the village, but it provides a post office and a village shop, as well as a pub and a café. It keeps that community thriving.
The Anglers Rest is run on a not-for-profit basis and its annual surplus income last year was about £3,000, which was needed for capital expenditure on replacements and doing up the pub. The business rates, however, increased from £11,500 before the revaluation—in effect, the pub had nothing to pay, because it had both rural rate relief from being in the very rural Peak district and small business rate relief—to £21,750, which is a bill for a further £10,000. It does not take someone of the financial stature of the Minister to realise that a surplus income of only £3,000 and a rates bill of more than £10,000 puts that community venture at risk. That is detrimental to the entire community, to which that venture is so important.
Another concern expressed by pubs in my constituency about the turnover basis of the rates is that the valuation goes online, listed among other pubs in their area, and that is seen as a shopping list by criminals looking for cash-heavy businesses. As businesses with high turnovers are being targeted, local pubs are concerned that that could be due to the release of information so readily available online. Criminals are not that stupid; they are quite capable of researching which places take significant amounts of cash.
Will the Minister have a look at that issue, which concerns pubs in my area? We have seen an increase in crime—in till snatches—which is worrying for small businesses and their staff in particular.
That is also why, earlier, I mentioned investment in CCTV. Many businesses feel that they have to make that investment now, either because crime is so high that they need a deterrent or because insurance companies often insist on installation of CCTV and other security measures to make premises viable to insure. Businesses, however, are hit with not just the insurance costs of being a victim of crime, but additional business rates.
I hope to see a system, however it is calculated, that does not penalise businesses for investment. A deterrent could be provided with time-limited exemptions for new developments, and we would see greater investment. The convenience store sector invested £856 million in premises over the past year, and any increase in that investment would benefit not only high streets, but the Exchequer.
Communities would all see the benefit too. The Scottish Government’s growth accelerator scheme, for example, delays increases in business rate bills for 12 months, allowing businesses to recoup their investment at least in the initial year.
I am not sure that turnover-based methodologies will be helpful in the retail sector, in particular for convenience stores and the like, which might have a high turnover but a very low profit margin. Petrol forecourt sites are rated on a turnover basis, which causes discrepancies when retailers invest in a convenience store on the same site. They find that it is rated under the same system, causing huge rating bills, which prevents the forecourt retailers from expanding their businesses to offer services to the whole community, often in areas where there is little retail opportunity.
Another issue is to do with cash machines, as has been said. Access to cash is key, in particular on high streets and in rural areas. Retailers are billed an average of £4,000 for hosting an ATM, which is in addition to the rates payable on their shop. I hope that the Minister will look at free-to-use cash machines because they are extremely important for retailers and do not often lead to an increase in turnover commensurate with their business rates increase. The increased risk of crime that unfortunately arises from hosting ATMs means that businesses in my constituency are reluctant to take one on in areas that are in desperate need of them.
I ask the Minister—I am sure that this is a subject close to his heart—to look at the impact on employment of the turnover basis of rating. Pubs that want to open for a few additional hours to increase their turnover, taking on extra staff and growing their business, are disincentivised by the fact that turnover is the basis of their business rates, as they get no relief for the staff. They simply get taxed additionally on the turnover, whereas business taxation is based on profit.
Finally, the “check, challenge, appeal” scheme is an absolute disaster for businesses that wish to challenge their rateable value. Only one case has got to the appeal stage. By February, we had seen a 90% decline in appeal cases lodged. The check stage requires ratepayers to input details about their properties, which needs significant research on details such as the construction date of the building—quite a challenge for some of the properties in my area. The challenge stage requires ratepayers to provide an alternative valuation and to supply all the evidence needed within four months, which is often quite a hurdle. The appeal stage now requires businesses to pay a refundable £300 fee, or £150 for small businesses, which is another disincentive for businesses to go ahead.
There are plenty of issues for the Minister to look at and, I hope, respond to. I welcome the debate and the chance to speak.
It is a pleasure to serve under your stewardship, Mr Gray.
I thank my hon. Friend the Member for York Central (Rachael Maskell) for securing this debate. It is important to put the issue of business rates into context with regard to the amount of money they raise in receipts. In 2018-19, the rates will raise £30.5 billion, the sixth highest tax receipt in the country. That is a substantial amount of money. We need to look at the business rates again, and in context.
I am pleased that my hon. Friend mentioned the turmoil on the high street, although that is not equal across the country—in some places, there is even more turmoil than in others. Nevertheless, the general tone is one of turmoil, with 10,000 stores to close, including the casework examples she alluded to. The prevarication needs to stop, and I am pleased that my hon. Friend gave us four ideas to consider.
The right hon. Member for East Devon (Sir Hugo Swire) made a point about the Valuation Office Agency. It is important that the VOA plays a part in this but, in reality, as an agency it can only play the hand it has been dealt. Yes, it may be able to sharpen up its footwork, but that does not go to the heart of the matter. However, I do see his point about the concoction of planning and parking—he raised several issues there. On parking, as local authorities have been denuded of support from central Government, they have tended to change how they get their money, given the reduction in grant. They’re damned if they do and damned if they don’t.
My hon. Friend the Member for Sheffield South East (Mr Betts) talked about more local control. That is a potential way forward, because as we are giving less money to local authorities from the revenue support grant, there has to be some more flexibility. That should be considered as part of the review. As the hon. Member for St Ives (Derek Thomas) said, it is a complex situation. Second homes is an issue that affects different areas of the country in different ways. He talked about the business rate calculation not being sensible, but that is a technicality. Trying to pin down how a valuation is arrived at does not deal with the heart of the issue: if £30 billion is being raised a year, how and where should it be raised and in what context? We need a review of business rates. My hon. Friend the Member for High Peak (Ruth George) said that there are strains on businesses. Her point about cash machines is a crucial issue in many areas. I am glad that it has been a thoughtful debate.
Business rates are causing a great deal of crisis in our retail sector, which is the UK’s largest private sector employer. In the first few months of this year, 21,000 jobs were lost due to closures. Thousands of working people face an uncertain future, and that has sent ripples through the retail sector. Only this week, Poundworld fell into administration, putting 5,000 jobs at risk. That follows administration or store closures at Maplin, Toys R Us, House of Fraser, Marks & Spencer, New Look, Carpetright and Mothercare.
The Government must recognise that there is barely a British brand left that is not affected by what many consider to be a hostile environment, given the business rates situation, whether by design or default. The high street is being denuded because the review has gone on and on. The Government have taken their eye off the ball. I do not want to introduce the “B” word, but Brexit must be a factor. Everything is dominated by Brexit, so the crucial day-to-day issues are not being picked up as they would and should be.
The independent retail analyst Richard Hyman predicts that 20% of retail space will close over the coming years. My hon. Friend the Member for Sheffield South East alluded to that and we must give thought to it—that is before we even get on to poor pay and faltering productivity, both of which are driving poor consumption across the economy, as well as leading to pretty miserable lives for so many in precarious work. Why is this happening? Last week, the chief executive of Tesco blamed the collapse of these retailers on the Government’s business rates policy, saying that it played a “large part” in sending some retailers to the wall.
The Government’s approach to business rates has been combined with, in effect, inaction, which has left a significant portion of the British economy exposed. There has been one review after another; there is nothing wrong with a review and we are quite happy to have them, but we would have to not let the review drift but taken action, as I am sure you would, Mr Gray. Uncertainty does not help.
The problem has been exacerbated by structural changes in the retail sector. For example, 791 villages and towns in England and Wales will face higher tax bills. Rates are rising by up to 500% for half a million businesses. That cannot be right. The rise will cause the average small shop to be hit by an extra £3,600 in rates over the next five years. Nearly three quarters of small companies say business rates are the most important issue they face. What is worse, at the same time, some large supermarkets’ rateable value has reduced by nearly 6%.
Online retailers, which have been referred to many times, have benefited from the structural shifts in retail and are the also winners of the Government’s business rate changes. The bill of online retailer ASOS fell from £1.17 million to £1.14 million, despite UK sales growth. The Government are in a business rates mess—it is no good pretending that they are not. The mess is hitting those who cannot bear the brunt of the tax changes, while letting others off the hook.
The Government will claim that they are introducing a package of support to mitigate the steep increases that have resulted from the seven-year wait for a revaluation, yet the Federation of Small Businesses does not take the same rosy view. They have called on the Government to
“speed up help for small firms facing unacceptable increases in their Business Rates”,
while arguing that the £300 million relief promised in the Budget has not made its way to businesses. Perhaps the Minister will let us know what the hold-up is. It is the same old story: we cannot rely on rhetoric to cover things up. The Government have to recognise that the cracks are getting bigger. In some areas, panic has set in, with major newspapers now reporting on a “high street crisis”. We do not want that panic to spread—I accept that it is overblown—and we do not want the Government not to deal with the matter and to put their head in the sand.
If we want to continue to have a high street, we must follow steps for business rates such as introducing a statutory annual revaluation, to stop business facing periodic and unmanageable hikes and to guarantee a fair and transparent appeals process—that has been touched on in the debate. The Government’s seven-year wait for a revaluation was one of the major reasons the process descended into chaos. Had the Government got their act together, businesses would not face such steep rises in valuations and could plan accordingly. It is quite shocking in certain situations how companies and businesses are being treated.
We would exclude new investment in plant and machinery from future business rates revaluations, to encourage investment. After eight years of the Government’s economic policies, we have the lowest productivity in the OECD; businesses must be incentivised because they are relying on pools of precarious, cheap labour rather than investing in fixed capital. That is especially the case in the retail sector. Government business rates policy should reward shifts to more productive models. I hope that we will be able to deliver on that.
Overall, we want fundamentally to reform the business rates system in the age of online shopping, to ease the burden on traditional high streets and town centres and to create a fairer system of business taxation for the £30 billion that comes in. We must recognise the gigantic shifts happening in the sector, and ensure that our fiscal framework properly adapts to that. It is not about hoping another review will make it all go away; our reform of business rates must be considered in the context of our wider support for small and medium-sized enterprises.
We want to build an economy for the many businesses, not the few. That means supporting small businesses so they can compete on a level playing field, rather than playing to the interests of big companies and monopolies, which seems to be happening all too often. To do so, we have committed to increasing lending to small and medium-sized enterprises, through our network of regional development banks. We have also committed to introducing a lower small business corporate tax, which would ease the burden on smaller retailers. We would scrap quarterly reporting, to end the scourge of late payments and reform.
Labour is offering a number of proposals, but the Government must act as soon as they can, to stop the prevarication.
It is a pleasure to serve under your chairmanship again, Mr Gray.
I congratulate the hon. Member for York Central (Rachael Maskell) both on securing the debate and on the tenacious approach she has rightly taken to the extremely important matter of business rates. I thank her for her comprehensive contribution, and in particular for the examples she gave of high street businesses—I think we all recognise that many face considerable challenges. I also thank the various other speakers, who raised numerous points. I intend to pick up on as many as I can, but I would of course be happy to engage with Members outside the Chamber on any that I omit.
I thank my right hon. and gallant Friend the Member for East Devon (Sir Hugo Swire) for his kind remarks about the amount that I care about this issue and for referencing my business background. I fully appreciate what a struggle it is in the business world, even when times are extremely good. It is never easy to go out and employ people, to generate wealth and to have a successful business. I also appreciate that business rates are one of those taxes that businesses simply cannot avoid—they are paid irrespective of profitability, which of course has particular consequences in some cases.
We need to put this debate in context. A number of Members said that business rates are an issue but are not the totality of the pressures that our high streets face. We heard much about the challenges of online marketplaces and of the planning system—when there is a change of use of businesses that reside on our high streets, for instance—and my right hon. and gallant Friend raised the issue of parking. Myriad issues impinge on this space, and I think we are all seeking to ensure that taxes right across the system are competitive, that there is fairness among those who are expected to pay them, and that they are collected, so that we minimise tax avoidance at every stage.
That brings me to the comments by the hon. Member for York Central about possible alternatives to the current rating system. She mentioned a tax on revenue or on profitability. As soon we started to tax revenue, we would run into the problem that businesses that were not profitable still had a turnover. For example, a new entrant on the high street that we all wanted to thrive may get throttled by the kind of approach that she suggests. If we went for a tax on profits, there would be the potential for profit shifting. If there were a particular regime in one area, businesses may move profits around between multiple enterprises to reduce their overall tax.
The hon. Member for Sheffield South East (Mr Betts) recognised that. He made the important point that business rates have a distinct advantage when it comes to avoidance, because buildings cannot be shifted around in the way that it might be possible to shift other metrics. He also raised the 100% business rates retention pilots and expressed hope that we would pursue that measure. We will pursue it with vigour. I am watching it very closely in Devon, where the pilot scheme is also operating. I very much look forward to catching up with the report of the Housing, Communities and Local Government Committee, which he chairs.
My hon. Friend the Member for St Ives (Derek Thomas) raised the issue of second homes being designated as businesses because they are holiday lets. We are engaged with the VOA to ensure that no abuse occurs in those circumstances. He will be aware that certain criteria have to be met for individuals or companies to treat properties in that way. I am happy to engage with him outside the Chamber on that issue, because he raised one or two interesting points. He also raised the issue of different businesses paying different rates and gave an example of two businesses right next door to each other. He and I have discussed that, and I look forward to looking in greater detail with him at the examples that I know he will come forward with.
The hon. Member for High Peak (Ruth George) raised a point about pubs and suggested that information being made available to the public might drive crime. I am certainly prepared to look at that. I imagine that those who are out to raid the premises of pubs have other measures by which they might be able to discern whether a lot of cash is being taken—how many people are in there drinking on a Friday night, for example—but I am certainly happy to speak to her about that. She also raised the way pub rates are calculated. They are valued by the VOA using the fair maintainable trade method, which has been agreed with the British Beer and Pub Association.
Let me point out the numerous things that the Government have done on business rates to support businesses. In 2016, we announced around £9 billion of relief on business rates. We made the 100% small business relief permanent, which took 600,000 businesses out of rates altogether. We increased the threshold for the standard multiplier, removing 250,000 businesses from the higher rate of business rates. Of course, we were able to do that only because of our prudent stewardship of the economy, which has allowed us the space to provide that relief to the business community.
I have limited time, but I will dwell for a moment on the online business threat, which a number of hon. Members rightly raised. There is a growing number of online businesses in this space, and an increasing number of purchases are happening through online companies. It is important to make the point up front that when we refer to some of those companies paying relatively small amounts of tax compared with high street operations, we are talking not about tax avoidance but about whether the way the international tax regime operates is appropriate or functional for the 21st century. It is not. We need to find different ways of taxing online platforms, whether they are search engines, social media platforms that generate revenue, or online marketplaces, where significant value generation occurs through the relationship between users based in the UK and the platform itself.
It is reassuring to hear the Minister say that we need to look at ways of taxing those rather more mobile forms of purchasing online. Will he say whether there is a team in the Treasury doing that, and when it is likely to report?
There is indeed. I am personally engaged in that matter, which has been taken up at the OECD and the European Union. They have both produced interim reports on the issue and suggested that we might look multilaterally at some kind of revenue-based taxation, albeit—to get back to the problem of revenue-based tax—we do not want to choke off new entrants to the marketplace, which may be loss-making, so there may have to be some de minimis thresholds associated with that formula. We are actively pursuing that on a multilateral basis with countries in those two institutions. I discussed exactly this issue with Finance Ministers from OECD countries at the ministerial meeting of the OECD in Paris last week. We have made it clear that, although it would be most beneficial to move multilaterally with other countries, we will make a unilateral move if we need to.
I am conscious that we are down to the last minute and I would like to give the hon. Member for York Central an opportunity to respond, so I will draw my remarks to a conclusion.
My constituents will be very disappointed by the Minister’s response, because he did not respond to the specific questions I raised. We have a broken business rates system. The fact that the system takes only £30 billion but requires £9 billion of relief is in itself evidence that it is broken and in need of urgent repair. In the light of the many cases that hon. Members have raised, the Treasury needs to pay greater attention to this issue.
Motion lapsed (Standing Order No. 10(6)).
Parking Charges: Chippenham
I beg to move,
That this House has considered Chippenham parking charges.
This week in Parliament, we are discussing the two issues that I would argue are the most important to Chippenham residents: Brexit and, believe it or not, parking. I should say that those are the two issues on which I receive the most correspondence. Parking is an issue across the constituency, but today I shall focus mainly on the town of Chippenham, where problems are the most acute and could easily be dealt with, and from which the majority of businesses and residents contact me. For instance, the situation in Bradford on Avon, which I represent, is more challenging because space in that historic town is at such a premium. I have campaigned on parking and parking charges in Chippenham for many years, from well before I was elected as the local MP, and the recent council proposal on parking charges left me with no option but to call this debate.
I completely empathise with the council’s motivations and thought processes in this area, but I hope to highlight the need for it to think again and to press the Minister to respect devolution but consider publishing best practice on this topic. As an MP, I have no power to dictate parking policy, nor should I, but I must stand up as a champion of my residents and businesses, as it appears that their voice has not been listened to or heard.
Chippenham’s parking problems are twofold, as I am sure you are aware, Mr Gray, having represented the area yourself. First, prices are too high, and further proposed increases in prices and charges will cripple our local high street and town centre businesses. Secondly, the number of spaces available is far too low to accommodate the town’s residents and visitors, and the staff that businesses need. It is important to note that both those problems need addressing.
In 2014, I conducted a local survey on parking charges and the key findings were that 93% of residents agreed that parking charges were—then—too high, and 88% of residents said they would shop in the town centre more often if prices were reduced even slightly. I raised the topic as one of my first questions to the Prime Minister on the support we could give market towns. The then Prime Minister, David Cameron, stated that he would argue
“in the case of market towns, that we should make parking easier—and, preferably, free.”—[Official Report, 8 July 2015; Vol. 597, c. 315.]
A key point is that since the Salisbury incident, overall, Chippenham residents are paying the highest fees of all towns in Wiltshire for parking per hour and for permits. Prices went up in February, which I fought against to no avail; I still await the results of the consultation. Those increases mean a total increase in the last two and a half years of up to 15%. However, it is the new proposals that are deeply worrying: parking season permits would increase by 145%. That is a problem for all my constituency, but most acutely for Chippenham. Some key local businesses, not just local retail offerings, are based in the town, and both have barely any of their own parking. Staff are therefore forced to park in car parks.
The other change is to introduce parking charges on Sundays and bank holidays, which will damage all of Wiltshire and is beyond short sighted. The average car parking charge in Chippenham is £1.20, and a premium season ticket is already more than £1,200. Council representatives have regularly disputed that charges deter shoppers or affect the high street. It is therefore ironic that one of the first things done after the Salisbury incident was to introduce free parking there for three hours in the city centre to boost footfall. Let us not forget that the national planning policy framework states:
“Local planning authorities should set appropriate parking charges that do not undermine the vitality of town centres”.
Taxpayers and consumers should always get value for money. As you know, Mr Gray, Chippenham is a small and beautiful market town, and one that is brilliantly placed for businesses to locate. However, that price should reflect the relatively small offering, which is not on a par with that from a city or a large town, although the charges as they are set—as they will be following these changes—suggest that it is. People will pay for what they get: the residents and employees of Chippenham are not asking to pay nothing, but they are asking for a fair parking and permit price.
One local resident who corresponded with me on bank holiday and Sunday charges wrote:
“The town centre is already struggling and this will only make things worse. You can go to Trowbridge, which has more to offer and where the parking is far cheaper...or as we now often do…go to Yate, which is free.”
That speaks volumes—we are literally driving our own residents out of our own town.
The disproportionate prices are killing our high street. Yes, the internet and changing buying behaviours are also key, but as Juliet Davenport, chief executive officer of Good Energy, one of the largest companies in Chippenham, said, this is making the “task harder”. It is something we simply do not need to do. When it is cheaper to get a return train ticket to Bath or Swindon than to park in Chippenham for the day, it is a no-brainer, and I know which most people would choose to go shopping.
I stress that I am fully behind cutting down on vehicle use, but we simply do not have the cycle routes and sustainable transport network to enable people to leave the car to go to work or to shop. That is needed first. I also argue that when buying the Gazette and Herald, at £1.15, costs less than parking, someone will probably go to Sainsbury’s or Morrisons just outside of the town, where parking is free, or to the Brookside retail park. When there, they might buy other things. The beauty of the high street is that when we go to buy one thing we see others, which helps to support the economy.
Let us not forget that the Portas review recommended that local areas should implement free controlled parking schemes that work for their town centres, and that we should have a new parking league table. Well, we have one in Wiltshire, but Chippenham is not playing well this season. Chippenham business improvement district, which represents 370 member businesses across Chippenham town centre, has been fielding a tide of complaints and concerns from its members on this topic. In fact, Sarah Andrews, manager of Mail Boxes Etc in Chippenham, said:
“The council need to be attracting businesses…not driving them away. I use Bath Road car park and the lines are not even drawn out clearly or maintained”.
I have had much correspondence on that. Although some of the money from charges is supposed to be reinvested in maintenance and the technology used in the car parks, that does not seem to be happening. Again, the argument is that there should be value for money and that people should pay a fair price. I reiterate that local residents are not against paying; they are against paying a charge that is not fair.
Our parking meters do not take card payments, but those in most large market towns across the UK now do. Our machines also do not give change, which means that someone who does not have the correct change is regularly losing 30p to 80p. The online service is patchy, given that we also have a number of notspots.
I must be clear: I fully appreciate that local councils use parking revenue to subsidise rural bus services, and I am not suggesting for one minute that we should cut those valuable services, which are lifelines for so many vulnerable, elderly and isolated people, but it is important to remember that we have lost a lot of our bus services in the last few years, so the policy is not working—and it is not sustainable, anyway. Plus, Sunday and bank holiday charges are expected to raise only £78,000 across Wiltshire, so they will cause more damage than they will raise revenue.
Damaging our high street to pay for rural bus services is not the answer. I have long argued for councils to look at smarter, more sustainable models such as regional bus contracts to fulfil their needs, rather than solely relying on parking revenue. In addition, and most importantly, starving towns of customers and encouraging businesses to leave serves only to reduce the business rate pot, meaning less money overall in the council’s coffers in the long term. That makes little financial sense.
A retort that has often been floated is that austerity is causing the increases and changes, but it is important to remember that the money has always subsidised bus services, so that argument does not really stack up. Other areas have introduced sensible parking systems, which speaks volumes—the evidence base is there. For example, Braintree introduced a parking charge of 10p after 3 pm, and 10p all day on Sunday. Figures show that more than 44,000 extra cars took advantage of that over the course of the year, thus increasing business rates and footfall in the town. Local authorities in Middlesbrough and other places have done similar things, and even Swindon, our neighbour, has found that reducing car parking prices for short-term and long-stay car parks has increased footfall. The list goes on.
We all know that difficult decisions have to be made in politics—indeed, we as MPs know that even more than most—and sometimes cuts and price increases are the only option. However, we must always have red lines and make decisions based on the will of the community and its interests, the local economy, and the long-term plan for an area. Those must be our priorities, otherwise what are we in politics for? Hiking parking charges again does not do that, but instead smacks of short-term thinking that is simply out of touch with the town, its residents and the business community. We have such wonderful potential to attract so many more businesses, especially given our location.
The consultation process was deeply flawed, which highlights my point. I have spoken to a number of businesses, the chamber of commerce, the business improvement district and multiple residents and community groups, all of whom had heard nothing about the consultation. The notice displayed on parking meters was, I think, in font size 10, and season ticket holders would never have gone to the meter to see it, even though they would be the most directly affected by the proposals. One constituent summed it up:
“I didn’t even know there was a consultation. What is the point of consulting when no one is given the chance to let the council know their views?”
As you might know, Mr Gray, I am somewhat passionate about parking—something many would find odd unless they lived in Chippenham. I invite the Minister to come to our wonderful town, which is nestled only 1 hour and 15 minutes on the train from Paddington, and sandwiched between Bristol, Swindon and Bath. It is a hub of engineering, technology and design, and has some of the leading companies in their sectors, such as Good Energy, Siemens, and MJ Church. We have a huge opportunity not only to retain those companies, but to build on them. However, the proposed changes to permits would particularly cripple the business community, because the staff spend in the retail offerings at lunch and in the evenings, and because a number of those businesses pay the permits for their staff.
For example, Alliance Pharma has said that if these changes are introduced it will simply leave, which would be devastating for our local economy. The managing director of accountancy firm Mander Duffill has said that it will stop its funding and encourage staff to park in residential streets. The business improvement district stated:
“Big businesses are threatening to leave the area if parking charges increase as much as is proposed…Town centres need a varied and robust offering”,
and that must be sufficient and well priced.
Let us be under no illusion: this is a very stark problem. The president of Chippenham chamber of commerce said:
“These changes will affect businesses in the town centre and will discourage people from visiting Chippenham.”
Little Waitrose has said that Sunday and bank holiday charges would mean closing its store. If all that happens, it will be devastating.
A Sunday charge has been suggested, but Sunday is the most profitable day for a number of businesses to which I have spoken, especially in the independent sector. In addition, a Sunday charge would make it harder for people to go to church and worship—churches in our towns do not usually have parking facilities, so this would basically be the introduction of a tax on worship across the constituency.
Even in Edinburgh, which has strong transport links, religious leaders warned that churches could close after plans to introduce parking charges on Sunday mornings were mooted. Our towns do not have the same transport networks or the available spaces that Edinburgh has—imagine the effect! Public holiday charges would particularly damage our restaurants and bars, and they would deter people in our community from going to community events.
Let me spend a couple of minutes talking about spaces—a self-explanatory yet infuriating argument. A common argument used to defend the car parking pricing structure is the regular high levels of occupancy. That is true, but it highlights a second problem, and one should not be used to justify the other. Indeed, high levels of occupancy are often part of the answer given, but that is easily solved: we could double-deck one of the car parks, with that in Bath Road being the easiest solution.
The lack of availability of parking spaces in Chippenham is acute and is pushing people into parking on residential streets, especially in Monkton Park, Wood Lane and other areas from where residents contact me daily to complain about the problem. The issue can prove dangerous for ambulances and service delivery, and even for rubbish collections.
Chippenham has about 31% fewer parking spaces than the national average. Trowbridge has more spaces and its population is 10,000 fewer. In 2013, the British Parking Association published “Re-Think! Parking on the High Street”. Its findings showed that there is a key relationship between the quantity of car parking and footfall in town. If we want our towns to grow and develop, and to support businesses, we need more parking spaces. We need to learn from neighbouring areas such as Cirencester, whose council is investing in car parking, rather than reducing funding, and has created 150 new spaces.
We need sustainable solutions, but also plans that are smart and consider business rate revenues and the importance of regenerating our towns, rather than short-sighted initiatives that will strangle Chippenham, especially if the season ticket price increase goes ahead.
One solution is to increase the number of car parking spaces, because if there were more spaces, revenue would increase—the high footfall has already proven that argument. Charging on bank holidays and Sundays is nonsensical in all areas of the constituency, and we need more spaces in Chippenham to feed the demand. In essence, we need a co-ordinated and considered parking strategy that prioritises local businesses—our job creators—and local people, helping to boost our towns and protect jobs. I therefore urge the Minister to consider conducting a best-practice review and producing a document to assist councils such as mine, which seem to need help on this matter.
It is a pleasure to serve under your chairmanship, Mr Gray, especially in this Wiltshire-themed debate.
Order. It might be helpful to remind the Chamber that although it is a Wiltshire-themed debate and I am a Wiltshire MP, I am here as Chairman and therefore I neither agree nor disagree with anything that might be said.
Point noted, Mr Gray.
I congratulate my hon. Friend the Member for Chippenham (Michelle Donelan) on securing this important debate. She has been an incredibly long-standing champion for parking in her local area. From the moment she arrived in this place—and before—not only has she advocated on behalf of her constituents, but she spoke passionately about the Parking (Code of Practice) Bill on which I had the pleasure of leading for the Government some time ago. That Bill would clamp down on rogue parking operators, and she made a powerful speech in that debate.
My hon. Friend is also a champion of small businesses, and in many debates she has spoken with authority and passion about the importance of supporting small businesses, just as she did today. I congratulate her on all those things, and I very much agree with the central premise of what she is saying: high streets and town centres are a crucial part of our local and national economy, creating jobs, nurturing small businesses, and injecting billions of pounds into the economy. Key to a thriving town centre and high street is accessibility, and effective parking is a key element of that. The ability of shoppers and visitors to park is integral to increasing and maintaining footfall on our high streets.
For many people, their day begins and ends with parking their car. Local authorities should analyse people’s need for parking provision, and adjust their strategies to support local need. Suitable parking provision is a matter on which local authorities must decide what is best for their area, as I am glad my hon. Friend acknowledges. As our communities are all diverse and unique, there should not be a one-size-fits-all approach, or a directive that comes from this office, and instead parking should be managed intelligently and be part of a wider holistic transport plan that is tailored to the needs of each local area.
The Government, together with key stakeholders and partners, promote the use of best practice and encourage the sharing of what does and does not work. We support the use of innovative techniques, such as flexible tariffs and the use of mobile technology, to create the most enjoyable experience for visitors to our towns and high streets. On that point, I am very happy to look at the Department’s current operational guidance, which it provides to local authorities, to see whether there is any merit in revisiting it and making sure that best practice is more widely shared, as was suggested by my hon. Friend. I will also have that conversation with the Local Government Association in my work with it on this topic and others.
Research by the British Parking Association and the Association of Town and City Management shows that flexible and intelligent tariffs are a factor in the success of parking management strategies for high streets and towns. Perhaps that is the type of research that my hon. Friend would like to be shared more broadly. Richmondshire District Council instigated free parking for the Tour de Yorkshire in May. That encouraged people to come and enjoy a fantastic event. As the peloton travelled through my constituency, it was a boost to local businesses, supporting community spirit.
Unrestricted free parking is not always a magic bullet: it can have a negative impact on town centre footfall if spaces are used more often by workers or commuters parking all day, meaning that spaces are not available for leisure users such as shoppers. There is a balance to strike. Intelligent tariffs, such as reduced parking charges or free parking, can be used effectively to incentivise people to visit their high street. My hon. Friend mentioned reducing the cost of parking to support local markets and events, or even during off-peak periods. That is a tool that the Government would urge local authorities to consider when developing high street parking strategies.
New technologies are supporting better access to high street and town centre parking. Technologies such as AppyParking give real-time reports of on-street and off-street parking availability, and they interface with payment apps used by local councils to offer a one-stop shop that allows users to find and pay for parking. Similarly, car parks are increasingly embracing technology to improve accessibility to customers. Larger parking companies, including NCP, now offer the ability to book spaces, giving motorists certainty that they can access high streets and economic centres conveniently.
My hon. Friend spoke clearly on the subject of high streets, and parking strategies that support our high streets and market towns are more important than ever. High streets are changing: we see it happening around us every week and the Government are committed to helping communities adapt. If a high street or market town centre is to flourish, local people, businesses and councils in an area need to work together to develop their own unique offer for the high street and town centre that resonates with the local community. It is not just about retail. People care about high streets because they are the centres of their community. Consumers are looking for a range of experiences when they visit a high street, from leisure to health services. I am pleased to say that the Government are taking forward a wide range of measures to support high streets and businesses.
In Chippenham, as my hon. Friend will know, there is a growth deal project to improve the train station. The project aims to enhance the station facilities and to develop the surrounding land for improved commercial and residential property, including increased car parking capacity. She was right to point out that local authorities should ensure that there is adequate provision for parking in town centres. My understanding is that, through that project, car parking capacity at the station will double, which I hope is welcome. In addition, there will be public realm improvements to signpost to the high street to improve access.
More broadly, since 2010 the Government have helped to create more than 360 town teams and have given more than £18 million to towns. That has included successful initiatives such as Love Your Local Market, and the Great British High Street competition. We also support Small Business Saturday UK. An estimated £748 million was spent with small businesses across the UK for Small Business Saturday UK 2017, which was up 4% on the previous year’s spend. I know that my hon. Friend, as a devout and passionate supporter of small business, will welcome those measures, and no doubt she has been involved in supporting them in her area. The Government also established the future high streets forum, which is chaired by the Minister for local growth, my hon. Friend the Member for Rossendale and Darwen (Jake Berry). The forum consists of developers, investors and retailers and provides leadership from the Government and the business community to support our high streets and town centres to adapt and compete in the face of changing consumer and social trends.
We also believe in celebrating success, including the wonderful work that communities put into their high streets, making them community hubs. The Great British High Street awards highlight some of the excellent examples of high streets up and down the country. Members may know that the last awards, in 2016, garnered more than 900 applications across 15 categories, and more than half a million people participated in the voting.
Because of the knowledge and insight with which my hon. Friend the Member for Chippenham speaks on matters relating to parking and the success of high streets, I have spoken to the local growth Minister, who has responsibility for high streets, and arranged for her to meet him at the earliest opportunity to convey her views on how parking should feed into the Government’s wider strategy on high streets. The Minister is working intently on the topic as we speak, and exciting things are to happen in the near future, so I urge her to meet him as soon as she can to feed in some of her ideas.
My hon. Friend asked about consultations, and I am pleased to tell her that the Government are developing the secondary legislation under the Parking Places (Variation of Charges) Act 2017. The Act provides for powers to simplify the procedure for lower parking charges. It also introduces a requirement for local authorities to consult businesses and communities on increasing charges, to ensure that local decisions are informed by local views. I know she will welcome that.
I think that we can all agree that parking provision is essential to making our high streets accessible, and to supporting them as vibrant economic centres. An intelligent and tailored parking strategy, taking account of local needs and designed to support high streets and town centres, should be central to local authorities’ transport plans. Suitable parking tariffs and, where appropriate, free or discounted parking are positive elements of such plans. We will continue to work with local authorities and key stakeholders to ensure that our high streets thrive in the future.
I end by echoing what I said in beginning: I thank my hon. Friend for securing the debate and for continuing the work that she does to champion her constituents, in this instance in relation to parking but, more generally, in the matter of supporting high streets and small businesses. She has been a tireless advocate of her constituents on those issues and I know that she will continue to press me and other members of the Government to ensure that they get the best possible deal.
Question put and agreed to.
Vaccinations: Developing Countries
[Mr Nigel Evans in the Chair]
I beg to move,
That this House has considered the economic effect of vaccinations in developing countries.
It is an enormous privilege to serve under your chairmanship, Mr Evans. I am grateful to have secured time to lead what will probably be a short debate, but I hope a positive and useful one, on a subject on which this Government and successive British Governments of different colours have shown leadership and genuine commitment.
I am delighted to see the Minister in his place. He has had a busy time in Westminster Hall in recent weeks and I almost feel reluctant to drag him back here again, but I hope he finds the debate useful and enjoyable. I know that I and other hon. Members here today look forward to hearing his usual wisdom and intelligence on such matters during his winding-up speech.
Today, nearly half the world’s population, including 1 billion children, live on less than $2.50 a day. More than 1.3 billion people live in extreme poverty, which means they survive on less than $1.25 a day. We get so used to reading those statistics that it is sometimes easy to forget what the reality means. It means families who go to bed at night hungry, wake up hungry and then go to bed the following night still hungry. It means families where people are incredibly blessed to have access to anything more than a very basic education, if any at all. These are people for whom daily work is repetitive, painful and dangerous, and who certainly cannot afford for themselves or a family member to fall sick.
We know that behind every statistic there is a human being. According to UNICEF, 22,000 children die every single day due to poverty. I do not believe that anyone in this House, or the wider British public, finds that acceptable. With many other countries, non-governmental organisations, private individuals and institutions, Britain is committed to working to end that poverty and to tackle the conditions and causes that trap people and whole nations in cycles of poverty.
As a Conservative, I believe strongly that free trade, markets and the rule of law play a powerful role in lifting nations out of poverty, but I also know that they cannot bring an end to some of the deep-rooted factors that perpetuate cycles of poverty around the world. That is why I am hugely supportive of the fact that as a nation, privately and through taxation, we provide large sums of money to fund interventions that seek to establish sustainable long-term solutions in the poorest nations. Britain is a leader in international development not just by virtue of the size of the budgets we make available, but through the expertise we deploy.
Is my right hon. Friend aware that the number of deaths from vaccine-preventable diseases is around 2.5 million to 3 million per year, but the number of people being inoculated has reached a bit of a plateau? Does not that say something about how we should focus our activities to establish better relationships with mothers, to reach hard-to-reach groups in Africa and Asia in particular, so as to take this further forward?
I have heard that said, and I will go on to refer to the importance of reaching the hard-to-reach groups. There is evidence that that is the way to get, to put it crudely, more bang for our buck on the vaccinations spend, because the threat of outbreaks of killer diseases is higher for some of those isolated communities and families than for those elsewhere. My hon. Friend makes a useful point early in the debate.
For the last decade and more, there has been a political consensus that we should spend 0.7% of our GDP on international aid and assistance. At times in recent years, it has felt as though that consensus is being tested; certainly, the all-out assault on our aid budget in some sections of the popular press has had a corrosive effect, at least among some members of the general public. The discussion in the popular press is overwhelmingly dominated by questions over the headline funding commitment and the suggestion, repeated over and over again, that aid money could be better spent on domestic priorities.
While those of us who support Britain’s role as a leader in effective overseas development should never tire of restating the basic case for aid, we should also do more to draw attention to specific examples where UK aid has helped to achieve profound economic and social improvements in some of the poorest countries on earth. One area of British leadership and expertise that has received too little attention is the funding, development and distribution of vaccines against killer diseases, and I will use this short debate to highlight that. Diseases are not just an unpleasant inconvenience for a country; they ravage a nation’s economy, directly affect its ability to grow and hold back economic development. Diseases keep poor countries poor.
It was a British doctor, Edward Jenner, who pioneered the first vaccine at the end of the 18th century, when he used pus drawn from a cowpox boil to inoculate a boy against the killer smallpox—a story that many of us will have learned about in our schooldays. More than 200 years on, British science and medical research still lead the world in improving the health of people living in extreme poverty. The eradication of smallpox was one of the great achievements of immunology in the 20th century. Smallpox was once one of the world’s most feared and deadliest diseases. Just 60 years ago, it was endemic in dozens of countries containing around 60% of the world’s population. By 1980, it had been eradicated, following a concerted international effort.
More recently, polio, once epidemic, has almost been eradicated too, due to concerted vaccination efforts worldwide. It has been reduced by 99% globally and the number of polio-endemic countries has decreased from 125 in 1983 to just three today. That is the culmination of a remarkable international effort that brought together Governments, NGOs and many private individuals. Rotary clubs around the world, for example, took this up as a campaign and raised enormous sums toward the effort through community-led fundraising. Full eradication of the disease is within reach, showing again what can be achieved when we harness political will, public support, large-scale resources and world-class science. I believe that that formula is the key to so many of the interventions that will make the world a better place in the years ahead.
British medical and scientific research remain world leaders in the fight against vaccine-preventable diseases. We are part of numerous initiatives and alliances, recognising that multilateral co-ordination and use of public resources to leverage in private sector funding provide a strong platform for this work at a global level. I am sure the Minister will update us on some of those initiatives in his winding-up speech.
I congratulate my right hon. Friend on securing the debate and on the speech he is making. On the issue of private company and pharmaceutical involvement in the development of vaccines, there has been a challenge, as we saw with the Ebola outbreak, in that this is not an area of great profit for pharmaceuticals; it is difficult for them to recoup their investment from lower-middle income countries. The pharmaceutical model needs more encouragement of pharmaceuticals to invest in development of vaccines such as Ebola. What would he say to encourage that?
My hon. Friend, who knows an enormous amount about this field, makes an important point. We are essentially dealing here with a case of market failure, where markets in the purest sense do not work in bringing through vaccine development and distribution in some of the poorest countries. I will talk about that later. I am about to talk about GAVI, the Vaccine Alliance; the model on which it operates is based on tackling exactly that problem, where there is not sufficient market demand in a poor country to create the financial incentive or pull for pharmaceutical companies to invest there profitably.
GAVI was created in 2000 and it brings together the public and private sectors with the shared aim of creating equal access to vaccines for children living in the world’s poorest countries. Britain was one of its original donors, and today we provide around 25% of its funding. There is also the global health fund, which was created to accelerate the end of HIV/AIDS, tuberculosis and malaria as epidemics, and for which UK funding averages around £360 million a year. Last year, the global health fund partnered with GAVI and Unitaid to provide around $50 million to pilot the world’s first malaria vaccine for young children in Ghana, Kenya and Malawi. That vaccine has been 30 years in the making in fighting a disease that still claims thousands of lives each year.
Back in 2015, the former Prime Minister, David Cameron, announced a plan to tackle the risk of global health pandemics that included the establishment of a UK vaccines research and development network. The network’s focus is to bring together experts from industry, academia, philanthropy and Government to invest in projects on vaccines and vaccine technology to combat diseases with epidemic potential, such as Ebola and Zika, in low and middle-income countries. Britain has led from the front in the global fight against killer diseases.
Vaccines are widely recognised as an important mechanism for controlling infectious disease outbreaks, although they are by no means the only mechanism. In fact, the supply of clean water, for example, is even more important in reducing the burden of infectious diseases. However, it is right that the international effort to develop and distribute vaccines against deadly diseases, of which Britain is a key part, is a strategic priority for our overseas aid policies, and it needs to remain so.
At the heart of that challenge is the market failure referred to by my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter). Outbreaks of some of the world’s deadliest diseases occur only intermittently, and often in the world’s poorest countries, meaning that there might not be a strong market incentive for the pharmaceutical industry to develop vaccines for such diseases.
The UK Government are taking concerted and co-ordinated action to address that market failure. For example, the UK has committed to invest £120 million between 2016 and 2021 in the development of new vaccines for diseases with epidemic potential, in line with the expert advice provided by the UK Vaccine Network. The UK is also helping to build laboratory capacity, surveillance networks and response capacity in low and middle-income countries to deal with the threat of antimicrobial resistance, which militates against the efficacy of drugs in treating diseases.
Some of the health impacts of vaccinations are widely known. For example, between 2010 and 2016, 109 million children were given the pneumococcal vaccine to protect against the main cause of pneumonia, saving an estimated 760,000 lives. In 2017, nearly 1 million people were vaccinated against cholera when an epidemic threatened South Sudan. Only 400 people lost their lives, thanks to an integrated approach that also incorporated surveillance, investigation of and response to cases by rapid response teams, the provision of clean water and the promotion of good hygiene practices. We could cite many other examples.
However, the wider economic benefit of vaccination programmes to the poorest nations has not been fully explored. More research and data are needed to help us to tell the full story of how and why investing in vaccinations helps to alleviate poverty and create stronger foundations for economic success. We certainly know that high out-of-pocket expenditures contribute to poverty, and healthcare can be one of the most significant such expenses for those living in poor countries. In 2010, the World Health Organisation reported that the cost of healthcare prevented many poor people from seeking treatment while simultaneously pushing 150 million care seekers into poverty each year. Put simply, poor people getting sick is likely to make them even poorer and to wreck their future earning potential. When that picture is repeated across families and communities, the consequences can be dire.
At economy level, we have evidence of the ravages that killer diseases can cause. For example, the 2014 Ebola crisis in west Africa disrupted international trade and travel, cost at least $2.8 billion in lost growth and killed more than 11,000 people in the three countries worst affected by the outbreak—Sierra Leone, Liberia and Guinea. It had a severe developmental impact in those counties, placing already weak health systems under extreme pressure, and had a negative impact on employment and school attendance rates.
In February, Health Affairs published a study, jointly authored by researchers at Harvard University and GAVI, that looked at the health and economic benefits of vaccinations, which it showed have a poverty-alleviating benefit, especially for the poorest people. Although the study raised some specific questions about the delivery of vaccination programmes, distributional impacts and the transition away from aid-funded programmes as countries move across the poverty eligibility threshold, it nevertheless helped to strengthen the case for continued investment in vaccinations and helped to give us a fuller picture of how good aid spent well does exactly what we claim it does—saves lives and reduces extreme poverty.
My right hon. Friend makes an important point. Aid initiatives are far too often evaluated purely on what they cost the Department or organisation giving the money, but cost-benefit analyses that look at the wider economic and long-term healthcare benefits are how we should evaluate aid spending in the future. Will he join me in urging the Department for International Development to look at using those more effectively in the future when looking at how it spends its money?
My hon. Friend makes an excellent point and I absolutely agree with him. That is exactly the kind of research and evidence that the Department and other bodies need to provide as those who believe in and support our overseas aid spending seek to make and restate the case for it over and over again. It is a powerful message with which to challenge sceptics and cynics.
In 2016, Johns Hopkins Bloomberg School of Public Health examined the projected return on investment in vaccinations between 2011 and 2020 in 94 low and middle-income countries. Looking only at the direct costs associated with illness, such as treatment and lost productivity, it found that the return for every £1 spent on vaccines was £16. When it expanded its analysis to look at the broader economic impact of illness, it found that the return was around £44 for every £1 spent. Such studies point to investment in vaccinations being an important means of improving health equity and reducing poverty, and to vaccinations providing value for money.
There is another aspect to this: investment in vaccinations in the poorest countries is also an investment in our own national security and resilience. I am always wary of the self-interest argument when it comes to defending overseas aid, and I think people generally see through those arguments, but polling evidence indicates that the general public understand that killer diseases such as Ebola do not respect borders and shows greater support for aid that focuses resources on tackling those diseases.
I will wrap up in a few moments, but I will close with several recommendations and observations, which the Minister will perhaps respond to today or follow up in writing at a later date. What efforts is Britain making, through its international partnerships and on its own, to improve vaccine coverage rates among the very poorest, ensuring that aid is spent on those who need it most and for whom it has the biggest benefit?
Distributional impacts should be taken into account when decisions are made about introducing or expanding vaccination programmes, and programmes accruing greater benefits to the poor should be prioritised over vaccines with less equity impact. Hard-to-reach families and people in isolated areas should be priority targets, as investment among those people significantly reduces the likelihood of disease outbreaks, which are more costly in lives and the money needed to respond.
Despite significant progress since 2000, today, nearly one infant in 10—that is, around 30 million children—does not receive any vaccinations, and more than 1.5 million children under the age of five die from vaccine-preventable diseases every year. Pneumococcal conjugate vaccines immunise against the most common cause of pneumonia, but they remain inaccessible to millions largely due to high prices, thus leaving behind the poorest and most marginalised children.
I thank my right hon. Friend for giving way again; he is being most generous with his time. Does he see a role for the Prime Minister’s trade envoys in this sphere? We are often assigned to countries that fall into the categories that he has been talking about and we have a seminar coming up on the healthcare applications of what we can do. I do not think that that should concentrate solely on encouraging healthcare companies into those countries; it should also look at how we can help to develop those programmes.
My hon. Friend makes an extremely important point. There are well established networks nationally in the UK and internationally, which bring policy makers together with academics, scientists and researchers who look at these issues. Surely within that there needs to be a role for people with a trade focus to link that investment angle into it as well. There would probably be a lot of interest, particularly among some of the private sector interests that are part of those networks, in seeing people such as Government trade envoys getting on board and helping with these programmes.
GAVI’s advance market commitment pilot, supported by the UK Government, has created a temporary but pioneering funding model that is changing the picture that I described—the poorest and most marginalised not getting access to vaccines—and it is doing so by changing the market. That funding mechanism can reduce the price of vaccines, such as the ones I have described for pneumonia, by creating an incentive for new manufacturers to enter the market and increase competition. The advance market commitment has succeeded in reducing the usual delay between introduction of a new vaccine in developed and in developing countries from 10 to 15 years to just three, reducing inequalities in access between rich and poor countries.
As we look to the future of programmes such as GAVI and the global health fund, which I was describing a few moments ago, we know that decisions will need to be made in due course about Britain’s ongoing support for those programmes. Those decisions will not necessarily be made anytime soon, but I urge the Minister and his teams, as they prepare for the replenishment conferences for GAVI and the global health fund, to bring together as much high-quality research and evidence as possible to enable them to make a strong, positive decision to continue funding those vital, life-saving programmes and, crucially, to explain that and show members of the public that it is a really good investment of our aid money for the future.
Investments in vaccines remain an enormously effective use of aid and contribute directly to achieving the sustainable development goals. Britain has a powerful track record to point to and we should do more to highlight that—not in the sense of being self-congratulatory, but to help to strengthen the broader case for overseas aid. Britain’s leadership in the field of vaccinations flows directly from the political consensus of a decade ago to expand our overseas aid budget and direct it towards some of the most difficult global challenges. The remarkable international effort on vaccinations underlines the importance of reforging that consensus and protecting UK aid.
It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on bringing this matter to Westminster Hall for consideration today. I am very happy to make a contribution to support his proposals and the views that he has put forward.
When I look at my own life and at my two beautiful granddaughters, I know that there is little in the world that I would not do to protect them and help them, because that is what a father and a grandfather would do. There is no medication that I would not fight for, and that is why I have been trying to help my constituents to secure medication for their ill child and why I continue that fight, with help from the relevant Ministers. This is not the day for that debate; this is a separate debate, but I wanted to illustrate how much it would mean to me if I had to have medication to try to save my child and what I would do to make that happen. I do not think that there is one person in this Chamber who would not have the same opinion; we would do everything within our power to make it happen.
I think of those children in Africa and, indeed, throughout the world whose parents and grandparents have nothing; they have little or no way to get the help that their children need. As fathers and grandfathers, our compassion for them is illustrated through our own personal beliefs and through our actions to help those who do not have the ability to help themselves. That is why I am supportive of aid going to make a difference to the health of people in those nations, and why I have always supported DFID’s commitment and the Government’s commitment to the DFID aid programme. It may not be popular with everybody, but let us think about what it achieves. I will illustrate in my contribution what it achieves. It achieves a massive amount of help for the people who need it, and I am very supportive of that.
Prevention is better than cure. We have been practising that for some time on our own shores. It is why our newborns, every three months, have new injections that make them scream and their mothers squirm with guilt for knowingly causing them pain. The short-term pain will prevent massive life-threatening illnesses in the future and is of course well worth it, as we all know through our own parenthood.
It is estimated that the aid that we give GAVI between 2016 and 2020 will fully deliver on the UK target to immunise 76 million children and save 1.4 million lives. If ever anyone needed motivation for doing this, surely that is it—76 million children immunised and 1.4 million lives saved through the programme that we do; it is done by our Government. That is a tremendous result for the amount of aid that we grant for immunisation purposes. The fact is that through prevention we save money and promote economic growth, in that a child who is prevented from having a debilitating illness will be able to attend school and eventually start work and be able to provide, rather than being a drain on their family.
The right hon. Member for Preseli Pembrokeshire explained that when sickness comes into a family, the opportunity to earn is restricted right away, and that affects the whole family. That is the truth. If there are multiple cases in a family—two or three children and perhaps a father who is unable to earn and a mother who is not well—all of a sudden the problem is compounded. It is so important to recognise that.
There has been massive success with immunisation in Africa, and that must continue. For it to do so, we must have adequate funding and perhaps work more with partners across the world to ensure that they also have—I say this very gently—the conscience and the compassion that they should have for those who are less well off. The Vaccines for Africa Initiative website outlines success stories. There are some; let us not pass this by and say that we have not done well, because we have, but we can do more.
In 1977, smallpox was eradicated after a successful 10-year campaign carried out by the World Health Organisation. It was through our efforts with our partners that we made that happen. Before the vaccination programme began, smallpox threatened 60% of the world’s population and killed every fourth person infected. That was the magnitude of smallpox. Vaccinologists are applying the lessons learned during the eradication of smallpox to control and eliminate many other vaccine-preventable diseases, so lessons learned have become good practice. That indicates how we have learned and how we intend to do better in the future.
The development of an effective vaccine against polio was heralded as one of the major medical breakthroughs of the 20th century. Currently, several different formulations of polio vaccine are in use to stop polio transmission. Poliovirus infections have fallen by more than 99%, from an estimated 350,000 cases in 1988 to 416 reported cases in 2013. Let us dwell on that for a second: a 99% reduction resulting from an immunisation programme. If that is not good news, there is something wrong with what we are listening to. That is what can be done if we have the commitment, the effort, the finance and the drive to make it happen. Our Government have been involved in that programme; our Minister and his Department have been involved in making it happen.
More than 5 million people have escaped paralysis since the launch of the Global Polio Eradication Initiative in 1988 by the World Health Organisation and its partners, of which we are one. Polio has been eradicated in the western hemisphere, and many other countries have been declared polio free. Again, that is tremendous news. As at the end of 2012, polio was endemic in only three countries in the world. The website to which I referred states:
“According to the GPEI, if enough people in all communities are immunized, the polio virus will be limited to spread and it will die out.”
That has to be our goal: the complete eradication of polio. High levels of vaccination coverage against polio must be maintained to stop transmission and prevent outbreaks. The GPEI is constantly assessing the optimal use of the different vaccines to prevent paralytic polio and stop poliovirus transmission in different areas of the world. We have come so far, but we need to be vigilant to ensure that there is no comeback and that polio is totally eradicated.
Measles vaccination has not had the same success, but it is still a fantastic success story. It resulted in a 75% drop in measles deaths between 2000 and 2013 worldwide. During the same period, measles cases dropped by 58% from 853,500 down to 355,000—again, a massive drop and good news. The World Health Organisation recommends that every child receives two doses of the measles vaccine. I remember receiving it as a child in the 1960s quite well. I remember the swelling on my arm and the pain, but my dad stood next to me and made sure I had it done. He was always there to comfort me as well.
According to a report by the Measles & Rubella Initiative, African countries have made the most progress—fantastic progress. They reduced measles deaths by 86% between 2000 and 2014. That is another fantastic, well recorded success story of what we have done. Such stories ensure that we continue aiming for the eradication of these diseases.
Meningitis is a serious public health problem among 25 countries in the African meningitis belt. Every one of us, as elected representatives, has had constituents who have had meningitis in their family. We know of the blotches, the faintness, the dizziness and the tiredness. We know that if our child or grandchild has those symptoms, our knees knock with worry about meningitis, but in African countries meningitis is very real. It extends from Senegal, on the shores of the Atlantic ocean, to Eritrea along the Red sea. Meningitis is prevalent right across that stretch of Africa.
Half a million people living in that region are at risk from epidemic meningitis each year. In 1996, there was a particularly devastating meningitis outbreak, which caused more than 250,000 cases and 25,000 deaths. That was mainly due to the Neisseria meningitidis group A, or Men A, as it is referred to. Within 10 years, the Meningitis Vaccine Project developed an affordable Men A conjugate vaccine. The vaccine reduced the incidence of meningitis of any kind by 94%—is that not fantastic?—following a mass immunisation programme in Chad, in west Africa. If we can immunise, we can stop the disease, deaths, pain, suffering, sickness and illness, and that has to be good.
I am enjoying listening to the hon. Gentleman’s speech. He captures well the sense of awe and wonder around some of the achievements that have been notched up in recent decades. Does he agree that we should be telling some of those stories in the school curriculum? As we think about Britain’s future global role, we should think about how to inspire a new generation of young British scientists to dedicate their education to going the last mile to finally eradicate some of the diseases he has been talking about.
The right hon. Gentleman is absolutely right. Too often, we focus on the negativity of life. Here is a positive thing we are doing. Others will speak afterwards with great knowledge of the subject matter and I look forward to their contributions. I am greatly encouraged by the young people of today, who have an eagerness and willingness to help others. That encourages me, as a grandfather and as the Member of Parliament for Strangford. I see talent, interest and compassion among young people today, who want to help. We should have this as part of our curriculum and education programme, so that we tell others and put a bit of pride back into what we do. That is why I am being positive in my speech. Sometimes we do not tell our story, but we should.
On the subject of inspiring young people, is he aware of programmes such as the ONE campaign’s youth ambassadors programme, which links in young people with an interest and uses them to tell a story back to their own peer group about some of these exciting developments?
I am aware of that programme and the right hon. Gentleman is right; it is a smashing programme and can do great things. It can help young people to develop their personalities and their characters in a way that is good for everyone. That is the ultimate, perfect society that we all wish to live in. There are many young people who inspire us and give us great courage for the future.
I am blessed to have a great many church organisations, mission groups and individuals in my constituency of Strangford, both in Newtownards and across the whole constituency, which carry out individual projects, mostly in Africa and some in eastern Europe. They do smashing rebuild programmes for schools and medical centres. They do water aid projects as well. That is a subject for a different debate, but when it comes to ensuring that people do not have health issues, it is important that they have access to clean water. I pay credit to the churches and missions in my constituency, which do tremendous work, unselfishly giving their time, money and effort, and—I will say as a Christian—their prayer time as well. Those things are very important in trying to reflect the opinion of a constituency and how people think—how generous people are when it comes to giving, both financially and physically.
The work I have referred to must continue. We must play our part in helping other nations to fund this work for the good of humanity. It works, because we work together. How many things in this world can we do when we do it together, with a passion, belief and drive that we are all committed to? I say gently that we have to put our own people first, but that we also have to help ourselves outside our boundaries. I believe this is a great way for us to play our part. The inspiring programme that the right hon. Member for Preseli Pembrokeshire referred to is something for our young people to do—so many people want to do something. Our Minister and our Government are committed to doing the same. We should be encouraged by what we are doing, but we know that we have more to do. We have a plan of action in place—a plan of action that is working and that can do more.
It is a pleasure to serve under your chairmanship, Mr Evans. I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate.
We must not underestimate the value of human capital to the future of developing countries. Around the world, year on year, countries are still losing the talent and potential of countless people, including children, whose lives are tragically cut short by vaccine-preventable diseases. The vaccines for these diseases exist: if we want those countries to reach their fullest economic potential, ensuring people there have access to vaccination must be one of our highest priorities.
Vaccines are vital in every sense of the word. They ensure that as many people as possible—children and adults—live and enjoy healthier lives throughout the world. Healthier people are more able to go to school and work, and to drive the growth of their countries’ economies, intellectually or physically. The logic and the evidence are clear: vaccines are a powerful force for economic development and wealth creation.
A recent Harvard study projected that vaccines will prevent 36 million deaths by 2030 and prevent a further 24 million people across 41 developing countries from sliding into poverty. Those are staggering and extraordinary figures. They show why it is so important that vaccination is at the top of the UK Government’s agenda for international development. We must not fall into the trap of thinking that health and economy are separate; in my view, they are inextricably linked. As the Harvard evidence shows, a healthy society can evolve to become a wealthy society.
I am delighted that UK Governments of various colours in the past decades have recognised the value of vaccines. In 2016, the Government invested £116 million of bilateral aid towards vaccination in developing countries. That was alongside £81 million in multilateral funding for vaccine-related areas. That funding, and all the Government’s past funding for vaccination in developing countries, has helped to save millions of lives, kept people out of poverty and brought prosperity to developing countries around the world. We as a nation must sustain those efforts and ensure that the projections in the Harvard study are achieved and, where at all possible, exceeded. Given the past record, I am confident that the UK Government will be a major contributor, and I hope that they can work with partners around the world to ensure universal access to life-saving vaccines.
In addition to improving access, we must also work on research, as has been mentioned, to develop new and improved but cost-effective and more easily accessible vaccines for developing countries and their citizens. The fruits of such research will go a long way towards ensuring that we banish once and for all the diseases that wreak tragedy around the world and hold back the economies of so many developing countries. Everyone, irrespective of what circumstances they are born into, should be able to live a life that is as healthy and productive as possible, and they should have as much access as possible to basic healthcare facilities, including vaccines.
It is shameful that people, especially young children, are still dying needlessly or suffering in large numbers from diseases that are so easily preventable by vaccination. I am thankful and proud that the UK Government recognise the health and economic importance of vaccination and are working tirelessly to build the healthier world that I am sure we all wish to see. The UK foreign aid budget has many critics, but, despite the odd failing, we can be extremely proud that the provision of vaccines is a key component of UK aid. I hope the Minister will confirm that such efforts will continue and might even expand.
At this point, I declare a slight interest. I am a Rotary International member, but I will congratulate Rotary here in Great Britain and Ireland, and their partners—including the Bill Gates foundation—for the Purple4Polio project, which, as was mentioned earlier, began way back in 1985. When that was introduced with such foresight all those years ago, there were 125 polio-endemic countries, with hundreds of new cases every single day throughout the world. Today, as was said before, only three polio-endemic countries exist, with some 22 reported cases in all last year. That is something that Rotary can be proud of, so well done to Rotary for its mission and its strapline “End Polio Now and Forever”. It is almost there and can see the finishing line.
Finally, we mentioned the successes of UK individuals in promoting vaccines. In fact, we are not talking about a vaccine, but an antibiotic. Sir Alexander Fleming, a Scottish physician and Nobel prize winner, was born in Ayrshire—not quite in my constituency, but in a neighbouring one. The provision of the antibiotic called penicillin was a success. We should be proud of this country’s achievement and our research and development. As was said earlier, we need to promote that more and encourage our young men and women as they come through life to look back at what their forefathers or forebears did. They can equal and, I am sure, better that as we enter into a new era of new technology, and medicines must surely be a part of that new technology. Artificial intelligence is way beyond me, but we can tap into genomics and we need to share it for the benefit of the people we share the planet with.
It is a real honour to speak after my hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) and the hon. Member for Strangford (Jim Shannon), and especially after the fine opening speech from my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). With my speech we have all four nations of the United Kingdom in a row, which is great because that shows how important it is for our country to support vaccination around the world.
In 1853, this House passed the compulsory Vaccination Act against smallpox, which was a great step forward, but that was 50 years after it could have happened. If we look at the literature of the first decade of the 19th century, we find references to the use of the vaccine in England and Australia. I know that for a fact because in the letters of a relative of mine, Mrs Lefroy, the wife of the Reverend Lefroy, who was the next-door neighbour of the Reverend Austen, the father of Jane Austen, we find that she was in correspondence with Dr Jenner as early as 1800. Her obituary in the Reading Mercury in 1804 stated:
“When the vaccine inoculation was discovered, she soon convinced herself of its beneficial effects, and having learned the process, actually inoculated upwards of 800 people with her own hand.”
So there is an instance of how something was available in 1804, yet it was not until 1853 that the House made vaccination compulsory. How many lives could have been saved had it been compulsory for 40 or 50 years before that? That is why there is no excuse not to make vaccinations available, when they have been tested and proven to be efficacious and safe, as soon as possible.
As chair of the all-party group on malaria and neglected tropical diseases, I will restrict myself to the introduction of the first malaria vaccine, RTS,S, which has been developed by GSK in partnership with many others—GAVI and PATH—with huge support from the British and US Governments and many others. It is now being piloted in three countries in Africa and we are already seeing the impact. It is not a perfect vaccine. There will be considerable improvements, but it ensures that children—it is particularly for children—have more chance when inoculated.
Combined with impregnated bed nets and, if the disease is contracted, with better medicines than we had 20 years ago, the vaccine will give children much more chance of survival. That is clear evidence of something of huge benefit to the children in the developing world in countries where malaria is still endemic. Let us not forget that it still kills 450,000 a year, most of them children. The highest prevalence is in Nigeria, the Democratic Republic of the Congo and the countries of east Africa as well as many other countries around the world.
I conclude by saying that investment in vaccination, as my right hon. Friend the Member for Preseli Pembrokeshire has said, has an enormous return: I think he said $45 per $1 invested; that is the kind of figure that I have seen. We will not go wrong if we continue to back investment in vaccines for diseases that affect the poorest, just as Dr Jenner did not go wrong in promoting his vaccine, even though it took this House 50 years to ensure it was available to everybody.
As ever, it is a pleasure to serve under your chairmanship, Mr Evans. I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for bringing us not only this important debate, but light and truth to an area that is often overshadowed and neglected. Although there was a lack of consensus in Prime Minister’s questions today, I think we agree in this Chamber that vaccines have brought some of the greatest public health successes of the past century.
According to the World Health Organisation, immunisations currently prevent approximately 2 million to 3 million deaths—more than half the population of Scotland—per year, and also prevent a large range of illnesses and disabilities associated with them. As we have heard, vaccination programmes do not just save lives; they also have a positive impact on increasing economic productivity.
Widespread access to vaccines in developing countries offers many benefits, including direct medical savings by preventing illness, and also through indirect economic benefits such as educational attainment, labour productivity, cognitive development, higher income, savings, and of course investment. I could go on. To put it simply, healthy children are more likely to attend schools and become economically productive adults. Vaccinating a baby benefits everyone in the long run. As all of us in the Chamber will note, we have all been through the vaccination process and are of course eternally grateful for it.
A Harvard University study published in February in the journal Health Affairs modelled the health and economic impact of vaccines for 10 diseases in 41 developing countries. It showed that increasing vaccination rates in developing countries could reduce poverty. The co-author of the study, GAVI, the Vaccine Alliance, reported that in addition to saving millions of lives, vaccines will help prevent 24 million people in some of the world’s poorest countries from slipping into poverty by 2030 because of the cost of medical treatment.
Previous studies have estimated that every dollar invested in vaccines—we have heard this today already—saves $16 in terms of healthcare costs, lost wages and lost productivity due to illness. There are even greater savings of $44 per $1 spent if the wider benefits of people living longer and healthier lives are taken into account. That all highlights the important role that vaccination has to play in reducing poverty.
We all welcome and support the good work that the Department for International Development is doing on vaccines. Through its funding of GAVI, it provides immunisation against life-threatening diseases around the world. Since its establishment, GAVI has reached 500 million children and prevented more than 7 million deaths in the process. Save the Children has estimated that UK investment in vaccines saves the life of a child every two minutes—something that we should all be proud of. However, I have done a little research in the House of Commons Library, and it came as surprise to find figures showing that UK bilateral aid spent on vaccination-related programmes dropped by almost half between 2013 and 2016. The UK Government must therefore refocus, and increase funding for vaccination-related programmes if we are to continue to save lives.
There can be no doubt that organisations such as GAVI play a vital role in ensuring the successful roll-out of existing vaccines, but we must also recognise that there is an urgent and pressing need to research and develop new vaccines—not only for emerging epidemics, but for those that already exist and have devastating consequences for human life and economies in developing countries.
HIV is a case in point. Notwithstanding progress, AIDS remains one of the world’s leading infectious killers, and new HIV infection rates remain stubbornly high—so high, in fact, that we are off track to meet the sustainable development goal targets. There is a consensus, which includes Bill Gates, Michel Sidibé and Peter Piot, that we will end AIDS only with an HIV vaccine. Does the Minister therefore agree with the experts that it is only by investing today in research and development on those new technologies that we can deliver on our promise of a tomorrow free from AIDS?
It is vital that poorer countries and emerging economies be helped to secure fair vaccine prices to increase coverage and save lives, so I ask what steps the Minister’s Department is taking to ensure vaccine price transparency and to promote competition within the market to increase affordability. The failing market was touched on earlier in the debate. Finally, how is the Department approaching the upcoming replenishment period and strategy review with GAVI?
Vaccines save lives. They can transform countries, offering opportunities for poverty reduction and greater social and economic development. We must ensure that existing life-saving vaccines are introduced into countries where people need them most, and support the innovation needed to develop new vaccines.
It is an honour to serve under your chairmanship, Mr Evans. I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate, and for his passionate speech. He raised important concerns about the challenges faced in the developing world, talked about the many lives saved in vaccination programmes and their huge economic impact on society, and made the argument for UK aid.
I thank other hon. Members who took part: the hon. Member for Strangford (Jim Shannon), who always speaks passionately about the work done by DFID and its partners, and its global impact; the hon. Members for Ayr, Carrick and Cumnock (Bill Grant) and for Stafford (Jeremy Lefroy), who said it was important to invest in vaccines for the poorest, as a priority; and the hon. Member for Dundee West (Chris Law), who spoke about progress and challenges in AIDS vaccination.
It is estimated that between 2 million and 3 million lives could be saved every year if vaccines against preventable diseases were given to some of the world’s poorest people. It is a truly shocking statistic that in Africa alone more than 30 million children under the age of five suffer from preventable diseases every year, with, tragically, more than half a million resulting deaths. Let us be clear: we are talking about the completely avoidable, unnecessary death of children. It is a cruel and heartbreaking fact that pneumonia, an entirely preventable disease, is now the biggest infectious killer of children under five, claiming almost a million lives a year.
Should further evidence be needed to steel our resolve to increase vaccination coverage, the fact that two children die of pneumonia every minute must surely provide it. Only 7% of children in the world’s poorest 73 countries receive all 11 World Health Organisation-recommended vaccines. Should the political will and resources exist to vaccinate those children, hundreds of thousands of lives would be saved, but, unfortunately, the proportion of the world’s children who receive WHO-recommended vaccines has stalled over recent years. Please will the Minister outline how the Government are working to address equal access to vaccines to ensure coverage of even the most marginalised children?
In an effort to address that stalling effect, in May 2017, Health Ministers from 194 countries, including the UK, endorsed a new resolution on strengthening immunisation to achieve the goals of the 2012 global vaccine action plan—a road map to prevent millions of deaths through more equitable access to vaccines by 2020. The resolution urges countries
“to strengthen the governance and leadership of national immunization programmes, and improve monitoring and surveillance systems to ensure up-to-date data guides policy and programmatic decisions to optimize performance and impact.”
Given the skills and experience of the Office for National Statistics and the importance of statistical analysis in implementing vaccination programmes, will the Minister update colleagues on how best practice is being shared with action plan partners?
In saying that vaccines
“don’t just save lives, they also have a huge economic impact on families, communities and economies”,
I am using not my own words, but those of Dr Seth Berkley, chief executive officer of GAVI. I fully subscribe to the argument that reducing health costs that would otherwise be incurred in treating serious illnesses has a positive effect on economic productivity. The concept is clear: according to a study published today in Health Affairs, vaccines will help to prevent 24 million people in some of the world’s poorest countries from slipping into poverty by 2030. Dr Berkley says:
“A healthy child is more likely to go to school and become a more productive member of society in later life, while their families can avoid the often-crippling healthcare costs that diseases can bring”.
The statistics prove the economic value of vaccinations to some of the poorest countries in the world. According to the WHO, in Africa alone, vaccine-preventable diseases result in a significant annual economic burden estimated at some $13 million. We have already heard about the recent research by the Johns Hopkins Bloomberg School of Public Health, which demonstrated that in every case where vaccines helped to prevent death or disability in 94 low and middle-income countries, including the world’s poorest nations, there was an estimated short-term return of more than 16 times on every $1 invested in vaccines. The figures show even more of an impact when wider economic benefits are considered, with the return on $1 dollar of investment increasing from 16 to 44 times.
From an economic perspective, UK aid funding for vaccinations simply makes financial sense by reducing the likelihood of disease outbreaks, the response to which is far more expensive. The economic benefit, however, will be under threat if current vaccination levels are not maintained. The WHO estimates a possible negative impact of some $59 billion over the next decade. It is crucial that Governments around the world recognise that vaccinations are one of the best buys for health and economic impact, and that they also recognise the risks to the economies of the poorest nations on earth if we are complacent about immunisation. With that in mind, will the Minister reaffirm the Government’s commitment to maintaining multilateral vaccine-specific funding?
Sustainable development goal 3 requires an end to preventable child deaths, and vaccinations have a crucial role to play in achieving that, yet we know that the cost of medicines is pushing another 100 million people a year into poverty. When Ebola broke out in west Africa in 2014-15, the lack of an available vaccine resulted in devastating consequences for local populations and understandable panic in capitals around the world. The lack of a viable vaccine was due not to a lack of research, as several candidate vaccines had been developed by Governments for biodefence purposes, but to a simple market failure.
The Government are a founding member of, and have supported generously, the GAVI pneumococcal advanced market commitment. AMCs are designed to accelerate the development of key vaccines and increase their availability in developing countries. A third supplier has entered the market to supply pneumococcal conjugate vaccine, the most expensive vaccine in the GAVI portfolio. It is now selling the vaccine at roughly 40% of existing prices. Given that success, what steps are the Government taking to promote competition within the wider vaccines market so as to increase affordability? Will the Government support Save the Children’s call to extend the AMC mechanism to allow funds to be spent beyond 2020? Finally, will the Minister outline the Government’s plans for future working with GAVI?
As we have heard from colleagues across the House, vaccinations not only save lives, but help to support healthier, more productive populations in the poorest countries in the world. They empower countries’ economies to grow and prosper, while allowing aid money to be spent more effectively on proactive rather than reactive programmes.
We are rightly proud of this country’s commitment to supporting vaccination programmes in some of the world’s poorest nations, but it is crucial that such programmes are maintained for the long term. Immunisation must remain a political priority, and the UK should continue to be a global leader in immunisation. Vaccines form an intrinsic part of universal health coverage, and I hope the UK Government will publicly champion the principles of united healthcare within their bilateral and multilateral support, while increasing technical and financial support to help to strengthen primary healthcare systems.
Child mortality will not be ended without a comprehensive, accessible and enduring vaccination programme. I take this opportunity to reaffirm Labour’s commitment to ending preventable child deaths, and to the sustainable development goals more widely, and I am sure the Minister would like to associate himself and his Department with that.
It is a pleasure to serve under your chairmanship, Mr Evans, and I thank all colleagues for taking part in today’s debate and for the way it has been handled.
I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for the way he introduced this debate—indeed, others have mentioned the passion with which he spoke. Such passion is appropriate for the leader of Project Umubano, and for a number of years he has played an integral part in the Conservative party’s social action programme in Rwanda and Sierra Leone. He spoke about the non-partisan nature of this debate, and that was emphasised by contributions from the hon. Members for Dundee West (Chris Law) and for Birmingham, Edgbaston (Preet Kaur Gill). There is no issue between colleagues in the House on this subject, and we are rightly proud of successive Administrations of all shapes and colours, and the work that has been done in making the United Kingdom a global leader in vaccination.
My right hon. Friend drew attention to the history of vaccination and the United Kingdom’s involvement in it. He mentioned our position in contemporary medicine, research and development, and spoke about looking forward to the next stage. As the long title of the debate suggests, he then moved from that historical perspective to the wider economic benefits of vaccination, and emphasised a link that is not made often enough.
The hon. Member for Strangford (Jim Shannon) spoke, as he always does, with passion, commitment and great wonder about the success of these programmes. Sometimes there is immense concentration in the press and media of everything that is wrong, but in the world of medicine, lives have been saved by finding opportunities to invest in things that have led to a reduction in diseases that were once all too common, including in our own childhoods, let alone 50 or 100 years ago. Medicine has made a remarkable contribution, and the hon. Gentleman was right to mention that. He encouraged us all to keep going on the eradication of polio, and he can be sure that we will.
My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) linked access to our success and the importance of research, and he spoke with pride about his involvement with Rotary. I, too, am a Rotarian—I am an honorary member of the Rotary club of Sandy in Bedfordshire. I recently met Judith Diment, who is chair of the polio advocacy taskforce. Rotary has done remarkable work on that issue, and we pay tribute to everything it has done over the years.
My hon. Friend the Member for Stafford (Jeremy Lefroy) contributes a remarkable amount to this House through his work on malaria and in east Africa, and he related the importance of vaccine research in those areas. The hon. Members for Dundee West and for Birmingham, Edgbaston had some questions, and if I may, I will return to those at the end of my contribution—on this occasion I actually have some time, so I will be able to answer one or two of the questions, although not all of them.
Let me bring this back to basics and the practice of vaccination. My dad is a doctor, and I am old enough to have needed injections for polio when I was very young, as that was before the wonderful man developed his oral vaccine on a sugar cube. My dad had to give me my polio injections, and I hid under every available table in the surgery because as a small boy I was terrified of needles. He will be tickled pink to know that I am responding to a debate on vaccination today, bearing in mind the struggle he had to get near me with a needle. I am eternally grateful that he did, because those vaccinations protected me—as they did many others—from the ravages of polio. My dad is still with us, so he will be able to get a copy of this debate and realise that all those days from long ago are still remembered fondly by his son. This issue is that personal. The hon. Member for Strangford referred to the moment of pain caused by a mother when a child gets vaccinated, although she knows that it will do so much good in future, and today we are remarking on the remarkable good that is done.
The number of children dying each year almost halved between 1990 and 2012—a significant achievement. Nevertheless, around 375,000 children still die every year from diseases that could be easily prevented by vaccines. As we all agree, the challenge is most acute in the developing world, where nearly 1 million children die every year from pneumonia. In 2016, 7 million people were affected by measles, resulting in nearly 90,000 deaths. It is therefore right that the UK works through organisations such as GAVI, the Vaccine Alliance, the Global Polio Eradication Initiative and the World Health Organisation to tackle vaccine-preventable diseases.
Clearly there is a strong moral case for the UK and its international partners to support developing countries to tackle the scourge of vaccine-preventable disease—the contributions to the debate have shown that we all understand that. However, the economic case for vaccination—a subject that my right hon. Friend the Member for Preseli Pembrokeshire homed in on—is also unquestionable. Vaccinating against childhood diseases is one of the most cost-effective health interventions. As colleagues have said, for every £1 spent on immunisation, there is a direct saving of £16. Those savings include healthcare costs, lost wages and lost productivity due to illness. Vaccination is a key driver towards reducing childhood mortality globally, and vaccines administered in 41 of the world’s poorest countries between 2016 and 2030 will prevent 36 million deaths.
Vaccination provides economic benefits many times beyond the direct costs of vaccinating children, which is why it is such a high impact investment. As the hon. Member for Dundee West reminded us, if we take into account broader economic and social benefits, the return on investment rises from £16 to £44 for every £1 invested. The wider economic benefits of vaccination are vast.
By preventing illness, whole families are freed from crippling medical costs, which in turn can have a substantial effect on poverty reduction. Unexpected healthcare expenses push about 100 million people into poverty every year, making medical impoverishment one of the main factors that force families below the World Bank’s poverty line. A vaccinated child is more likely to be healthier, live longer and have fewer and less serious illnesses. Healthier and more productive populations trigger a virtuous cycle that results in enormous economic gains. Vaccinated populations therefore form a more productive labour force, resulting in higher household incomes and economic growth.
There is a clear positive relationship between immunisation and education. Vaccines support cognitive development, so children learn more and have more opportunities. In the Philippines, for example, routine immunisation was found to raise average test scores among students. When translated into earning gains for adults, the return on investment was shown to be as high as 21%. In Bangladesh, measles vaccination was found to increase school enrolment of boys by 9%.
There is also an effect on the next generation. Children of educated parents are more likely to be vaccinated and healthier. In Indonesia, for example, child vaccination rates are just 19% when mothers have no education, but increase to 68% when mothers have at least a secondary school education.
Additionally, the decrease in child mortality as a result of routine immunisation can have a significant impact on a country’s economy by reducing fertility rates. Since more children are expected to survive, families have fewer children. A lower birth rate has significant effects on child and maternal health, as well as a broader economic impact, not least in the role that it might play in the development of women’s opportunities in their societies. Up to 50% of Asia’s economic growth from 1965 to 1990 is attributed to reductions in child mortality and fertility rates. Overall, the savings that come from the need to pay for fewer medical interventions, combined with a healthier, more productive labour force and demographic dividends, create more economically stable individuals, communities and countries.
Let me turn to some of the questions asked by hon. Members. First, we are very proud to be the largest investor in GAVI, the Vaccine Alliance. The UK recognises the strong and convincing economic arguments for vaccines as being a clear development best buy. That is why we, through the Department, have supported GAVI since its inception in 2000.
Since then, our investment has supported the immunisation of 640 million children and has contributed to the prevention of 9 million deaths from vaccine-preventable diseases. Those are remarkable figures that, as my right hon. Friend the Member for Preseli Pembrokeshire said at the start of the debate, and as we have all said, we do not talk about nearly enough. If someone is looking for a demonstration to put to the people of the positive advantage not just of UK aid, but of any country’s development budget, and of why they are useful, vaccination is possibly the single most obvious example that they can give.
Between 2016 and 2020, the UK’s support to GAVI will directly enable 76 million children to be vaccinated and will save 1.4 million lives. Investment through GAVI represents a particularly high rate of return. The £16 direct return for every £1 invested, which I mentioned earlier, rises to £18 in the 73 developing countries that GAVI supports. Overall, between 2001 and 2020, in GAVI-supported countries, the long-term gains associated with a more productive workforce are expected to add up to £260 billion. Every year, as a result of vaccinations, each of those 73 countries will avoid more than £3.5 million in treatment costs.
Critically, GAVI not only delivers vaccines on an impressively large scale, but works to bring down the cost of vaccines to make them more affordable for the world’s poorest countries. Since 2011, GAVI has enabled a 43% reduction in the cost of immunising a child, from $33 to $19. That price cut means that UK taxpayers’ money goes much further and delivers a much greater impact, and brings those products within the reach of poorer countries’ Governments, which was a key point made by the hon. Members for Birmingham, Edgbaston and for Dundee West. Our support for GAVI is explicitly designed to ensure that Governments in developing countries gradually increase their contributions until they eventual transition away from aid, which the price cut also helps with.
In response to the point made by the hon. Member for Dundee West about bilateral funding, some time ago the United Kingdom made a decision to put its support for vaccination into GAVI, because it has a wider reach than our bilateral funding programmes. That is why the contribution to GAVI has been so strong: it allows us to reach more children. We continue to offer bilateral support to health systems to make them more sustainable. Of course, GAVI will work in some of the areas where the UK is also working directly through the Department.
On the need to ensure that vaccinations support equity, the financial benefits of vaccines are mostly accrued by poorer households, which are more susceptible to financial shocks from unexpected healthcare expenses. Immunisation programmes reduce the proportion of households facing catastrophic out-of-pocket health expenses. GAVI ensures that the right people are reached through the three equity measures in its monitoring framework, which track vaccination coverage by geography, poverty status and the mother’s education. We work with GAVI to ensure that the vaccinations are reaching the poorest, as my right hon. Friend the Member for Preseli Pembrokeshire said in his opening remarks. GAVI is designed to do so, and we will continue to work with it on that.
Will the Minister address the question asked by several hon. Members about why the levels of inoculation seem to have plateaued internationally? Is that correct and, if so, what might be the underlying causes? I hope he will forgive me if he had planned to come on to that in the next few moments.
I cannot give my right hon. Friend the figures, but let me say two things. First, in some areas, there has been a reaction against vaccination. Earlier this year, two vaccinators in Pakistan, a mother and a daughter, were killed. The Pakistani Government have worked with others to try to change the nature of the programmes, but that is a reminder of how brave some health workers have to be. In some cases there is a supposed religious objection to vaccination, and in others it can be more direct.
Secondly, yesterday, in another context, I mentioned in the House the issues that are being faced in Yemen due to the de facto Houthi authorities in the north of Yemen, which have refused permission to transport vaccines into Sana’a. That has meant that 860,000 people in the north have not received vaccines, while hundreds of thousands of people in the south have benefited from the campaign. The Department is working closely with the World Health Organisation and through diplomatic channels to help unblock the use of vaccines in Yemen, particularly in Houthi-controlled areas.
In some areas, the cause is conflict; in others, it is an ideological response or a false fear that has been spread. In some areas, vaccinators are somehow seen as being connected to the west, and it is easy for false stories to spread. All those things need to be combated, and perhaps one way to do that is to ensure that there are more local programmes, because it is essential that the effort of vaccination continues, as all hon. Members have said.
In particular, we cannot afford to lose the chance to eradicate polio, and we have to be very careful. The rise in measles may be connected to some false stories about vaccines. There appears to be a market for people who want to spread those false stories, not only in developing countries but in places such as the United States. Fake news has to be combated. The outstanding research in this area makes it very clear that the benefits of vaccination far outweigh any potential medical consequences, of which there are some from time to time, but in a very tiny proportion of people. It is essential that the public grasp that.
Let me return to other remarks by hon. Members. We have talked about how we can ensure that future research is done in areas where the economic benefits of a vaccine may be questionable and about what help we can give. That is not an easy issue to tackle or to be absolutely certain about, because the specific diseases market is highly variable and pharmaceutical companies need to know that they will make a sufficient profit for a new market initiative to be possible.
However, things can be done to assist with that. GAVI’s advance market commitment, which the hon. Member for Birmingham, Edgbaston mentioned, has done significantly well, and we have provided finance to support it. It now produces 150 million doses of the pneumococcal conjugate vaccine annually at a price of $2.95, which is significantly lower than market price. GAVI also provided £390 million as an advance purchase commitment for the Ebola vaccine, which enabled Merck to make 300,000 doses available. In the Democratic Republic of the Congo, that vaccine was implemented 13 days after the Ebola outbreak was announced.
There are ways in which the international community can help to ensure that some of the costs are borne collectively, but that is not always an easy process, so there will always be issues about how to develop the vaccine and how to pay for it. The Government are well engaged in dealing with those.
I will conclude and offer my right hon. Friend the Member for Preseli Pembrokeshire a chance to respond. As well as the support for GAVI, the UK invests in vaccines in developing countries in a range of ways. We are a leading supporter of eradicating polio, as has been mentioned. That investment brings economic returns of many times the magnitude, and a stronger global economy that will benefit us all.
Hon. Members also mentioned Ebola. The handling of the recent outbreak contrasts with that of the previous one. The WHO and the Department supported the development of two Ebola candidate vaccines during the 2014 outbreak that have been brought through into the most recent one. These are some examples of how we—through DFID, GAVI and bilateral programmes to strengthen and sustain health systems—have been able to put vaccination at the very top of the agenda, as the most cost-effective way of dealing with health problems.
I conclude by acknowledging the dedication and hard work of all the health workers around the world, who often put their lives at risk to deliver vaccines to children, even in the hardest-to-reach places; by saying that I am very proud of the United Kingdom’s investment in vaccines in developing countries, and I say that on behalf of us all as this is a non-party issue; and by saying that saving the lives of children and improving the lives of families in some of the world’s poorest countries is simply the right thing to do.
Finally, I will say that the exchange between the hon. Member for Strangford and my right hon. Friend the Member for Preseli Pembrokeshire about the inspiration that can be gathered for this work and the promotion of it through schools, so that people are more aware of what we can do, is the way that we should finish today. Sometimes this place has to deal with difficult subjects that occasionally colleagues fall out over—not this one. This is something we can agree on and we can all use our own influence to ensure that a new generation of young scientists, young doctors and young health professionals are inspired to work, not only in this country but throughout the world, knowing how important vaccination will continue to be.
Thank you, Mr Evans, for calling me to speak again.
By way of wrapping up, I will just thank the Front Benchers. I thank my right hon. Friend the Minister for that very useful update he has given at the end of this debate. I also thank the other Front-Bench spokespeople, the hon. Members for Dundee West (Chris Law) and for Birmingham, Edgbaston (Preet Kaur Gill).
This has been a very useful debate; I have certainly learned a tremendous amount. I am grateful to all the colleagues who have spoken or made interventions, and for the spirit in which they did so. As my right hon. Friend the Minister said, this is an issue on which there should be no differences at all between the parties. It can bring this House together as something to unite behind, not to be self-congratulatory, but to recognise the remarkable progress that successive British Governments have helped to achieve internationally, in partnership with so many other international bodies and other Governments.
I will finish by asking the Minister to urge his team at the Department to keep briefing us and updating us on these developments. Do not keep Members in the dark—not that he does at all. However, there is a powerful story that we all want to tell in our constituencies about this issue, and it would be incredibly helpful if he and the NGOs that his Department works with provided us with as much information as possible.
Perhaps I might make an immediate commitment. I will write to all colleagues here, on the back of this debate, to set out some of the facts that have been raised by us all and, as it were, do it in the form of a factsheet, which they will then have available to give to constituents. I am very grateful to my right hon. Friend for the suggestion.
I am grateful to my right hon. Friend the Minister for that response.
Finally, Mr Evans, I thank you. As ever, you have chaired this afternoon wonderfully. Diolch yn fawr.
As someone who has witnessed the vaccination, via the Department for International Development, of many babies under a tree in Uganda with the International Development Committee, may I say what a privilege it has been to chair this debate?
Question put and agreed to.
That this House has considered the economic effect of vaccinations in developing countries.
Terminal Illnesses: Continuing Healthcare
[Siobhain McDonagh in the Chair]
I beg to move,
That this House has considered the Government’s policy on continuing healthcare for people with terminal illnesses.
It is a pleasure to serve under your chairmanship, Ms McDonagh, in this important debate this afternoon.
I rise to speak today as a member of the Public Accounts Committee, which in November last year held an inquiry into the National Audit Office’s report on NHS continuing healthcare funding. Although this particular issue concerns health policy in England and I am, of course, an MP for a Welsh constituency—you can probably tell that from my accent, Ms McDonagh—I secured this debate in my capacity as the secretary for the all-party parliamentary group on motor neurone disease, in which I have worked closely with the Continuing Healthcare Alliance, an organisation comprised of 17 different charities, including the Motor Neurone Disease Association and Parkinson’s UK.
Many of those charities’ long-held concerns were addressed in both the NAO report and the PAC inquiry, and we were all hopeful that the Government would finally address the many issues surrounding continuing healthcare, and rectify them to make the lives of those who suffer from ongoing or terminal illnesses that little bit easier. However, I am saddened to be standing here today to say that, judging by the Government’s response to the PAC report, that was wishful thinking. The PAC set out a number of recommendations for the Government with regard to continuing healthcare, which the Government have yet to fully take on board. That is disappointing, but unfortunately—I am sad to say—not surprising.
One of the key issues highlighted by the NAO and the PAC was how the clinical commissioning groups—CCGs for short; they are responsible for administering and approving eligibility for continuing healthcare—are not being held to account for delays in assessments and eligibility decisions. In 2015 and 2016, a third of patients had to wait for longer than 28 days for a decision on their eligibility for continuing healthcare. The Government said in their response to the PAC report that 80% of assessments are conducted within 28 days, and that they will regularly monitor the effectiveness of the assessment procedure. That percentage—80%—sounds huge, but I wonder and worry about the other 20% of patients who are not receiving such assessments.
However, the NAO report demonstrated that existing mechanisms are not effective in addressing CCG performance. Across the CCGs, the percentage of patients judged as eligible for continuing healthcare, or CHC, ranged from 41% to 86%, which suggests there are differences in the way each CCG interprets the national framework for eligibility. The Government are yet to address this variance and provide more concrete proposals for changes to the process.
What is more, the Government seem more concerned with hitting the 28-day decision target rather than with assessing whether judgments are accurate and in line with the national framework. They must be careful to ensure that the quality and accuracy of decisions are not compromised by the drive to meet targets. Although it is important to ensure that patients are not kept waiting too long for a decision on their eligibility, we must make sure that those in need of help are not deemed ineligible, so as to hit waiting time targets.
The PAC also recommended that the NHS and the Department of Health and Social Care do more to raise awareness of the availability of CHC among patients, their families, and health and social care specialists. According to the CHC Alliance, two thirds of people do not find out about CHC until very late in their journey in the health and social care system. Furthermore, a 2016 survey of MND patients found that although 30% of respondents were receiving CHC, 33% were not aware that it existed. As many will know, motor neurone disease is particularly cruel; most people who are diagnosed will pass away within 18 months of diagnosis.
The Committee asked the Government to update it on how awareness of CHC has been raised among the relevant groups. The Government have said they will carry out joint work with the NHS to understand awareness gaps and how the process for determining CHC eligibility is understood, with a plan of action ready by summer 2018. As of this month, June, patient organisations are still waiting to be approached regarding levels of CHC awareness.
Another area in which the Committee required more clarification from the Government was on how they plan to improve the quality of the assessment tools and staff and assessor training. The Committee has also asked the Government to be clear on how they plan to monitor the impact of changes in reducing variations in eligibility rates between CCGs. Rather than give a detailed response, the Government instead chose to refer to the recent changes made to the national framework. They also said they would carry out the work providing more insight into CCG variations by autumn 2018, but it remains to be seen whether they will keep to that deadline.
The CHC Alliance has reservations about the changes. The eligibility assessment tools include the decision support tool, which is a checklist for eligibility. That tool lies at the root of the eligibility issues with CHC, yet only minor cosmetic changes have been made to it. There are also issues with the definitions of severe and priority conditions in some care domains. They can lead to the impression that CHC eligibility is for terminally or morbidly ill patients only, which is simply not the case. Such misinterpretations of the framework contribute to the very low conversion rate between the checklist and those receiving eligibility. The rate was only 29% across 2015 and 2016, according to the NAO report.
There are further concerns surrounding the Government’s proposals to stop CHC eligibility decisions being made in acute or specialised hospitals. That will seriously disadvantage those patients in need of long-term care in such settings. For example, a spinal injury patient in a specialised spinal hospital could be at risk of losing out on CHC funding if the Government choose to remove eligibility assessments and decisions from those institutions. I urge the Government to seriously reconsider that proposal, as it does nothing to help those in desperate need of CHC funding and causes unnecessary worry and concern for their families, friends and carers.
I mentioned the inconsistency of approval rates for eligibility across CCGs. The Committee recommended that the NHS should establish some sort of oversight process to ensure that eligibility decisions are made consistently within and across CCGs, as well as setting out criteria to identify and investigate outliers in eligibility decisions so as to generate a greater understanding of the variance in eligibility outcomes.
I congratulate the hon. Gentleman on securing this debate. There is no guiding framework for continuing healthcare in Northern Ireland, which makes getting a CHC assessment particularly challenging. It is unlikely to be offered or mentioned by someone’s local health or social care team, but it is definitely available. Does the hon. Gentleman agree that we need a UK-wide change in how CHC is managed for those who are terminally ill, instead of expecting phenomenal charities such as Macmillan to stand in the breach?
I thank the hon. Gentleman for his intervention; he is always insightful. My experience is the same as his. Most people do not know about CHC. That is not just an issue for the Northern Irish, Scottish or Welsh Governments or whoever; it is a UK-wide issue. We are dealing with people who are near the end of their time on this earth, and we have a duty not just as politicians, but as human beings, to ensure that their time is as comfortable as humanly possible. I think the whole House would support us on that.
The Government’s response has been to try to dodge responsibility by saying that the NHS already has assurance mechanisms to hold non-compliant CCGs to account. Those are mechanisms that the NAO report demonstrated are not effective in eliminating unwarranted variation when it comes to eligibility decisions. The NHS has not been addressing CCGs’ non-compliance with the national framework. The Government need to help and encourage them to do so to ensure that accurate decisions are made and that people in need of help are not left struggling without it.
Perhaps most concerning of all, there has been little substantive stakeholder engagement with patient organisations representing those affected by inconsistencies and variation in eligibility outcomes. In my discussions with a range of organisations, that is the No. 1 problem. They do not believe they have been asked what they think of how the present system is working. The Government did not lead a full public consultation for the national framework revision, and the closed engagement process has left patient groups feeling unhappy, ignored and out of the loop. The revision was conducted over a very short period, with a very select group of consultees. It is little wonder that the changes made to the framework are so unsatisfactory given that those in receipt of care have not been consulted on what changes need to be made.
All the pledges to improve the framework and the eligibility process mean nothing if the changes are not properly funded, so it was disappointing to see the Government provide such a vague breakdown of the costing of efficiency savings in their response to the PAC inquiry. They expect to reduce spending by £855 million, yet no details are provided as to how those large cost savings will be achieved without limiting either eligibility or the support provided. The Government believe they can save £122 million by improving the commissioning of care packages and a further £293 million by allowing CCGs to locally deliver improvement initiatives. However, those savings in practice may refer to cuts to care packages. We need further assurance from the Government that care packages and support will not be sacrificed to save money. Sometimes, there are issues wider than saving money.
Overall, the Government’s response to the NAO report and the Committee inquiry is disappointing and lacklustre. As with many aspects of the Government’s health policy, it seems that they view the revisions to the framework as a money-saving project, rather than considering the detrimental impacts the changes may have on the patients and their families who are in desperate need of CHC funding. It feels as though the Government have learned nothing from the report and have taken none of the recommendations on board. I am sad to say that that seems typical of the Government in so many areas.
The response was not good enough. Further clarity is needed on the issues. I have mentioned that the changes need to be set in concrete. Through my role on the all-party parliamentary group for MND, I have met several MND patients. I have to pay tribute to the bravery of those who are suffering with MND, as well as their families. I pay tribute to their passion to help others. If anyone wants to see humanity in action, I ask them to go along to a Motor Neurone Disease Association meeting. What strikes me is that it is not about them or the sufferer; it is about the people who come after them.
All my life, I have counted myself as a socialist in the belief that I have as much responsibility for the person sitting next to me as I have for myself. I honestly believe that I see that all the time in the Motor Neurone Disease Association. I can only pay tribute to those people from the bottom of my heart for the work they do for families and for carers. Even after the ones they loved have gone, there are still people out there fighting for those with MND. I know the Minister is compassionate; I have often been very impressed with her work in this Department and as a Minister for Justice in a previous life, and I know she cares. I hope that today she will show that the Government she represents really care about these people.
It is an absolute pleasure to serve under your stewardship, Ms McDonagh. I start by congratulating the hon. Member for Islwyn (Chris Evans) on securing this important debate on NHS continuing healthcare. I pay tribute to him for the inspiring work he does on the all-party parliamentary group on motor neurone disease. I also pay tribute, like him, not only to those who suffer from this very cruel illness, but to those who provide the unstinting care and compassion to loved ones who go through that horrible experience.
One of my first experiences as a Member of Parliament was helping a constituent who had motor neurone disease to get her continuing healthcare package to kick in during a very difficult part of her life. I am completely aware of the people to whom the hon. Gentleman refers. I met a few carers for people with motor neurone disease earlier this week, as part of carers week. As ever, I was completely overwhelmed by their incredible sense of duty and the commitment that they give to those for whom they care.
The hon. Gentleman is right to ask for further clarity on the issues he raised, and I hope that today I can provide him with some reassurance on those issues about which he is most concerned. We know that continuing healthcare is provided to some of the people with the highest and most complex health and care needs in the country, and they deserve our support. Of course, the nature of the situation presents some challenges. The hon. Gentleman made some valid points about the current issues facing the NHS continuing healthcare system, including some of the issues raised in the Public Accounts Committee earlier this year. I will set about trying to address them all, and will drop him a line afterwards about anything that I miss out.
Decisions about NHS continuing healthcare are important because they have a very big impact on people’s lives. It is right that there is a careful and considered decision-making process in place. The hon. Gentleman talked about people not being aware of continuing healthcare, which was a really good point. It is fundamental that we raise awareness of continuing healthcare and ensure that those who are entitled to it during a particularly difficult period of their lives claim it. Work on that by NHS England and the Department of Health and Social Care is under way, and will be announced later this summer, as we have confirmed to the Public Accounts Committee.
My Department is responsible for the NHS continuing healthcare national framework, which the hon. Gentleman mentioned. An updated version of the framework was published on 1 March, and will be implemented on 1 October this year. The revised framework follows an extensive period of external engagement with stakeholders and patient representative groups, including the Continuing Healthcare Alliance and those working within the NHS and local government. The update incorporates a new structure, which is intended to provide clarity, reflect legislative changes such as the Care Act 2014, and include minor clarifications on some policy areas. It is really important to underline that none of the changes is intended to alter the eligibility criteria for NHS continuing healthcare or the extent of the service provided by the NHS.
The hon. Gentleman mentioned progress and the next steps on the NHS continuing healthcare assessment tools. As set out in the Government’s response to the Public Accounts Committee, my Department is working very closely with NHS England to review the NHS continuing healthcare checklist tool. That work is due to report by this autumn. However, we know that those changes alone are not enough to deliver all the necessary improvements, particularly on some issues such as the variation in eligibility criteria, which the hon. Gentleman highlighted. That is why we are working very closely to support NHS England with their NHS continuing healthcare improvement programme.
It is important to be clear that there will always be some variation in NHS continuing healthcare eligibility rates. Such variation can be due to a wide variety of reasons, including the age dispersion within the local population and variation between geographical areas in health needs. It is really important that NHS England is working to understand the unwarranted variation in eligibility rates between clinical commissioning groups, and helping them to apply the national framework more consistently. NHS England is also developing a pilot to test the feasibility and the cost of running a sustainable case-level audit of eligibility decisions across clinical commissioning groups, to provide that kind of assurance on consistency and fairness in the provision of NHS continuing healthcare, which we all know is utterly vital.
Another area that NHS England is working to improve is the length of the NHS continuing healthcare assessment process. A quality premium is now in place to incentivise clinical commissioning groups to carry out more than 80% of assessments within 28 days. There is, of course, also a fast track for those who need the service much quicker. Clinical commissioning groups with the highest numbers of delayed cases are required to establish improvement plans to set out key milestones and planned measures to improve.
The hon. Gentleman will be pleased to hear that progress is being made. The latest quarterly data shows that in the last quarter of 2017-18, 66% of assessments were completed within 28 days. That is still not good enough, but it is up from 58% at the beginning of the year. The number of clinical commissioning groups delivering the expected standard of 80% within 28 days has gone up from 52 to 87 so far this year. As I have said, there is steady progress, but more to do.
The hon. Gentleman raised the target of £855 million of efficiency savings that we are planning by 2021. It is really important that I make it absolutely clear that that is not a cut in spending, but a reduction in growth in spending. Spending will continue to rise in real terms, with a projected budget increase of almost 4% a year, and of 20% between 2015-16 and 2020-21. I think he will agree that that rate of growth would be the envy of many other areas of health and care spending—indeed, of many other Departments.
The eligibility threshold for NHS continuing healthcare has not changed. The assessment of needs by a multidisciplinary team, as well as the primary health need test that we set out in the national framework, must be adhered to when deciding on continuing healthcare eligibility. No financial considerations or efficiency programmes alter that. Any planned efficiencies are not predicated on changes to eligibility or on limiting the care packages available. Clinical commissioning groups have an absolute responsibility to ensure high-quality standards of care, and any reduction in the growth in spending must not affect that.
It is vital that we continue to work closely with NHS England, local authorities and key stakeholders to ensure that we keep improving the system for those who need it. I know that there is still work to do, as the hon. Gentleman has highlighted, but I hope that he can appreciate that the Government and NHS England are aware of the challenges that we face in the provision of NHS continuing healthcare. I hope that he is aware of my personal dedication to getting this right. I am confident that the steps we are taking to improve the system are the right ones and will deliver an improved experience for patients, families and carers.
Question put and agreed to.
Immigration Rules: Paragraph 322(5)
Before I call Alison Thewliss, let me say that I think it has become obvious to everybody that there might be quite a strict time limit on speeches.
I beg to move,
That this House has considered paragraph 322(5) of the Immigration Rules.
To assist those who wish to intervene or speak later, I will speak about the background to this issue and about recent case studies from my constituency, and then I have some questions for the Minister. That may help them tailor their remarks.
I pay tribute to the members of the Highly Skilled Migrants campaign group, who have now held four large demonstrations outside this Parliament and have been extremely active on social media. They have self-organised and worked hard to give this issue the attention it deserves. I also want to thank Amelia Hill at The Guardian and Kirsteen Paterson at The National, who have given this issue first-rate coverage.
For more than a year at least, the Home Office has been issuing highly skilled migrants, many of whom entered the UK via the tier 1 general route, with notices detailing that their leave to remain application has been refused. It seems that many of those decisions have been predicated purely on the applicants’ alleged poor character in the wake of amendments to their tax returns and income statements. In making those decisions, the Home Office has deemed highly skilled migrants a threat to national security under paragraph 322(5) of the immigration rules, which refers to
“the undesirability of permitting the person concerned to remain in the United Kingdom in the light of his conduct (including convictions which do not fall within paragraph 322(1C), character or associations or the fact that he represents a threat to national security”.
That is highly inappropriate.
It is important to note that paragraph 322(5) is discretionary: it should be for the Home Office to determine whether to use it, based on the merits of each individual application. It also places the burden of proof on applicants, rather than on the Home Office. From my constituency casework, and from listening to highly skilled migrants who have contacted me, I have seen that that is regimented, calculated decision making. Individuals’ applications are refused whenever they supply details of different incomes, or seek to amend information in a tax return, often on the instruction of an accountant.
None of the migrants to whom I have spoken has any issues that should cause them to be considered a threat to national security, but the very invoking and recording of this paragraph could compromise their future work and travel. After all, what country would wish to accept somebody who had been refused by the UK on such grounds?
When an application is refused, it is incumbent on the applicant to challenge the decision through the courts. In many cases, the judge has overruled the Home Office’s decision, finding it entirely disproportionate. A number of refusals appear to have been predicated on nothing more than the individual making an honest mistake. As far as Her Majesty’s Revenue and Customs is concerned, when the correction is made, the case is closed. Some of the sums involved in those corrections are only a few pounds—sums of £1.20 and £1.60 have been reported—and many were from many years ago. For one of my constituents, it was from 2010. Many people have asked me, “If there was a problem back then, why didn’t it affect my status at that point?”
I raised this matter with the Financial Secretary to the Treasury at Treasury questions in May, and he confirmed that
“people should clearly continue to make appropriate changes to their tax returns. I reassure her and the House that Treasury Ministers and HMRC officials are working closely across Government—particularly with the Home Office—on the issues that she raised in order to ensure that we get these matters right.”—[Official Report, 22 May 2018; Vol. 641, c. 710.]
I congratulate the hon. Lady on bringing this matter to Westminster Hall for consideration. Does she agree that some of those affected are doctors—highly skilled, highly valued members of our medical society—in the Ulster Hospital in Northern Ireland and in hospitals throughout the United Kingdom of Great Britain and Northern Ireland? We must ensure that those who are living, working and making a difference in our communities, and are pouring into them, are able to continue to do that without the undue stress of overly onerous immigration procedures, caused by simple non-criminal mistakes on tax returns. Perhaps some in this House have made such mistakes themselves.
The hon. Gentleman is absolutely correct. Many of the people I have spoken to are in shortage occupations and are much valued. They are the very people we wish to attract to this country to work.
Several highly skilled migrants in my constituency of Slough have had their Home Office applications refused due to the heavy-handed application of paragraph 322(5). Many who contacted me have lived in the UK for more than a decade and have British-born children, and are now in a state of despair. One told me:
“I have given my best years, and contributed to the growth of Britain. My private, family and professional life are established here. I am a law-abiding citizen and have never faced criminal charges of any kind.”
Does the hon. Lady agree that it is very difficult to respond to somebody in such circumstances, and that the Tory Government’s hostile environment must end?
I agree. That chimes with many of the stories I have heard. We must think particularly about the impact on children, who do not know why their parents are not allowed to work all of a sudden. Some people have not been able to access medical care for their children, which is deeply worrying.
The hon. Lady is aware of my constituent, to whom this rule was applied. In many ways, the biggest impact was on his wife, because NHS Scotland removed her access to medical services, even though she was eight months pregnant. Although NHS Scotland and Home Office staff have very difficult jobs in highly stressful situations, mistakes can have serious consequences that are hard to unpick.
I thank the hon. Gentleman for that intervention. I had cause to meet his constituent, and I was so concerned about his situation that I wrote to the Cabinet Secretary for Health and Sport in Scotland to ensure that all GP practices in Scotland understand that they cannot just take people off their lists in such circumstances. Certainly, women who are eight months pregnant need medical care and should not lose it due to Home Office errors.
Will the hon. Lady give way?
If the right hon. Gentleman lets me make a wee bit of progress, I will appreciate it.
It seems extremely odd to me that HMRC could be satisfied, but that the Home Office should treat the same behaviour as akin to deception at best and terrorism at worst. If I, the Minister or anybody in the Chamber made a legitimate, in-time correction to our tax return our lives would not be turned upside down—as the hon. Member for Strangford (Jim Shannon) said—and we would not have the threat of removal hanging over our heads. It is said that half a million British citizens amend their tax records every year within the one-year grace period that HMRC allows. Others, of course, do it outside that period. None of those people is treated as a criminal under paragraph 322(5). The only reason highly skilled migrants are treated in that way is their nationality. As far as I am concerned, that is discrimination under article 8.
In one case that was reported to the press, an individual who had come to the UK via the tier 1 route went through this process. He presented a letter from his accountant detailing that the error was the accountant’s fault, and a letter from HMRC explaining that it was satisfied that the individual was not acting dishonestly, but the Home Office refused to exercise any discretion or change its original decision. In another case, after an individual’s tax information was scrutinised by three different appeal courts, no evidence of irregularities was found. The individual’s lawyer noted that the Home Office had made a basic accounting error by confusing his gross income with his net income.
The hon. Lady is making an excellent speech. That is one of the key points: Home Office officials do not know anything about tax, and they are making decisions about people’s lives based on their tax information. This responsibility has to be taken away from them today.
I absolutely agree. Paul Garlick QC, who specialises in extradition and human rights law, said:
“The system is crippled by not having enough people to do the work while those who are there don’t understand the basics”,
as the right hon. Gentleman says. Paul Garlick continued:
“They genuinely have no idea of the difference between tax years and accounting years, or what is a legitimately deductible expense. My feeling is that since Theresa May’s announcement of a ‘hostile environment’ for immigrants, caseworkers have been told to look for discrepancies that could form the basis of an accusation that the applicant is lying, because that’s the quickest way to dispose of an application”.
The hon. Lady is making an excellent case. HMRC has wide-ranging powers and can prosecute when there is any whiff of criminality, but it has not done that in any of these cases because these are mistakes or small errors of the kind that many of us have made.
The hon. Lady is absolutely right. If there were a case to answer, HMRC would have something to say about it.
This issue affects not just those individuals. Last week, I spoke to Saleem Dadabhoy, who employs 20 people in his business. If his situation is not resolved, all those people will be made unemployed and a British company worth £1.5 million will be wound up. That is economic madness, and the Home Office should carefully consider the impact of its target-driven culture on the economy, especially in these uncertain times.
I have spoken to many highly skilled migrants, all of whom have been distressed about the way they have been treated, having given the best years of their lives to the UK and made their home here. We should thank that group, not put them out.
My constituent, Omer Khitab, travelled to the UK on a study visa in 2006 and completed a master’s course in international marketing at the University of the West of Scotland in 2009. He then worked in journalism and marketing before starting his own business. His accountants completed his tax return on his behalf, and the errors they made inadvertently were rectified by my constituent a few months later. Omer has written documents from his accountants to prove that, and accepting full responsibility for the errors.
Omer also suffers from depression and anxiety, a factor that his GP and his psychiatrist have acknowledged would, without doubt, contribute to his inability to spot an administrative error in his tax return. His stress is only worsened by the ongoing nature of his case. He said:
“I feel this is my home, I thought my children will grow up here, I will get married and die here. That letter saying I don’t belong to this place, I am a threat to national security, it’s very hard to swallow”.
It is hard for all of us to swallow.
Does the hon. Lady agree that, given the association of that rule with terrorism provisions, the implications are wide ranging and can leave a black mark on people’s lives forever? It is difficult for them ever to get a visa or to work anywhere worldwide after all that.
Absolutely. That is why there needs to be a proper and thorough inquiry into the use of the provision. If Home Office staff are being advised to use it as a means of refusing people, they are clearly not looking at the full implications or the possible long-term impact.
My constituent Omer was refused leave to remain on the basis that he had deceived the Department, which goes entirely against all the evidence that he provided. Furthermore, HMRC has written to Omer to say that its staff are satisfied that he has acted honestly and not tried to deceive anyone.
Mustafa Ali Baig also travelled to the UK to study in 2006. He obtained master’s degree in international marketing from the University of the West of Scotland in 2009. Mustafa and Omer have a lovely picture of the two of them graduated—two young boys with all their lives ahead of them, and Omer certainly is almost unrecognisable from that picture, given the stress he has been under lately.
Before coming to the UK, Mustafa obtained a bachelor of law degree at the University of the Punjab, and he has master’s degree in political science. He has worked in business development, marketing and public relations, and has undertaken voluntary positions for civil rights and social action groups. He also volunteers to run a current affairs radio show. He is very much part of the Glasgow community, and he has gone above and beyond to advocate for his friends.
As far as I am aware, there is no question as to Mustafa’s integrity, but, due to that immigration rule, as the hon. Member for Ealing Central and Acton (Dr Huq) has just pointed out, he has been told that he is a questionable character and a threat to national security—as a result of correcting a small error on his tax return in 2010. That is no basis on which to remove someone in such a way. His case goes to the immigration tribunal on 20 June—that proves that decisions on such cases are still being made, despite what the Home Secretary has said.
Mr Sanjeev Pande travelled to the UK in 2005 on a student visa and graduated from Glasgow University in 2008. He started his own IT business and was also employed as an IT consultant and project manager—a lucrative career. Most recently, he had been leading an IT project for a bank in Scotland, before his right to work was removed by the Home Office.
Mr Pande applied for ILR—indefinite leave to remain—under long-term residency rules in 2017. He had been in the UK for 12 years at that point. He hired an accountant, but his tax return submissions were subsequently questioned by the Home Office. As a result, Mr Pande made attempts to change his accountant and to rectify the errors, but the Home Office has continued to pursue him on the basis that officials believe him to be dishonest.
Most distressingly, Mr Pande was detained at Heathrow airport on his return from a family holiday in 2017. His passport and BRP—biometric residence permit—were confiscated by immigration officers, removing his right to work. That has a huge impact on the family finances, because he has a mortgage and other commitments. Judges found in his favour at both first-tier and upper tribunals. Indeed, paperwork from the first-tier tribunal states that in some detail—it is a long quote but it is worth putting it on the record—with the judge saying:
“The refusal letter is I think confusing in itself in relation to the Appellant’s income, but I have to say that I found both the Appellant and his wife to be credible witnesses. I do not think that they have acted dishonestly. The Appellant relied on the advice of an accountant. He was entitled to rely on that advice and whilst he is under a duty to check information, it is entirely unfair to expect him to have a level of accountancy and tax knowledge accorded to professionals in this field... He was clear that he sought clarification from the accountant but eventually, when he was unable to get satisfactory answers, he changed accountants… It also appears to me that the Appellant was unfairly treated by the Home Office. His passport was retained during the first appeal proceedings. As a result he was unable to find employment since employers refused to employ him without the benefits of his passport. He was, I think, therefore prejudiced and I consider that this matter should be taken into account in the question of proportionality.
Taking all of the above into account, therefore, I do not consider that the Appellant has acted dishonestly. He may have been misguided, but that is a different matter and I consider that it would be disproportionate in the circumstances to expect the Appellant and his wife to leave the UK, particularly as they own property in the UK, they pay tax in the UK and they have spent a considerable number of years here.”
The last case I want to highlight is that of a female constituent—I do not want to name her, because her children are at school in my constituency. She travelled to the UK from Nigeria and has been refused leave to remain in similar circumstances to the others, under paragraph 322(5) of the immigration rules. She legitimately made changes to her tax return, but the Home Office is again putting forward the argument that she has tried to deceive the Department and it has refused her an administrative review.
My constituent is a qualified accountant, and has been unable to continue seeking work in her field as a result of the status imposed on her by the Home Office. She has been made destitute as she has no recourse to public funds—many on tier 1 have no such recourse.
My constituent has been to my office to seek help in getting school uniforms for her children. Unable to work, she is struggling to keep her family afloat, and there is a real risk that she and her children will be made homeless as a result of the Home Office decision. Her landlord, the Wheatley Group, confirmed only yesterday that, due to the support of her church paying her rent, it was not to proceed with legal action to evict her at this point, but that option remains open. I am extremely grateful to the Wheatley Group for the discretion it has shown, but the situation is not sustainable—my constituent needs to get back to work.
The issue has been considered by the Select Committee on Home Affairs, and the Home Secretary corresponded with its Chair, committing to put all 322(5) applications on hold and to carry out a review by the end of May. As far as I can ascertain, that review has not yet been published and no further detail on it is available, although as I said in connection with my constituent Mustafa, 322(5) decisions are still being made.
I congratulate the hon. Lady on securing this debate, and I apologise for missing the first few minutes of it due to business in the main Chamber. She is absolutely right that the Home Affairs Committee, on which I sit, is still not clear where the Government are going on the matter. Does she agree that this scandal shows the wider systemic problem in the Department, as we have seen through Windrush, this immigration rule and a series of decisions being made wrongly when there is a hostile environment, a lack of discretion, cuts in staff and cuts in ability, as well as Ministers who, quite frankly, do not have a grip on what is going on in their Department? The net result is damage to individuals and their families.
I absolutely agree. It is worrying that even the Home Affairs Committee cannot get answers on certain things. This rule is of huge concern, and decisions under it are clearly still being made, as I heard from people I spoke to at the Highly Skilled Migrants demo last week. They are clear upon that.
The hon. Lady is being generous in giving way, and she is making a very powerful speech. Does she not agree that the Home Office was made aware of such issues in letters from me and others present in this Chamber back in mid-March, but no action was taken? Having such a delay in action is simply not good enough when that is affecting people’s lives in such a terrible manner.
Yes, I absolutely agree with the hon. Lady. For some months, I have been trying to get answers for the constituents who have been to me. The woman I mentioned came to see me in January, and she still has no answers in her case. When constituents come to us, it is not always evident that they are affected under those particular rules, and we often have to see the refusal letter to understand exactly why the refusal has been made, but a growing number of people have been getting in touch with me about finding themselves in this circumstance. Those who are not my constituents I have encouraged to get in touch with their own MP, as I am sure they have done going by the number of people in the Chamber today.
To add insult to injury, The Times reported this morning that a new visa route for migrants who want to start businesses in the UK
“is to be expanded to include non-graduates under efforts to increase technological innovation.”
That is rank hypocrisy. How can the UK Government reasonably expect to attract new migrants to the country when they treat the highly skilled population who are already here, and have been for years, with such utter disrespect?
I have a number of questions, which I hope the Minister will assist with. When will the review that I mentioned be published? How many cases are in process, and how many are awaiting judicial review? I have asked the Home Office how many people have been refused under the provision, and I understand that Channel 4 News also put in a freedom of information request to the Department without getting an adequate response.
Was an instruction issued to start refusing cases under the rule? If so, by whom and when? On 2 May, The Daily Telegraph reported that Home Office caseworkers had discussed using previous amendments to tax returns to cast doubt on current tax returns. How widespread is that practice? Will the Minister allow people caught up in all this the right to work, the right to access NHS services and the right to rent during their appeals? They often lose those rights as soon as the administrative review is refused—that is the first line of appeal after the initial refusal—and, as was mentioned by the hon. Member for East Renfrewshire (Paul Masterton), that can have a serious impact, in particular on women who are pregnant.
Will the Minister tell me whether compensation is to be offered to those wrongly caught up in this mess, just like Windrush? People affected can be out tens of thousands of pounds, particularly if they cannot get legal aid for their cases, because they have not been able to work and have gone into debt and arrears.
Lastly, what does the Minister have to say about the impact of this policy on individuals? I have been told by many about the strain on their mental health; relationships with their family here and with relatives abroad, who they are not able to visit; the stress of having to report to the Home Office regularly, sometimes on a fortnightly basis; and the loss of employment. Does the policy have a wider economic impact?
The Home Office’s policy of deliberately targeting these highly-skilled migrants is yet another example of this cruel Tory Government’s hostile environment policy in action. The group being targeted here are highly skilled: they are doctors, accountants, IT professionals, teachers and academics, to name only a few. They have put down roots and contributed greatly to their communities.
The UK Government continue to talk about attracting talent, yet their behaviour towards this group shows that they clearly are not interested in retaining much of the highly skilled population who are already here—already well integrated and contributing hugely. I urge the Minister to take swift action now to support highly skilled migrants who have done us the honour of choosing to live here.
Order. As all hon. Members will be aware, this is a very popular debate—people have done very well in getting their MPs here. Eight people wish to speak in the 20 minutes remaining before I call the Front-Bench spokespersons, so if we are to get everyone in, I am afraid Members must not speak for longer than two and a half minutes. I call Douglas Ross.
I will scrap most of my speech in front of me, but I thank you for calling me, Ms McDonagh; it is a pleasure to serve under your chairmanship. I genuinely congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing this debate. It is important that we discuss this subject. I am extremely grateful, as a member of the Home Affairs Committee, to have had the privilege of meeting campaigners and some of the affected people earlier today. That allowed the Committee members to hear some of the real hardships faced by a number of people because the immigration rules, which are there for a reason, are perhaps not being implemented in as useful and credible a way as possible.
We heard this morning that no fewer than 1,000 highly skilled immigrants face expulsion from this country under this paragraph. That is not right. The hon. Member for Glasgow Central mentioned the two individuals who owed HMRC £1.20 and £1.60; we heard that they were brothers and that that was their only offence against HMRC, yet the Home Office is using this rule potentially to remove them from this country. It seems that either a simple mistake or no mistake at all leads to law-abiding immigrants’ applications being refused out of hand. That means that no common sense is being used.
I was going to read from the letter to the Home Affairs Committee from the Home Secretary, but the hon. Lady did that. However, I urge the Minister to respond to this point: the Home Secretary said in the letter that he or the Immigration Minister would report back to the Home Affairs Committee by the end of May. Today is 13 June. I checked with the Clerk before this debate; despite chasing up the Home Office’s parliamentary officials this afternoon, we as a Committee still have no knowledge of the Home Secretary or the Immigration Minister’s response. We really need that as quickly as possible.
I asked our guests at the Committee this morning, because I did not want to put words into their mouths, whether it is the policy that is wrong or the implementation. I believe that they agreed that the policy is right—we are right to have these anti-terror policies—but the way it is implemented is wrong. I hope that the Immigration Minister will go from this debate and give case workers more clarification on how to use this policy the way it is intended, not to inflict suffering on people who should not be affected by it.
I want to tell hon. Members about two constituents. Muhammad has lived in and contributed to the UK for 11 years. He has a master’s in architecture from Oxford Brookes. His wife is pregnant; he has a career, a home, a mortgage and a real life in the UK. The Home Office refused him indefinite leave on the basis of a minor tax error. The error was not his. Muhammad is dyslexic and does not do his own tax returns—they were submitted by a professional accountant, who made a mistake and issued an apology. Muhammad immediately paid every extra penny owed once the mistake was discovered.
Last year, Muhammad’s grandmother died. In April, his only brother died, too. He could not go to the funerals because he would not have been allowed back in the country afterwards. The baby is expected in September; he has been invoiced by the NHS for £9,000. If he does not pay that £9,000, his wife will come off the GP’s list. Muhammad’s case is not singular—far from it.
Sadeque is a senior lecturer at a university in the UK. Before that, he was at the University of Derby. He has lived and worked in the UK for seven years. Sadeque applied for indefinite leave in 2016, which was refused by the Home Office because in 2011 he made and accepted a minor error on his tax return. He repaid it in the same year. It is hardly a mark of bad character. He has been suspended from his job and soon will be forced to withdraw from his part-time master’s at Oxford University. He volunteers with Amnesty International, Save the Children and UNICEF and promotes IT skills in the Bangladeshi community. He was graduate of the year at the University of Bedfordshire in 2011. In 2012 and 2013, he was a finalist of the British Computer Society, of which he is now a fellow. In fact, he is also a fellow of the Royal Society of Arts.
Sadeque’s wife and daughter have already left the UK. His second daughter was born in Bangladesh but Sadeque has never met her. Why? Because he cannot go there; if he did, he would not be allowed to return. In Bangladesh, Sadeque was the dean of a university faculty. So why will he not just leave, when he is being so badly and disgustingly treated by our Government? That is basically what he plans to do. He has been worn down and is going, despite the pending judicial review.
It is hard to look at cases such as those of Muhammad, Sadeque and Windrush and not conclude that this Government are chasing an arbitrary immigration target, regardless of the needs of our economy—or, indeed, the NHS or any sense of decency we might still have left as a country. Frankly, the Government have to look at the reputational damage caused by this issue.
Like all hon. Members, I have constituency cases in this matter. My constituent Inam Raziq has been fighting his case and it seems to have taken many years off his life, but also £80,000 of his money. He is among the people who helped to organise the hundreds of case studies spoken about today at the Home Affairs Committee.
I sent 300 case studies to the Committee and to the Home Office in November last year. In the seven months since I did that, the Home Office has failed to do anything about the issue. Let us be honest: it is just another issue of low-hanging fruit. It is the Government saying, in a target-driven culture, “Who are the people we can get rid of quickest?” I wrote to Ministers about this issue in November, telling them of all the hundreds of case studies, including the specific case of my constituent Inam. Still, when questioned about it, the Home Office says, “Oh, we didn’t know about it.” I do not write the most amazing emails, but I told you—not you, Ms McDonagh; there is no doubt that you would have listened.
I wonder if the Minister will tell me whether she feels that these were good and honest mistakes. In here, we are allowed to make good and honest mistakes. The Health Secretary made a good and honest mistake when he forgot that he owned some luxury flats. I am sure that colleagues will agree that we can all forget the owning of luxury flats—I am sure I have forgotten many. He forgot to declare them to this place and to—I cannot remember where it was—[Interruption.] Companies House, that is right. That was considered an honest mistake. Inam Raziq is an honest man. I will leave the judgment of the Health Secretary for everyone else here.
It is estimated that thousands of migrants who have been living and working in the UK for many years are wrongfully facing deportation because of minor tax discrepancies or rectifications. The immigration rules we are discussing today under paragraph 322(5) are extremely vague. Fortunately, the Home Office issued guidance on when to use that sub-paragraph to deny leave to remain. It states:
“The main types of cases you need to consider for refusal under paragraph 322(5)…are those that involve criminality, a threat to national security, war crimes or travel bans.”
Let us be clear: we are all here because the people being denied leave to remain under that paragraph are none of the above. They are doctors, lawyers, engineers, IT technicians and other highly skilled migrants who make a valuable contribution to our country.
One of them is a constituent of mine who has lived in this country for almost 10 years. He works in the IT sector, he has one son, who was born in this country, and his wife is expecting their second child. He is being punished because he made a minor tax rectification, which HMRC accepted, prior to applying for indefinite leave to remain. He even notified UK Visas and Immigration of the change. Because of that minor change, his application has been on hold for more than two years. He is anxious and concerned that he, like many others, will be forced to leave the country that has been home for him and his young family for the past 10 years.
My constituent works hard, pays his taxes, provides for his family and contributes to his community. His future, and the future of hundreds of others in his position, should not be left in limbo because he did the right thing and corrected his tax returns. He and his family are living with stress, anxiety and uncertainty, which is not acceptable. It does not take a review to recognise that something is wrong here. Ordinary people who contribute to our economy are being denied leave to remain because of routine changes or simple mistakes. Are these wrongful deportations a result of pressure from the Government to meet deportation targets, or is the Government’s typical defence—that this is merely a result of their reckless incompetence—to be believed?
I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing this important debate.
I will focus on one constituent, because the individual cases really highlight the damage the Government are doing. I have a woman constituent—she prefers to remain anonymous—who came here from Zimbabwe in 2007 after winning a British Council scholarship to Birkbeck College in London. She has been a model citizen ever since. She works very hard—she has never had fewer than two jobs at a time—and she brings up her three children without any recourse to public funds. She has held management jobs, and she is the director of a company she set up in 2010. She has been a governor and a volunteer at a school in her community. She has run three marathons for charity, she volunteers at Crisis at Christmas and she helped to set up an arthritis charity.
In 2010, this woman suffered the horrific experience of being raped. Her attacker was eventually sentenced to 15 years in prison. In the aftermath of that trauma, she made a mistake on her tax return. She put that down to the many pressures in her life at that time. Considering that she was dealing with a serious sexual assault, holding down multiple jobs, volunteering and bringing up three children, she had an awful lot on her plate. She realised the mistake herself, reported it to HMRC, put her affairs in order and paid off the underpayment. HMRC accepted that it was a mistake and did not impose a fine. A few months later, she applied to the Home Office for indefinite leave to remain but, after a 19-month wait, she was rejected on the grounds of a tax discrepancy that had already been resolved to the satisfaction of HMRC.
This woman has now used up all her life savings on legal advice, has lost the right to work, can no longer afford to pay her mortgage or her bills, and is forced to live on handouts. She faces immediate deportation unless she can raise enough money to carry out further legal action. The Government have ruined this woman’s life.
Clearly, this woman and the thousands like her are assets to this country. They must not be used as pawns in the Government’s attempts to cover up the failures of their immigration policy by targeting people whose presence in this country is wholly legitimate and wholly beneficial. I hope the Minister agrees to suspend the use of paragraph 322(5) for purposes it was never intended for, sets up a hardship fund to help people this policy has damaged, and offers compensation to people who have lost their jobs, homes, savings and livelihoods because of it—and I hope she says sorry to the people she has damaged.
I, too, congratulate the hon. Member for Glasgow Central (Alison Thewliss) on all her work on this issue and on her speech.
A large group of my constituents are affected in exactly the same way as others, but let me first say this. I was a Minister with tax responsibilities on four separate occasions. It is an important principle of our tax system that, once a mistake has been identified and any additional tax due has been paid, the authorities do not come back with further recriminations unless new information subsequently comes to light. It has to be like that, otherwise there would not be an incentive for people to own up to mistakes and pay the additional tax due.
In the cases we are talking about, people have owned up to mistakes, tax has been paid and HMRC has been completely satisfied, but the Home Office has come back, sometimes years later, with recriminations—it has not just demanded more money but destroyed people’s livelihoods and, in a number of cases, broken up families—in a way that is wholly wrong and unfair. Like others, I have met many people in that situation.
My hon. Friend the Member for Birmingham, Yardley (Jess Phillips) referred to the Health Secretary, who failed to do what he should have done. As she said, he made what he described as an “honest administrative mistake” and received no sanction. I do not complain about the fact that there was no sanction, but we cannot have one rule for Cabinet Ministers and affluent people, and a completely different rule for our constituents. That is not the way things are done in Britain, and the Home Office cannot be allowed to behave in that way. People’s lives are literally being destroyed because they made honest administrative mistakes that have long since been rectified.
For far too many, the Home Office’s hostile environment has become an oppressive nightmare. This must end, and we need the Minister to take action today to start to put things right.
I, too, congratulate the hon. Member for Glasgow Central (Alison Thewliss).
I will concentrate on one case—that of my constituent, Mr Iftikhar Ahmad—although there are many others. He has run a business in this country that employs other people since 2011. He is also a victim of the Prime Minister’s hostile environment. I do not know what it says about the state of our country that we have ended up with a provision that was designed to protect us from terrorism being used to pick on people for minor tax difficulties, but it does not make it sound to me like the sort of place anyone would particularly want to live.
The Minister must know perfectly well that whenever MPs raise this issue, the replies they get are wholly inadequate. We get a cut-and-paste letter with a standard stamp on it, which tells us that nobody bothered to read our letter and that there is absolutely no prospect of our being told when the matter might be dealt with. I do not blame the Minister for the hostile environment—the Prime Minister created that state of affairs when she was at the Home Office—and I know that since this issue got a bit of attention in the press, the Government have announced that it is no longer their policy. I was delighted to hear that.
Despite the limited time, I wonder whether the Minister will tell us honestly what happened. She is the Minister left holding the baby. What happened? How did we end up in this state of affairs? Will she give us a clue about what she thinks is the number of people affected? I certainly have reason to believe it is well over 1,000. The number of people affected by Windrush started small, but we suddenly discovered it was much bigger. How many lives like the ones we have heard about are being wrecked as a result of this situation, and what will she do for people such as Mr Ahmad, his wife and his three children? He cannot provide for them anymore. Just like everybody else who is affected, he has almost spent his life savings—savings he accumulated through his hard work in this country, while he was paying taxes and helping the rest of us. He is almost spent up. Will the Minister give him a chance to work while the review is concluded?
It is a pleasure to serve under your chairmanship, Ms McDonagh. I also thank the hon. Member for Glasgow Central (Alison Thewliss) for securing this excellent debate. I will try not to repeat the points that have been made by her and others. I declare an interest: I was chair of Barrow Cadbury Trust, which funded the Migrants’ Rights Network from its inception, and the MRN has been part of the group of organisations that has supported the work in Parliament today as well as at other times.
On Friday, I met a group of constituents in my surgery that included both individuals and couples who have been affected by the new operation of the immigration regulations. They are all from India and are highly qualified, well paid and well respected IT professionals. They came to answer this country’s skill shortage—a shortage that has not gone away. They work in our large and reputable companies such as Sky and Royal Mail, and one of the affected people they know even works for HMRC. Today, the Government launched a programme to attract tech entrepreneurs to the UK, yet the Home Office is effectively sending home high-skilled tech people who contribute so much to our economy. I must also say that they are, of course, net contributors to the Exchequer.
After the Windrush scandal, this is yet another example of the hostile environment operating at the Home Office. Many have been refused for spurious reasons. Those without the right of appeal cannot work, cannot take up the offer of promotion, cannot rent a flat and may lose their driving licence. Even those with pending appeals or judicial review applications who can work are losing jobs because nervous employers have asked them to resign. Many cannot travel to see family and cannot explain to their family why they cannot visit them. One person I met was told by the Home Office that he could get his travel documents to attend his brother’s funeral if he withdrew his application.
Given these people’s age profile, many have small children, or they want to start a family but cannot do so because they are in limbo. They told me, “We love this country and we don’t want to leave, yet we feel we’re just numbers. You”—not me but this Government and, they feel, this country—“want to attract talent from across the world, yet you don’t respect those of us who are here. This is affecting the reputation of the UK around the world.”
Some are refused not for tax problems but because, with their employer’s permission, they have extended their leave beyond 28 days to 45 days, or for maternity leave.
I thank my hon. Friend the Member for Glasgow Central (Alison Thewliss) for securing the debate and pursuing this issue with her usual determination and eloquence, not just today but over several weeks. I thank all hon. Members for their contributions and, like the hon. Member for Moray (Douglas Ross), thank the campaigners and witnesses who spoke to us this morning to give us an insight into what is going on.
I do not think there is a more effective way to highlight yet another rotten Home Office stink than by relaying the personal stories of the individuals affected, as hon. Members rightly have. I started jotting them down—the hon. Member for Strangford (Jim Shannon) spoke about doctors who had made simple mistakes with their tax returns and the hon. Member for Slough (Mr Dhesi) spoke about law-abiding citizens with families who had been here for a decade—but I stopped when I got to the gobsmacking story relayed by the hon. Member for West Ham (Lyn Brown) about the accountant who had owned up and yet found that that was not enough to satisfy the Home Office, and about all the consequences that followed.
This all reeks of another episode of the Home Office coming up with a new wheeze to increase the number of people they can remove, and implementing it with no concern for whether decisions stand up to scrutiny in terms of the law or, indeed, basic common decency. It is clear that the Home Office did not like tier 1 general visas as they were closed to new applicants in December 2010, and those still in that process face severe repercussions—low-hanging fruit indeed.
Will the Minister, in responding, tell us whether there has been any change to Home Office guidance? Have any new policies or instructions been issued that relate to tax discrepancies and the relevance of paragraph 322(5) to that issue? If not, what is her explanation for this sudden upsurge in the number of cases we have seen in the last 12 months? Members have pointed out, and were told this morning, that there are probably now more than 1,000 cases. Will she confirm the numbers her Department has? What do the data on appeals and judicial reviews tell us? What has happened to the review we were told was due to be completed by the end of May? Going further, why has the Department been so slow, given that those such as the hon. Members for Oxford East (Anneliese Dodds) and for Birmingham, Yardley (Jess Phillips) and my hon. Friend the Member for Glasgow Central have been raising this matter for months? Once again, it seems that there are systemic issues in the Home Office and those at the top do not appear to know what is going on.
When did the practice of comparing declared income on Home Office applications with tax returns commence, and what safeguards were put in place to ensure that caseworkers, who are not accountants or tax lawyers, did not put two and two together and come up with five? That is exactly what seems to be happening in too many cases. We have all read about cases where minor errors were corrected without demur from HMRC and where different sums were declared purely as a result of different accounting periods or rules applying. We heard again about cases where the difference was £1.20 or £1.60.
When was it decided that paragraph 322(5), which Home Office guidance states is usually to be focused on people involved in serious crime, threats to national security, war crimes and travel bans, was remotely appropriate for the circumstances we have heard about today? As my hon. Friend the Member for Glasgow Central and the hon. Member for Ealing Central and Acton (Dr Huq) said, that could have serious implications for applications to travel to other countries.
No doubt the Minister will flag up, as she has before, examples of where apparently there has been genuine fraud. Obviously she cannot publish the details of those cases, and that is understood, but the problems with that being the total response from the Home Office are twofold. First, it is utterly contrary to the experience of everyone in the Chamber, as has been relayed, and it seems that yet again the Home Office is using the excuse of a few bad eggs to throw out more than 1,000 people. Secondly, it is a question of trust. I do not think that many members of the public or MPs here—especially after Windrush—will be happy with the Home Office saying, “Trust us. We’ll review things and sort it out.” If she wants us to have confidence in the process, there must be an independent review of what is going on. Will she set that up?
Finally—and most crucially of all—what steps can be taken to allow those individuals to live their lives here while they challenge what appear, in many cases, to be absolutely perverse decisions? Individuals and families are facing destitution and bankruptcy because of the outrageous changes to appeal rights made in 2014 and 2016. If the immigration system was just and respected the rule of law, they would all have an in-country right of appeal to a tribunal and their leave to remain would be automatically extended so that they could still work until the appeal process had been completed. What will the Minister do about that?
I finish by repeating what my hon. Friend said. So many of those involved are people we should be thanking, not threatening with removal. If there is one positive from today, it is that they know that MPs across the political divide are on their side and determined to put things right. I very much hope that the Minister is listening.
It is an honour to serve under you, Ms McDonagh. I thank the hon. Member for Glasgow Central (Alison Thewliss) for securing the debate and all Members for their contributions.
The Government’s treatment of highly skilled migrants has been shocking and unfair. Such migrants who have made legitimate and lawful changes to their tax returns are being put in the same category as serious criminals and terrorists. This is not just about the treatment of highly skilled migrants; it is about a hostile environment created by this Government, who treat all migrants like criminals and cannot distinguish between legal and illegal migrants. It is also about an ineffective Department that makes absurd mistakes, refuses appeals and cannot pick up on casework trends without media outrage.
First, I would like to discuss paragraph 322(5) and the way it is being used. According to Home Office policy guidance, it should be used for cases of criminality, threat to national security, war crimes or travel bans, yet a large number of refusals are on the basis of minor tax errors, many of which individuals picked up on and corrected themselves, as is their right. The Government’s overbearing hostile environment treats all migrants like criminals. Does the Minister recognise that many people are being penalised on the basis of 322(5) because of mistakes by the Home Office?
According to Home Office guidance, UK Visas and Immigration caseworkers are instructed to refer potential refusal decisions under paragraph 322(5) to a senior caseworker. Given the mistakes that I and other hon. Members have mentioned, does the Minister think that the system is working? How can such basic errors get past senior caseworkers and be allowed to play havoc with people’s lives?
Those are the actions of an overbearing Home Office driven by the Tory target of reducing net migration and failing to treat applicants in a fair and reasonable way. At least 1,000 highly skilled migrants seeking indefinite leave to remain are wrongly facing deportation owing to this paragraph. Our country desperately needs thousands of these people as NHS doctors, lawyers, teachers and engineers, and the effect of a refusal in such cases is devastating and lasting. People become ineligible for another visa and they are banned from returning to the UK for 10 years.
Often, people are either given only 14 days to leave the country or, if they stay, refused the right to work, to rent or to access NHS services. That is all without mentioning the mental and emotional effect of the process. During Home Office questions last week, I raised the issue of highly skilled migrants with the Minister, who said that,
“there have been several instances where those minor discrepancies have run into tens of thousands of pounds.”
She went on to say:
“We want to make sure that we collect the amount of tax that is owing.”—[Official Report, 4 June 2018; Vol. 642, c. 7.]
Of course nobody here would disagree that we want to collect tax that is owed. However, it is in HMRC’s interests for people to correct their taxes, and HMRC is explicit that that is entirely permissible and encouraged, if done within the 12-month timeframe. Is the Minister comfortable with the role the Home Office is taking on, second-guessing HMRC decisions and reassessing cases that it has said are settled and will not be penalised?
In conclusion, many cases of highly skilled migrants are heartbreaking, not to mention nonsensical from the perspective of the UK’s interests. Our NHS is facing a staffing crisis, and our businesses need skills. Yet the Home Office is denying visas to NHS doctors, lawyers, teachers and engineers, condemning them to be labelled as terrorists, criminals and a threat to national security when they have committed only minor tax errors. Will the Minister commit to apply paragraph 322(5) properly—to target serious criminals, not bad accountants? Will she tell her officials not to automatically deny visas when they spot minor mistakes? Will she recognise that minor mistakes in tax returns are not evidence of fraud? This reckless and hostile environment is targeting the wrong people.
It is a pleasure, as always, to serve under your chairmanship, Mrs McDonagh. I congratulate the hon. Member for Glasgow Central (Alison Thewliss) on securing this exceptionally well-attended debate. There have been numerous contributions from hon. Members; I fear I will not have enough time to do them justice by referencing them individually, but I think it is important that we look closely at this whole matter. That is one reason why we have the review.
The hon. Lady and many hon. Members have raised individual cases, which are of course central to this debate, but we must also reflect on the policy as a whole, and many hon. Members have requested that I do so.
When the Minister appeared before the Home Affairs Committee in May, she claimed she had not had the time to look at those cases because there had only been two working days since the issue had been flagged up. She was told in November last year by my hon. Friend the Member for Birmingham, Yardley (Jess Phillips). My hon. Friend the Member for Reading East (Matt Rodda) wrote to her in February and we have heard that my hon. Friend the Member for Oxford East (Anneliese Dodds) wrote to her in March. Can she clarify for the House, and for other members of the Committee, when she first knew about this issue?
It is important that we reflect that I cannot comment on correspondence received by my predecessors back in November. What is important is that we are looking at the review now and at the individual cases, of which there are many. I will come to the specific points about numbers in due course.
As hon. Members will know, the Government are committed to building an immigration system that is fair to British citizens and legitimate migrants, while being tough on those who abuse the system or flout the law. We welcome those who wish to come here, stay here and take up highly skilled work, but people must play by the rules. Reports have suggested, and we have heard it repeated today, that the Home Office has been telling people who made a minor mistake on their tax records that we are deporting them because they are a threat to national security. I want to be very clear: that is not what is happening. We are not refusing people for making minor tax errors. We are certainly not saying they are terrorists.
The refusals we are discussing all relate to the tier 1 (general) route, which allowed individuals to come to the UK to look for work without needing a sponsoring employer. The hope was that they would make a significant economic contribution to the UK through taking up highly skilled jobs. The Government closed the route in 2011, as it had not worked as intended and, indeed, there were levels of abuse. Many applicants ended up in relatively low-paid work; an operational assessment of the route in 2010 found that 29% of tier 1 migrants were in low-skilled jobs and the employment of a further 46% was unclear. When they applied to extend their stay, many had PAYE earnings that were below what they needed to score enough points to remain in the route, but they also claimed for self-employed earnings. In some cases, the evidence showed that the claimed self-employment did not happen, and in other cases the evidence was less clear.
We were unable at the time to carry out the same level of checks with HMRC that we can today, and applicants in those cases where the evidence was not clear were given the benefit of the doubt. Now that those same individuals are applying for settlement, we are able to make more rigorous checks with HMRC on what applicants have told us in the past about their self-employment, and compare it with what they have told us for HMRC purposes.
Again, I want to be really clear: we do not have a policy of refusing people for making minor tax errors. We all know that many people have to make corrections to their tax records. However, there is a clear pattern that does not reflect that sort of minor correction. In many cases, more often than not, the self-employed earnings used to claim points in the tier 1 application have been £10,000 or more higher than the self-employed earnings reported to HMRC. That is not minor.
There are numerous examples where applicants have either not amended their tax records, or have amended them several years later, only shortly before applying for settlement, so that the records match. We have even seen cases where applicants have subsequently amended their tax records back down again after applying for settlement.
We give applicants the opportunity to explain, and we take their explanation and all available evidence into account. Any such cases must be signed off by a manager before they are refused. The review that I am carrying out is checking those safeguards to make sure that they have been followed correctly. We refuse cases only where applicants have been unable to provide a satisfactory explanation of what their self-employed activities are or why their earnings reported to the Home Office and to HMRC are so different. We will refuse cases where the evidence leads us to conclude that an applicant provided misleading information to one branch of Government or other.
Will the Minister give way?
I am sorry; I only have a few minutes and I want to explain what paragraph 322(5) is for. It is for refusing applications where the evidence shows that an individual has not played by the rules. While there has been a focus on the minority of judgments that go against the Home Office, more often than not the courts have supported our refusal decisions.
Will the Minister give way?
I am sorry; I simply do not have time. I have about three minutes left.
To pick an example, in May this year the upper tribunal agreed with us that an applicant’s explanation was simply “hopeless”, and noted the timing of the amendment in relation to the ILR application. Paragraph 322(5) is a long-standing provision within the immigration rules, dating back to 1994.
Will the Minister give way?
I have already told the hon. Lady that I will not. Paragraph 322(5) was not introduced to support compliant environment policies, as has been suggested, as it long pre-existed those policies. It does not mean that any particular individual represents a threat to national security, but for obvious reasons we do not seek to isolate national security refusals from others.
However, I also recognise that it is not enough simply to talk about circumstances that happen more often than not. Each case is individual and must be treated on its own merits, which is why we are using this review to make sure that no one who has made an innocent mistake has been caught up in tackling the wider abuse. That is why we have had this review, which is still ongoing. The first phase is complete, and I just wanted to indicate specific numbers. There were 281 in the first phase and 1,671 in the second. While I do not wish to prejudge the final conclusions, it has been very clear that they are broadly in line with what I have said this afternoon. I will report the conclusions of the review to Parliament once it is completed. [Hon. Members: “When?”] The first phase of the review, as I indicated, is already complete. As soon as the second phase, which is a significantly higher number, is done, we will report it to Parliament and to the Home Affairs Committee, as I said.
We are aware of 427 appeals and judicial reviews in progress. Many are still outstanding, but no applicants have been successful at judicial review, and only 38 appeals have been allowed, mostly on human rights grounds. All current cases are on hold, and while it is the case the applicants’ statuses are protected, that means that those who applied before their existing leave expired can continue to work, and their other rights, to rent and to NHS services, are also unaffected.
In 50 of the cases we have considered, there has been a discrepancy in excess of £10,000 between the income claimed to HMRC and the income claimed to UKVI, and 34 of the applicants sought to amend their tax records only within the 12 months preceding the submission of an application.
It is very important that we have a rigorous review that reports when the findings are clear. However, I would like to inform Members this afternoon that we have taken a very thorough approach with this, determined to find out whether there are any genuinely wrong refusals and to put them right.
Question put and agreed to.
That this House has considered paragraph 322(5) of the Immigration Rules.