Tuesday 9 October 2018
[Mr Philip Hollobone in the Chair]
Oil and Gas Industry
I beg to move,
That this House has considered the future of the oil and gas industry.
It is a pleasure to serve under your chairmanship, Mr Hollobone.
I start my contribution today by taking a moment to remember the 167 workers who lost their lives 30 years ago in the Piper Alpha disaster, off the coast of Aberdeen, on 6 July 1988. Piper Alpha is the world’s deadliest ever oil rig accident. This anniversary is and should be a reminder to us all that we must remain vigilant and do all we can to help the oil and gas sector in seeking to eliminate major hazards and risks.
I will focus my remarks on the success of the North sea oil and gas industry, and on how the sector is working alongside its partners downstream and in its supply chain to secure a lower-carbon future. I will also outline two choices that the UK Government must make. The first is to protect existing labour and supply chains through the single market and customs union membership, or risk sacrificing world-leading firms and skilled, productive jobs.
I am grateful to my hon. Friend for securing this important debate and for taking an intervention so early. Grangemouth, which is in my constituency, is home to Scotland’s only crude oil refinery, as well as the terminus of the North sea Forties pipeline system. It hosts a number of petrochemical plants and leading players in the chemicals industry, and it accounts for more than a third of the chemical sector’s gross value added in Scotland. In total, 60% of the UK’s chemical exports and 75% of imports are to and from the EU. How important is it to have frictionless, tariff-free trade, and to ensure that multinational companies can move their staff between different countries to support local jobs and growth across districts?
My hon. Friend makes an excellent point; it is absolutely essential that we remain in the customs union. Of course, I will come on to the importance of frictionless trade and the supply of labour later in my speech; indeed, I hope that everybody will speak about that.
The second choice that the UK Government must make is to recognise the £350 billion contribution to the Treasury that the sector has made over the past 50 years and provide the political certainty and financial support it needs now, or risk undermining North sea oil and gas by once again using it as a cash cow, this time to pay for Brexit Britain.
With sales up by 18.2% between 2016-17 and 2017-18 and the North sea holding up to 20 billion barrels of oil, the sector is in very strong health. Recent industry announcements, such as BP’s successful discoveries in the Capercaillie and Achmelvich wells, Nexen’s phase II development of the Buzzard field, and the Norwegian oil and gas giant Equinor’s deal to buy Rosebank’s share of the oil reserves to the west of Shetland, demonstrate the enormous investment potential that the United Kingdom continental shelf still holds.
The sector supports 283,000 jobs across the UK. In the town of Grangemouth, which is in my neighbouring constituency of Linlithgow and East Falkirk, INEOS alone employs 1,300 people, including seven new apprentices, who started training in 2017. Those figures somewhat contradict the predictions we hear about the sector’s constant decline. Healthy investment is continuing.
I am grateful to my hon. Friend for giving way again and for mentioning the great work that goes on in my constituency. INEOS, which now owns the Forties pipeline system, estimates that the economic life of the asset will be extended to 2040, which is 10 years longer than BP’s original projection. INEOS has already invested £500 million in the Grangemouth site in the last five years, and it is now investing in infrastructure projects at Grangemouth that will have a further positive impact on the longevity and reliability of the Forties pipeline. The firm has already committed to the UK’s North sea sector with investment in the northern gasfields west of Shetland, which contain the Lyon prospect. However, I wonder how much potential investment by the wider sector has been delayed until the uncertainty of Brexit has passed. Will he join me in calling on the UK Government to do more to stimulate exploration and investment?
I thank my hon. Friend for that intervention; again, he makes a very good point indeed. He is right to raise the concerns about investment, and I join him in calling for the UK Government to support and encourage investment in this vital asset that we have on our shores. I give him my full support in that regard.
Healthy investment is continuing, even though in some cases the level may not be as good as it should be, and new discoveries are being made and developed. In 2017-18, revenues from Scottish North sea oil and gas increased to £1.3 billion. Surely it is now time that the UK Government acted to support the sector’s future.
The sector recognises the need to decarbonise our economy and its responsibilities in supporting that transition. It is an international leader in supporting the low-carbon transition. Average emissions per unit of production on the United Kingdom continental shelf—its carbon intensity—have fallen year on year since 2013, with total emissions in decline from their peak in 2000. Firms are increasingly diversifying and using their existing skills to grasp opportunities emerging from the green economy, thereby providing sustainable employment. Often, infrastructure owners and operators in the oil and gas sector are already part of wider portfolios across a range of conventional and renewable energy sources. Contractors and supply chain companies with expertise in offshore operations and maintenance are also providing solutions across a range of energy industries, to diversify and replenish their order books.
As we all know, innovation is absolutely key to that process. Building the sector of tomorrow presents exciting and challenging opportunities for our people. The Offshore Petroleum Industry Training Organisation’s workforce dynamics report has predicted that by 2025 there could be as many as 10,000 roles that require completely new skills. It is reassuring to note that the industry continues to attract young people to build its future. There were 105 new entrants to the oil and gas technical apprentice programme in September alone. Once again, I have seen that forward-looking agenda at first hand in my neighbouring constituency of Linlithgow and East Falkirk.
As I mentioned, the town of Grangemouth is home to Scotland’s only crude oil refinery. It is a truly remarkable site. For example, the refinery was the first to introduce ultra low sulphur diesel and ultra low sulphur petrol to the UK market. Grangemouth already makes up approximately 8% of Scotland’s manufacturing base. Many of my constituents are employed at the site or in its supply chain. Grangemouth’s success shows the impact that downstream operations and manufacturing can have on the economy, locally and globally.
I am grateful to my hon. Friend for his indulgence in giving way to me so many times.
Grangemouth has one of the country’s largest concentrations of energy-intensive industries in down- stream petrochemicals operations, and its development of a strategically located carbon capture and storage infrastructure in its industrial cluster may be essential to ensuring that those industries can compete in the low-carbon world that is coming in the future. I know that the Grangemouth site, INEOS and others are working with Imperial College as part of a wider collaboration to evaluate the feasibility of CCS for the UK. Does my hon. Friend agree that this developing technology would have been given a huge boost if the UK Government had not cancelled its CCS competition back in 2015, and that that decision demonstrated how they are failing the long-term interests of the industry?
Once again, my hon. Friend makes a good point about the need for long-term certainty of investment and policy. The CCS decision was an example of a shambolic state of affairs, given that many hundreds of millions of pounds had been invested for the future. That future was basically taken away from under investors’ feet, so I absolutely agree with him.
The export-orientated supply chain generates about £30 billion annually across the UK, and its exported services deliver £12 billion, and the future blueprint for the sector, “Vision 2035”, grasps the importance of that. Alongside adding a generation of productive life to the basin, the blueprint has the objective of doubling the long-term opportunities for the supply chain. If we work together to maximise production from the UK continental shelf and to help the supply chain grow its share of the global energy market, we can boost that prize by half again and generate £920 billion of revenue for the UK economy through to 2035. That is a real game changer for us all. By doubling its share of the global market and embracing the opportunities available through diversification into other markets, the sector can achieve an additional £150 billion of revenue above the baseline estimate of £350 billion.
However, Grangemouth, its workforce and the wider sector are being put at risk by Brexit. The latest Oil & Gas UK report makes it clear that Brexit will have a significant impact on the oil and gas sector, warning about the impact on frictionless access to goods and services, and that the UK Government’s Brexit plans could cause a “skills shortage” for vital North sea services such as emergency response and rescue vehicles.
The Scottish National party is clear that the best way to achieve the goals I have mentioned is to protect Scotland’s place in the single market and the customs union. The Scottish Government have delivered an exceptional range of support for the oil and gas sector and its workforce, including an investment of £2.4 billion in enterprise and skills through our enterprise agencies and skills bodies, £90 million over the next decade to support the Oil & Gas Technology Centre as part of the Aberdeen city region deal, and a £12 million transition training fund to support individuals and help the sector to retain talent.
The other major risk that is looming also comes from Westminster, and that is the Budget on 29 October. With the Treasury having taken about £350 billion from the oil and gas sector in the past 50 years, this is an opportunity for the UK Government to repay their debts and show their support for the sector. The Chancellor must ensure in his autumn Budget that the UKCS is globally attractive for investment, with a competitive and predictable fiscal regime. The UK Government must not repeat the mistakes of previous Administrations and undermine the sector by using it as the Treasury’s cash cow. Instead, they must protect tax incentives designed to support the sector, introduce measures to improve exploration and attract fresh investment, complete the work on transferable tax history, urgently ensure that the tax treatment of late-life assets is addressed so that those assets are in the right hands, and support the urgently required alternative solution to end-use relief.
The SNP also demands that the UK Government use the autumn Budget to implement an oil and gas sector deal, instead of dragging their feet, as is currently the case in Ayrshire, Tayside and Inverness. A sector deal should support practical steps to protect, progress and promote operators, the supply chain and the offshore and onshore workforce. A sector deal for the industry must include visionary national hubs for underwater innovation, transformational technology and decommissioning, based in Aberdeen but serving the whole industry.
In conclusion, North sea oil and gas is booming and the sector is working hard alongside its downstream and supply chain partners to secure a bright, lower-carbon future. The sector has a clear route map in “Vision 2035” and is ably supported by the Scottish Government, who are using their limited powers to the full. The UK Government must now make two choices: to protect the supply chains and the labour supply through single market and customs union membership, and to provide the long-term political certainty and financial support that the sector needs.
Order. The debate can last until 1 pm. I am obliged to call the Front-Bench spokespeople no later than 12.27 pm, and there will be 10 minutes for the SNP Front Bencher, 10 minutes for Her Majesty’s Opposition and 10 minutes for the Minister. I would be obliged, Minister, if you allowed the mover of the motion three minutes to sum up at the end. Eight Members are seeking to catch my eye, so I will impose a time limit of five minutes and the clock will act as a helpful guide to those making speeches.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Falkirk (John Mc Nally) on securing the debate, and he has done so at an opportune time, just under three weeks before the Chancellor delivers his Budget. He has also provided us with the opportunity to highlight the vital importance of the industry to the UK: it is essential for the UK’s security of energy supply, it has contributed billions of pounds to the Exchequer over the past 50 years, and it provides hundreds of thousands of highly skilled and well-paid jobs.
The industry has been through a great deal in recent years. As a result of the collapse in the price of Brent crude, tens of thousands of jobs have been lost and the industry has had to restructure. In many respects, it has emerged fitter and leaner, but significant challenges remain, and it is vital that the tripartite approach of industry, regulator—the Oil & Gas Authority—and Government working together continues. The oil price has bounced back, but that is almost certainly for short-term global geopolitical reasons, and it would be complacent to assume that the higher price will be sustained into the longer term. Production is up significantly, and by the end of the year could be 20% higher than over the past five years. Significant cost reductions have been made, though it is important that they are sustained if the industry is to remain globally competitive. However, warning lights remain on amber, with exploratory drilling activity at a record low and the revenues of supply chain businesses continuing to fall. It is vital that exploration and production companies work collaboratively with their supply chains, as their respective futures are very much intertwined.
I will briefly highlight three factors that need to be centre stage for the industry to continue to play its lead role. The first is the need for a stable fiscal regime. One of the key reasons why the UK continental shelf is an attractive investment proposition is that it is fiscally competitive. That reputation has been hard won and must not be thrown away because of an increase in tax rates. That would be short-termism, and it would cause lasting damage. In the Budget, the Chancellor should re-emphasise the Government’s commitment to the “Driving investment” plan. The proposals for transferable tax history, to be included in the forthcoming Finance Bill, are extremely welcome and will drive investment in late-life assets and maximise economic recovery. It is also vital that the Treasury urgently clarifies its plans for ship end-use relief and introduces proposals that are in line with the “Driving investment” plan.
Secondly, it is vital never to forget those who work in the industry. As the hon. Member for Falkirk said, 167 people lost their lives in the Piper Alpha disaster 30 years ago. The drive for business efficiency, which is very important for the industry’s future, must never compromise safety. It is also important to provide attractive career paths to encourage people into the industry. OPITO estimates that there is a need to recruit 40,000 people into the industry over the next 20 years, 10,000 of them into roles that currently do not exist. The “Workforce Dynamics” review has been taking place this year, and skills demand maps are being worked up. The Government should encourage and support that initiative, which will enable the industry to employ safe and well-trained people who will maximise its contribution to the UK economy.
Lastly, the industry must provide a bridge to a low-carbon future, which means setting out a clear and deliverable deployment pathway for carbon capture, utilisation and storage. The Government should consider carefully the conclusions of the cost challenge taskforce and work with the industry to develop regional clusters that will bring significant economic benefits to both the north-east and to Scotland.
Off the East Anglian coast, in my part of the world, an enormous development of offshore wind farms is taking place. The two industries—oil and gas and offshore wind—need to work together. There are encouraging signs that that is beginning to take place, as evidenced by the Oil & Gas Authority’s promotion of “Gas to Wire”, which involves the gas produced from gasfields being generated into electricity offshore, and then transmitted to shore via spare capacity in the subsea cables used for wind farms. The industry has a great future—it is important we do not squander it.
It is a pleasure to serve under your chairmanship, Mr Hollobone. As time is pressing, I will try to keep my contribution relatively brief. I want to make two points. First, I want to remind Members of the historical context as it applies to oil and gas and the north of Scotland.
When I was at Tain Royal Academy in the north of Scotland, many of the brightest and best in my class left to go south—perhaps a rather sad facet of life in the highlands. Despite the best efforts, people left and sought employment further south; indeed, my own father said to me, “Go south, young man. That’s where your future lies.” However, in the 1970s, as we all know, the music changed completely and utterly, and the oil came.
Where I come from, the arrival of the Nigg oil fabrication yard was a crucial turning point, seeing the building, first of all, of the two giant BP rigs. Suddenly there was really high-quality employment available locally. Welders were trained, and other skills were trained up. The point is that the depopulation trend was halted and actually reversed, so we cannot underestimate the social importance of Nigg’s contribution to the highland economy. I would not have married and brought up children locally if I had not been employed in the Nigg yard. The fact that my children were born locally and went to the local school is entirely down to the fact that that was where I was employed and had the income to live and to grow my family. In succeeding generations, we saw increasing evidence of a reversal of the population decline, as top-quality jobs supported local infrastructure and the local economy, so we should not forget how important that contribution was for the highland economy and how, structurally, it was very much to the good.
My second point brings us to today. Very good contributions have already been made, and the potential of offshore wind was mentioned. In my constituency, we have the Beatrice wind farm nearing completion—an example of technology that is cutting edge for the future, but that is in many ways based on technology that went before, in terms of fabrication and working in very inclement conditions in the North sea. As I see that technology approach completion, I take considerable pride in the fact that, not long from now, it will be making a major national contribution to our grid and will literally keep the lights on.
West of Shetland, as I am sure Members will also mention, we still have great potential for the future. Discoveries continue to be made. It is deep water with incredibly inclement conditions, but the technology has moved forward. There is much more subsea work, but there is the new oil.
My point is this: I wish I knew what was going to happen with Brexit. I do not know, and I am sure many Members will tease me and say, “Would a Lib Dem know anyway?” However, I am damn sure that the contribution that the oil industry has made in the past, makes today and can make in the future to my constituency, to the constituency of my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) and to the remotest parts of Scotland is absolutely huge. So my final point is a plea to the Minister, Her Majesty’s Government and future Governments. I want them to remember the goose that laid the golden egg: the oil and gas industry. Please preserve it, enhance it and protect it for the generations to come.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Falkirk (John Mc Nally) on securing this important debate. As many colleagues know, before I was elected to this place, I spent 25 years working in the oil and gas industry, as many of my constituents still do. The industry is still a major employer in my constituency, as is the supply chain that supports it.
Almost half the UK’s oil and gas makes landfall by pipeline in my constituency. The Forties pipeline system, which has been mentioned, comes ashore just outside the coastal village of Cruden Bay and carries about 30% of the UK’s oil. St Fergus, a few miles up the coast, is the location of the St Fergus gas terminal, through which 25% of the UK’s gas is imported through three different pipelines. St Fergus is also the site of a new project currently being developed for carbon capture and storage—a technology that has already been mentioned.
A little further south is the slightly lesser known city of Aberdeen, which many know as the oil capital of Europe, and rightly so. Many people from my constituency and from all around the north-east of Scotland commute to Aberdeen, heading not only to the worksites and offices in and around Aberdeen, in the constituencies of my hon. Friends the Members for West Aberdeenshire and Kincardine (Andrew Bowie) and for Gordon (Colin Clark), who I am sure we will hear from, but offshore, to and from the world’s busiest commercial heliport at Dyce.
At the start of the downturn in 2014, more than 460,000 jobs in the UK depended on the oil and gas sector. Throughout 2015 and 2016, the number fell steadily, reaching 280,000 in 2017, with about 40% in Scotland and 60% in the rest of the UK. As we approach the end of 2018, the sector is seeing a cautious increase in employment for the first time since the start of the downturn. I say “cautious” because we have been in this situation before, going through the cycle of a high oil price followed by a crash in revenue and knee-jerk cost-cutting measures, followed by an equally impulsive return to wasteful spending when oil prices recover. I am encouraged by conversations I have had with oil companies in Aberdeen and with Oil & Gas UK and the Oil & Gas Authority, based in Aberdeen, because it feels as though lessons have been learned from the past. However, time will tell. Will the Minister take that into account in his response?
Even before the downturn in 2014, it was long realised that many of the wasteful and inefficient practices were not sustainable. The report by Sir Ian Wood in 2014 made a range of recommendations, including a joint Government and industry strategy for maximising economic recovery, or MER, and the creation of a new arm’s length body charged with the effective stewardship and regulation of UK continental shelf hydrocarbon recovery and with maximising collaboration across the industry. The new arm’s length body, the Oil & Gas Authority, working with industry, developed the MER UK strategy. Under the strategy, a range of taskforces have already delivered huge value: an additional 2.8 billion barrels of oil equivalent to be produced by 2050, in comparison with pre-Wood report baseline forecasts; average unit lifting costs reduced from £19 per barrel to £12 per barrel in 2017; and production efficiency increased from 65% in 2014 to 73% two years later. There is still a lot of upside there to be had.
Through Oil & Gas UK’s “Vision 2035”, it is estimated that the industry could generate £920 billion of revenue to the UK economy. By 2035, two thirds of the UK’s primary energy is predicted to still be produced from oil and gas, with 60% coming from our own UK resources. Renewable sources of energy will and must continue to grow over that time, but they will not be able to meet the full demand.
MER is a strategy that can co-exist with a low-carbon agenda. As efficiencies improve, fossil fuels are burned more cleanly, CO2 can be captured, stored and used to help enhance oil recovery, and the full transition away from oil and gas may actually be extended while still meeting climate change targets.
In summary, the future of the oil and gas industry is positive, but there needs to be flexibility and openness to change. We have seen support for this from the Government, which is very welcome. Transferable tax history was a great good news story from last year’s Budget and shows how important it is that Members of Parliament, especially those representing constituencies in the north-east of Scotland, speak up for the oil and gas industry. According to Oil & Gas UK, TTH is one of a range of policies that can help the industry realise up to £30 billion of future investment opportunities.
I will conclude by asking the Minister to provide, if possible, an update on the decision on the sector deal that has been mentioned. That would be most welcome.
I thank and congratulate the hon. Member for Falkirk (John Mc Nally) for securing this debate. As often happens during debates in Westminster Hall, although the issue might not directly concern Northern Ireland—our seas do not contain any oil or gas fields, at least at the moment—a number of my constituents work on oil rigs and travel over and return each week or fortnight, depending on their shifts. The debate is important for those constituents, but also because, although the gas and oil is found in the seas off Scotland, the United Kingdom of Great Britain and Northern Ireland benefits from it. The debate therefore affects every person, every family and every household in the entire United Kingdom of Great Britain and Northern Ireland, which is why it is so important.
We all know the importance of the gas and oil industry and how big it is, and the stats are clear: according to 2018 figures, 37,000 people are employed directly by the industry, and 127,000 are in the relevant supply chains. Most of those roles are in the offshore industry, which is also important to Northern Ireland. Some of the repairs done to the oil rigs and the apparatus that brings the oil and gas ashore take place at Harland and Wolff in Belfast, and it is important to note our input into the process. Statistics from 2017 indicated that 40,000 people were employed directly in the industry, and it is important to record the importance of the oil and gas sector to Northern Ireland. Oil and gas provided 72% of the UK’s total primary energy, and net imports of natural gas were around 45% of UK supply. The majority of oil—almost 80% of final consumption—is refined for use in transport. Those figures indicate how important the industry is to everyone in the United Kingdom of Great Britain and Northern Ireland.
The debate is also pertinent as we look towards the Budget. In 2016, the Chancellor of the Exchequer announced commendable reductions in taxation for North sea oil and gas fields to maximise the economic recovery of the North sea. The Budget also included commitments effectively to abolish petroleum revenue tax by permanently reducing the rate from 35% to 0%, to simplify the regime for investors and level the playing field between investment opportunities in older fields and infrastructure and new developments, and to reduce the supplementary charge from 20% to 10% to send a strong signal that the UK is open for business—we need the message to go out from this debate that we are open for business and working positively towards that. In recognition of the exceptionally challenging conditions that currently face the sector, those changes were introduced in the Finance Act 2016.
As has been said, although oil prices fluctuate between massive highs and lows, they are currently high. We want all regions to benefit from the oil and gas sector, so perhaps when he responds to the debate the Minister will indicate how we in Northern Ireland can continue to benefit from the oil and gas that we in the whole United Kingdom of Great Britain and Northern Ireland own, as individuals and as regions.
In the 2017 autumn Budget, the Government focused on decommissioning costs and announced that they would bring forward legislation to introduce a mechanism for transferable tax history. Tax relief on decommissioning costs is linked to tax payment history, so the new mechanism would allow tax history to be transferred along with the asset. The Government also announced that they would consult on reducing tax for decommission- ing costs incurred by the previous licence holder.
It is clear, however, that we must do more to address prices for consumers. The Minister may not be directly responsible, but my biggest plea to him is that, because energy prices fluctuate, people consuming oil and gas think they are saving money when they come to pay for it, but actually they are not. Back home in Northern Ireland, a number of constituents who changed between oil and gas six months ago have found themselves in a difficult place in the past few weeks. That is yet another squeeze on so many families who cannot afford it, and we must address that issue at the highest level.
I look to the Minister for advice on how we can and will secure the future of this industry, and on our ability to provide our own sustainable energy source for heating in this great nation of the United Kingdom of Great Britain and Northern Ireland.
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I thank the hon. Member for Falkirk (John Mc Nally) for securing this important debate.
I welcome the stated aim of the Oil & Gas UK trade association, which is
“to strengthen the long-term health of the offshore oil and gas industry in the United Kingdom by working closely with companies across the sector, governments and all other stakeholders”.
In late 2014, Her Majesty’s Treasury developed a plan to reform the oil and gas fiscal regime. Over the last 50 years the oil and gas industry has contributed more than £350 billion to the UK Exchequer in production tax revenue alone—not an insignificant sum.
In 2017 the UK Government’s industrial strategy stated:
“We can also reduce costs for the UK as a whole by making intelligent use of our oil and gas assets and expertise. While the move towards clean growth is clear, oil and gas remains one of the most productive sectors of the UK economy, supporting 200,000 jobs directly and in the supply chain, and generating £24 billion in annual exports. The emerging shale gas industry offers the prospect of creating jobs, enhancing the competitiveness of downstream sectors and building up supply chains.”
It seems likely that shale gas will be extracted only south of the border, as the Scottish Government appear—I emphasise the word “appear”—to have placed a moratorium on that source of energy. I understand, however, that imported shale gas from the US is helpful when securing the future of the important Grangemouth plant.
I read with interest a recent post note in the journal of the all-party group for energy studies, which considered decarbonising or reducing the carbon content of UK gas supplies as an option for reducing emissions from heating, potentially substituting natural gas with hydrogen or biomethane. I am pleased that such welcome research is continuing in that field. Indeed, some businesses in my constituency are already utilising biomethane, although not necessarily to the exclusion of natural gas.
The opening in February 2017 of Aberdeen’s Oil & Gas Technology Centre clearly illustrates both the UK and Scottish Governments’ commitment to the future of the oil and gas sector. The £180 million investment aims to unlock the full potential of the UK North sea for future generations, which is vital given that future energy demand, in not just the UK but globally, is predicted to increase as global living standards and population levels rise.
Another important aspect for the future is securing for the UK work associated with the decommissioning of platforms and subsea facilities where a cost-benefit analysis proves that to be prudent. The Oil & Gas Authority has stated that such work may create a globally competitive market for the UK. The aim of the Department for Business, Energy and Industrial Strategy is to maximise the economic recovery in relation to the UK’s continental shelf, and it endeavours to secure maximum value for economically recoverable hydrocarbons.
Although the oil market is volatile—post 2014 the price of a barrel of Brent crude plummeted—it is clear that oil and gas have a positive future. That future may not be a mirror image of the past, but rather a new vision, as scientific research and innovation define and constantly refine it for our children and grandchildren. Oil and gas may not have the same exclusivity they once experienced, but in my view they will remain part of an inclusive package of energy options for some time to come.
Let me turn to a fuel from the past—coal. These days, open-cast or imported coal is used mostly as an integral part of the UK manufacturing sector, especially in the chemical process to make steel and cement. Many Members present, however, will recall when coal was king. Collieries in Ayr, Carrick and Cumnock, such as Littlemill, Killoch, Barony, Knockshinnoch and Beoch, to name but a few, fuelled the industrial revolution and kept the home fires burning. Sadly, there are no longer any deep mines in the United Kingdom, and coal is outlawed as a polluting fuel. With the recent alarming UN report on global warming, we must be aware that the same fate may befall oil and gas in the rush to embrace clean renewables and to prevent a catastrophic rise in global temperatures. In closing, therefore, I ask the Minister to comment briefly on that recent UN report on rising global temperatures.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Falkirk (John Mc Nally) on introducing what is clearly a timely debate, given that the Budget is forthcoming. As he rightly said, that Tory Budget cannot undermine the future of the oil and gas industry by once again using the North sea as a cash cow—terminology that was effectively recognised even by the hon. Member for Ayr, Carrick and Cumnock (Bill Grant), who acknowledged the £350 billion that the UK Treasury has accrued over the lifetime of the oil industry. That money has simply been frittered away.
Will the hon. Gentleman give way?
No, because I have limited time.
Where is the legacy from the UK Government? Where is the onshore infrastructure investment to support Aberdeen? It has been left to the Scottish National party Government to pick up the pieces, including the Aberdeen bypass and rail improvements. Where is the oil fund we have called for? Norway’s oil fund, started in 1990, has now topped $1 trillion in assets, and last year returned a profit of $131 billion. That alone gives lie to the myth that Scotland relies on the broad shoulders of the UK to deal with any price volatility. Careful stewardship would have taken care of that.
Let us look at the measures the UK Government have taken recently. In the spring 2016 Budget, they reduced the supplementary charge back to 10%. That was very welcome, but the predicted cost to the Treasury of £l billion was only a third of the inheritance tax giveaway to millionaires—such were their priorities. In the November 2017 Budget, the transferable tax history was a welcome measure, but given that it was predicted to bring an additional £70 million in revenue to the Treasury, that was not a difficult decision. The UK Government need to close out the process going forward. Over the same period, we have had the £1 billion carbon capture and storage betrayal. That project would have facilitated diversification from the wider oil and gas industry.
As others have recognised, the offshore oil industry has clearly been a great success story and has turned Aberdeen into a global city. Despite the predictions of when oil will run out, there is still a bright future. Just last month, Total announced a major gas discovery off Shetland, with an estimated 1 trillion cubic feet of gas that can be extracted. Rosebank, off the west of Shetland, is estimated to contain around 300 million barrels of oil. Equinor has called it
“one of the biggest undeveloped finds on the UK Continental Shelf.”
Overall, the North sea holds significant potential, with the equivalent of up to 20 billion barrels of oil remaining. That could sustain production for the next 20 years. I repeat that the UK Government cannot do another cash grab on the industry. Production statistics show that the sales value of oil and gas has gone up, and we know that production of oil and gas remains 23% higher than the level recorded in 2014-15. Even so, the UK Government must introduce measures to improve the exploration and attract fresh investment. They need to support the industry in its ambitions to increase the total economic value of the North sea.
With the publication of the Intergovernmental Panel on Climate Change report, we have to recognise the wider climate change issues and that the world is not on track to meet the temperature goals of the Paris agreement. The UK Government will have to take action in that regard, but that does not mean that we need to pull out of the North sea any time soon. Even if we did, we would then be reliant on imports.
Scotland’s energy strategy recognises that a strong domestic oil and gas industry can play a positive role in supporting the low carbon transition. What would help that transition, while we are still extracting oil and gas, is carbon capture and storage, greater investment in renewables, and allowing onshore wind developments in Scotland. The UK Government must also back away from the nuclear folly, and invest that money in offshore renewables, grid upgrades and directly in energy efficiency measures in homes.
We must recognise that the North sea industry is highly regulated, with some of the most advanced and comparatively least polluting production methods in the world. The industry is focused on reducing its carbon footprint and average emissions have fallen year on year since 2013. An oil and gas sector deal could help that process. Where is it? We really need one, and we need to hear about that from the Minister. The future of the oil and gas industry is bright, but it needs better leadership from the UK Government.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Falkirk (John Mc Nally) on securing this important and timely debate.
Hailing from the north-east of Scotland, having grown up surrounded by the oil and gas industry, having worked for an incredibly brief time in the sector, and now representing a constituency to which its continued success is vital, I know all too well the importance of the industry to not just the north-east of Scotland but the wider UK economy. Looking around the Chamber, contributing to debates about the industry’s future seems to be the preserve of Members who represent such constituencies as mine, which is unfortunate. Yes, the industry is based proudly in the north-east of Scotland, but it is a UK-wide industry that has contributed more than £330 billion to the British economy, supports more than 330,000 jobs across the UK and has a supply chain worth nearly £30 billion stretching into every nation, region and community across our islands—as demonstrated by the hon. Member for Strangford (Jim Shannon)— both servicing domestic activities and exporting almost £12 billion of goods and services to other basins across the world.
The success of the North sea oil and gas industry is, of course, a story born in the north-east of Scotland—all good things are—but it is a whole-UK success. It depressed me beyond belief to hear, not that long ago, a colleague exclaim, when he heard about the recent discovery west of Shetland on the Glendronach field of around 1 trillion cubic feet of extractable gas—the largest discovery of conventional gas in the UK since 2008, with a productive life of 10 to 15 years—that that was remarkable. He did not know that any exploration was going on anymore. He thought it was all decommissioning and closing up shop for the North sea oil and gas industry.
Sadly, that is a common misconception. Of course decommissioning is taking place in the North sea at the moment, and the rate of decom activity will increase in the years ahead, but that is only one small part of the story. Anyone who takes a stroll around the Oil & Gas Technology Centre in Aberdeen or visits the Oil & Gas Innovation Centre in Bridge of Don, in the constituency of my hon. Friend the Member for Gordon (Colin Clark), will be blown away by the great advances in technology being made. There is exciting, explorative work being done on the smaller fields in the North sea, led by enterprising smaller companies growing in the sector, such as ROVOP in my constituency. There is also the sustained commitment to the area of big companies, such as BP, which recently announced its two North sea developments, which are expected to produce 30,000 barrels gross of oil equivalent per day at peak production.
This is not an industry in decline; this is an industry with a positive future, but it remains in recovery. We are still emerging from the deepest and most sustained downturn in the sector’s history. Many jobs were lost, some companies disappeared completely and others had to radically change how they did business. However, through shared learning and experiences, through economising and doing much more with much less, and with the support of the Scottish Government and the UK Government, which has supported the sector to the tune of £2.3 billion, the industry is confident about the future.
However, as many Members have said, what the industry needs more than anything else is fiscal stability. The North sea is one of the most attractive mature basins in the world in which to invest today, because of the long-term and fiscally sensible approach taken by Her Majesty’s Treasury since 2014. It was evident a couple of months ago, however, when there was just a hint of a change in policy or an increase in tax, that that would upset the recovery and put off investment, which could have damaging consequences.
Let the call go out from the Chamber today, from every Member and from every party represented, that we wholeheartedly support our oil and gas industry, that we recognise the huge value that it brings to the entire United Kingdom and that now is not the time to consider changing the fiscal situation, increasing tax or putting off further investment. Let us work with the sector and both of Scotland’s Governments to ensure a positive, long-term and productive future for this world-leading industry.
It is a pleasure to see you in the Chair, Mr Hollobone. I congratulate the hon. Member for Falkirk (John Mc Nally) on securing the debate, only a few months after my own debate on the industry.
Oil and gas is a massive part of the UK economy and an enormous part of my constituency of Gordon, with 233 service companies operating from Gordon alone. I routinely claim that I have the largest oil and gas footprint, but other Members may try to argue the point. Thanks to this Government, and the transferable tax history that will come into effect in November, billions of pounds of investment will be released into the industry. I am disappointed that voices from the Opposition Benches have said that transferable tax history is the wrong thing to do.
The industry continues to develop efficiencies in decommissioning, supported by Her Majesty’s Treasury. It contributes £1 billion a year to HM Treasury—somewhere short of the estimated £11 billion that the Scottish National party, during the independence referendum, claimed would be contributed. Fifty-nine UK constituencies have a major oil and gas footprint and, as my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) said, the same Members seem to turn up for such debates. Many other areas should realise what a significant industry oil and gas is. It is truly national and international, and it is not a dying industry. It has shrunk from 4.5 million barrels a day to 1.5 million. It is still of great importance, and it has tremendous longevity.
Why is that industry so important to the north-east? The north-east has 8% of the population of Scotland, but 18% of its economy. Even during the downturn, unemployment only got to 1.2%, because the people of the north-east believe in getting out and working, even if it is in another part of the world. The north-east is the engine room of the Scottish economy. The cost of living is higher and house prices were driven up by the boom years, but we have the highest council tax bills. It is the most expensive place to live in Scotland, because the Scottish Government chose to put council tax bills up. Employers feel penalised by higher business rates, to the extent that buildings are being knocked down in the north-east of Scotland. I recently drove past the Baker Hughes GE building in the constituency neighbouring mine, and I am told it will have to be knocked down because the business rates are so punitive.
The UK Government have delivered, with transferable tax history, a massive incentive for oil and gas estimated at £30 billion. The fiscal policy that is making the UK continental shelf the place to produce oil and gas is that of the UK Government, and there is low corporation tax for the whole sector, UK-wide, because of the UK Government. In the north-east there is the highest concentration of technicians and engineers in the UK. We have an incredibly strong and robust economy. The industry puts safety first, absolutely, and I pay tribute to Step Change in Safety, which has brought together producers, the service sector and offshore workers in a collaborative effort.
As for any downturn in activity, the Oil and Gas Authority estimates that £400 billion is still to come from the North sea through collaborative action. Chrysaor, a private equity-backed organisation, invested £3.8 billion to buy Shell assets. Wood Group bought Amec, to be a FTSE 100 company. General Electric and Baker Hughes have merged their oil and gas, which is going to float on the New York stock exchange. There is not a lack of activity because of Brexit—far from it. The size and type of mergers and acquisitions deals last year signalled confidence in the UK continental shelf. The sector needs fiscal stability and I agree with other Members that that is a message we are sending, loud and clear, to HM Treasury. Businesses are not seeking to exit the UK continental shelf, which is still seen as a strategically important basin. SNP claims of a Brexit downturn simply do not ring true. They should look at the money and where it is being invested. In the past couple of days, I and colleagues visited Wood Group, an £11 billion organisation only 6% of whose business is in the North sea, because it is a dynamic company investing further afield. As to oil and gas being something of the past, let us remember that it is our throwaway culture, not the hydrocarbons, polluting the sea.
Oil and gas have been pivotal in transforming the carbon intensity of the power sector, as has been mentioned. Let us get to the nub of things. Higher taxes in Scotland will encourage companies to register and operate from outwith Scotland, damaging its tax base. Punitive business rates in the north-east are costing jobs. Having visited 90 north-east firms related to oil and gas, I have not heard anyone speak about Brexit. Every single one has mentioned business rates. Both Scotland’s Governments need to get their shoulder to the wheel and drive the industry forward.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Falkirk (John Mc Nally) for obtaining the debate. The timing is good, as other Members have mentioned, given that we are in the run-up to the Budget.
I want to talk first about Brexit, which several colleagues from throughout the House have mentioned. The economic report put out by Oil & Gas UK makes the point that 7% of the offshore workforce are from EU countries and refers to the fact that before Bulgaria joined the EU it took four days for goods to come from there to Aberdeen to be used in the oil and gas industry, but that they were routinely held up for an additional week because of customs controls. If we do not have a customs union deal that allows for those goods to come through the border without being held up for a week, it will cause problems for our supply chain companies and for the wider industry. A fifth of people living in Aberdeen were not born in the UK. We have done immensely well at attracting immigration, which has been good for our industry. It is a huge concern that that might be less easy after Brexit, particularly if the immigration plans mentioned at the Conservative party conference go through and we end up in a situation where very few immigrants are allowed to come to the UK. That would cause a real problem for my city and for the oil and gas industry as a whole.
The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) set out particularly clearly the requirement for a stable taxation regime for the oil and gas industry. One of the points most often raised with me is that if there is a story in the Financial Times about the possibility of the Treasury increasing, or massively changing, tax in relation to oil and gas, that story alone causes a problem for the industry—it makes a dent. We need a clear commitment from the Chancellor in the Budget to stability and predictability in the taxation regime.
We were both at the same meeting when the Exchequer Secretary to the Treasury came up. I think it was the myth being peddled that did the damage—he clarified it from the Treasury. Does the hon. Lady agree?
I do not disagree at all. I understood that that was a private meeting, so I did not want to talk about what that Minister said during it, but it would be good if the Chancellor could make a clear statement in the Budget. I agree that it was the myth, rather than any statement by the Treasury, that caused the problem. I am sorry; I thought I had been clear on that point.
There are other asks for the Budget. I have not heard anyone on the Opposition Benches being negative about transferable tax history. I apologise to the hon. Member for Gordon (Colin Clark), but I was calling for that in March 2016, which was more than a year before he was elected. We have consistently called for changes in the taxation regime for late-life assets. I have made the case for that on many occasions, and I am pleased that it may be coming through—we hope it will. It is a good example of the industry working together. Things have happened a bit more slowly than I would have liked, but the industry worked well with Government, and the conversation went well about trying to make the tax regime work from the point of view of both the Government and the industry.
The importance of transferable tax history is because of what happens when assets at the end of their life are transferred to another company. Something that belongs to a big company with many different onshore installations will probably not be its No. 1 priority, but if it belongs to a new entrant and is all that it is concentrating on, it will be a priority. That is why transferable tax history is so important for maximising economic recovery.
The point about end-use relief is a good one. My hon. Friend the Member for Falkirk and the hon. Member for Waveney (Peter Aldous) both mentioned it. Whatever happens, it is vital that the Government should speak to the industry about the best way to make the change work, if there is to be a change, and that as much notice as possible should be given of changes to end-use relief. We nearly had a big disaster in July, with the pulling of end-use relief. It is clear that that cannot happen. The industry and the Government need to continue to speak to each other to make it work better.
The final Budget matter I want to speak about is the sector deal. If the Chancellor could announce progress on that it would be phenomenal—excellent. I would be really pleased. If not, it would be good to know when a commitment is likely. My impression from speaking to those in the industry who worked on the deal is that they feel they worked together incredibly well on it. They feel that the proposal that has been put forward to the Government reflects the industry’s needs and requirements, so it would be positive if the Government brought it forward sooner rather than later.
I want to talk about “Vision 2035” and focus on the subject of the debate—the future of the oil and gas industry. I will not talk much about the industry downstream—I apologise to anyone involved in it—because I represent Aberdeen and because my hon. Friend the Member for Falkirk, who represents Grangemouth, and the hon. Member for Waveney have spoken about that important aspect of the industry. “Vision 2035” is the Oil & Gas Authority’s vision for securing the supply chain and the oil and gas industry in the north-east of Scotland to ensure that, in 2035, it still makes money for the Treasury, supports our local economy and provides jobs in the local area. That will happen only if the Government provide support now, including the stable fiscal regime that we spoke about earlier and support for the supply chain. They must talk positively about the industry, consider its asks, and make changes if need be.
The North sea field is a late-life asset—it is incredibly mature. It was one of the first fields in the world to reach that level of maturity, so our engineers who go out there are doing incredibly innovative things. They are working on enhanced oil recovery, bringing in tech in the supply chain, and using longer tiebacks so that small pools can be exploited. It is groundbreaking, world-leading stuff; this is the first time some of it has been done. If we get the technology right, we will be able to export it around the world even when there is no oil and gas in the North sea, but we must ensure that those companies stay anchored in the north-east of Scotland and the wider area.
The hon. Member for Gordon mentioned how many oil and gas companies he has in his constituency. I am sure he has more than I do, but I have the services that support those companies—two local authorities, the hospital and all the other vital things that the industry requires. As the hon. Member for West Aberdeenshire and Kincardine said, it is hon. Members from the north-east of Scotland and those who represent constituencies with oil and gas industries who come to speak in debates like this. I have taken part in many such debates in my time as a parliamentarian, and it is interesting that we and Conservative Members are largely asking for the same things: transferable tax history, the sector deal and support for the Oil & Gas Technology Centre, which is doing absolutely phenomenal work. Previously, we were asking for the Aberdeen city deal. We are calling for the same things because we all go out there and speak to people who work in the oil and gas industry, and the companies involved in it. We ask them what they need, and they say pretty consistently that the most important things are stability and predictability.
Support for exploration is also hugely important just now. Anything that can be done to encourage exploration and help big projects be signed off will be incredibly important. More big projects have been signed off in the past year than in the previous couple of years, which is hugely welcome news, but we need them to keep coming through the pipeline so that we can secure the future economic benefit.
Hon. Members in the Chamber largely speak with one voice and have the same asks for the oil and gas industry, but I sometimes feel like we do not make as much headway with Ministers in the Department for Business, Energy and Industrial Strategy and the Treasury as we could. I hope that the Minister hears everything we are asking for. We are all calling for the same things, because we are reflecting the voice of the industry. I would very much appreciate it if he would ask the Chancellor to make a clear commitment to a stable fiscal regime in the Budget.
We have had an excellent debate, with informed contributions all round, and I congratulate the hon. Member for Falkirk (John Mc Nally) on securing it. As hon. Members have said, this is a very important debate because the Budget is so close and because there are wider issues relating to the role that the oil and gas industry will play in a substantially decarbonised future. There are a number of assumptions about how oil and gas will be used in the future. As hon. Members have said, the debate is taking place literally the day after the IPCC published its report on global warming and its effects, and discussion about that report is just beginning. That must be the context for our discussions about the future of oil and gas.
As hon. Members, including the hon. Member for Kilmarnock and Loudoun (Alan Brown), have said, although the oil and gas industry in the North sea has recovered substantially from the miserable predictions and prognostications of 2014-15—it is estimated that production will be up 5% over the coming year, exploration is picking up, and various other indicators show that the industry is in a better shape than it has been in for quite a while—we must nevertheless be extremely wary of assuming that happy days are here again, and that the industry can be the cash cow for the Budget that it has been perceived to be in years gone by. The industry’s long-term future is of a different order from anything that has happened in the past, so we should strike those thoughts from our minds. Although it will make a good return for the Exchequer in years to come, it should not be seen as a cash cow in the future.
I say that because we face a period in which the lessons of the downturn, up to the recent upturn, must be put in place to ensure the long-term future, prosperity and health of the industry as a whole. There has been a recent efficiency trend: development drilling has fallen substantially, but the costs of drilling have reduced substantially, and the average unit operating costs have halved from about $30 a barrel in 2014 to $15 a barrel now. Those tremendous efficiency gains will stand the sector in good stead for the challenges that lie ahead. We can use them to exploit small pools, which will be one of the staples of exploitation and development in the future.
It is unlikely that any new Brent fields will be discovered. In that context, we need to understand, as hon. Members said, that the North sea is not just a mature field but a very mature field: 43 billion barrels have been extracted, and there are perhaps about 10 billion to 20 billion barrels left to extract. Its future therefore needs to be in the best possible hands.
I commend the creation and operation of the Oil & Gas Authority and—hon. Members have mentioned it—“Vision 2035”, which the OGA is putting forward for the future of the industry. In that vision, it does not just talk about continuing business as usual, but looks at the much longer-term future, even beyond the point at which the very last reserves have been produced. One of the OGA’s missions is to create a sustainable energy service and technology centre long after the final economic reserves have been produced. We need to look not just at business as usual, but at a range of other things that the industry can start to develop, and is developing, as the North sea field becomes even more mature. Of course, one of the things it can do is develop decommissioning skills on a worldwide basis, so that we can ensure not just that the decommissioning in the North sea is done in the best possible way, but that those skills can be exported across the world.
We also need to contemplate a future of carbon capture and storage in the North sea and the use of decommissioning as a possible way forward to a position in which the North sea is not only producing oil and gas, but storing the carbon that comes from those processes and creating an industry so to do.
We need to be mindful of the fact that, as I mentioned at the beginning of my contribution, the IPCC report on global warming and the future of the world has just come out. It is pertinent to our discussions today, because it underpins what kind of long-term future there is for oil and gas. I consider that the long-term future involves looking at how oil and gas can be used in a range of ways that are not entirely familiar to us today but will be essential for the sinews of British industry. Oil and gas will have a substantial role to play, for a very long time, in those areas of activity. I am thinking of chemical products for which oil is irreplaceable and of alternative vectors such as hydrogen, if the CCS implications of the formation of hydrogen can be managed. All those things imply that there is a substantial future for oil and gas from the North sea.
We know—I am not talking off the top of my head here, I am referring to BEIS’s updated energy and emissions projections—that the demand for oil and gas in the UK economy, is likely to go down substantially. Indeed, we can see that from looking at the 1990 figures, when there was a primary demand for oil of 87 megatonnes of oil equivalent and for natural gas of 97 megatonnes of oil equivalent. In the year when “Vision 2035” comes to fruition, the demand is projected to be something like 70 megatonnes of oil equivalent for oil and only 28 megatonnes of oil equivalent for gas.
There will be a substantial decline in demand, but that means, it seems to me, that the North sea can provide a secure UK supply for the declining demand over that period. It is surely best, for energy security purposes and many other reasons, to ensure that our supplies for the future come from the UK. That is the future that I want to see for the North sea oil and gas industry, by means of efficiency and by means of the innovative techniques mentioned this morning—the ways of managing a mature field so that it works in the best way possible in the national interest and in the interests of having very different future for oil and gas from what we have seen hitherto. We must ensure that it works for the UK and that it has a secure future. I hope that the Government will be able to join in that vision and provide support where necessary to underpin that innovation and those new methods of doing things, so that the oil and gas industry can be in the best shape possible to face that very different future.
It is a great pleasure to serve under your chairmanship, Mr Hollobone. Indeed, I congratulate you on the discipline that you have brought to these proceedings, although curtailing the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), to 10 minutes is a clear infringement of his human rights and of the normal way he behaves. In fact, some would say that it is a crime against humanity that his erudition, which is never known to be brief, was curtailed. I look forward to hearing him, as I did today, on many other occasions.
I genuinely congratulate the hon. Member for Falkirk (John Mc Nally) on not just securing the debate, but the thoughtful way in which he made his contribution. That sums up today’s debate. There is general consensus, and I hope hon. Members do not think I am saying this out of complacency, but the fact is that, as the hon. Member for Aberdeen North (Kirsty Blackman) said, most things to do with oil and gas are done on the basis of consensus. I wish there was the same attitude towards other debates in which I have the pleasure of speaking.
When I became Energy Minister, one of my first visits, in August of last year, was to Aberdeen—several hon. Members were with me that day—where I met industry leaders and visited Robert Gordon University to see the dynamic advanced response training simulator. That is relevant today because of the comments from the hon. Member for Falkirk about Piper Alpha. I saw a lot of the virtual reality equipment there, and I felt that I was actually on a rig. Everything was about health and safety and preventing the kind of incidents that happened at Piper Alpha. It is a tribute to the area that academia, industry and Government work together. I was most impressed by what I saw.
I understand the hon. Gentleman’s constituency interest because of the Grangemouth industrial site, which I visited as an A-level economics student in 1975—many hon. Members here were not born then, and some of their parents were probably only just born. However, I do remember the industrial site; I remember the scale of it. I think of it when I hear figures such as 8% of Scotland’s manufacturing base and 4% of GDP; I will never forget that visit, so I do understand the issue, and so do the Government.
In a very thoughtful speech, the shadow Minister expressed how important oil and gas are for the UK economy. I am not paid to promote the shadow Minister; I just cannot help but compliment him at various times. He talked about the mutual vision for the future. In fact, I kept looking up at him and seeing him reading from a document with blue print, which I thought was a Conservative party document, as the colour appeared to be the same, but which I then realised was, of course, “Vision 2035”, the authors of which at least had a good idea of which colour it should be in. But it does show no complacency; the serious point is that it does show a vision for the future, from what many people, out of ignorance, believe is a clapped-out former industry—they think that because they remember the boom days. One has only to visit it to realise that that is far from the case.
The upstream industry alone supports more than 250,000 jobs. Then there is the supply chain, supported by the sector, in key clusters all over the country. The hon. Member for Strangford (Jim Shannon), who has been at every single Westminster Hall debate I have ever spoken in, contributed extremely well. He mentioned the importance for Northern Ireland of the supply chain. I am very pleased to say that it is a United Kingdom supply chain and is not restricted to the specific area that many hon. Members have spoken about today.
The hon. Member for Aberdeen North mentioned Brexit, which came up in a few of the contributions. I do not take it lightly, I assure you, Mr Hollobone—none of us does. Many of the good things that have happened in the past couple of years have happened in a time when things have been written off because of Brexit, but I want to say to the hon. Lady and others that the Government fully understand the need for frictionless trade, on which the oil and gas industry has long depended, whether in the movement of goods, services or people. I assure her and other interested Members that my Department has made that matter very clear to other parts of Government—it is our job to do that, and we have. We are fully aware that the sector has paid more than £330 billion in revenue to the Treasury, which is phenomenal. I know of no other single sector that has been as beneficial to the Government over the past half-century.
The end-use facility mentioned by my hon. Friend the Member for Waveney (Peter Aldous) and by the hon. Member for Falkirk relates to customs procedures. I assure Members that Her Majesty’s Revenue and Customs continues to discuss with the sector the possibility of future mitigations being available, and which ones. The issue is complex, and I cannot claim to understand the full detail.
Since 2014, it is fair to say that the industry has had a torrid time as a result of the collapse in the price of oil. From that point of view, I am pleased that the price has gone up, but what I realised on my visit to Aberdeen was that, despite the decimation of the industry and its contraction—a statement of fact about the number of employees and so on, as was explained to me—good things resulted as well, such as some new technologies.
I remain optimistic for the future. I feel that the tripartite approach between the OGA, industry and Government, which hon. Members mentioned, is particularly important. I am pleased that, since its establishment, an extra 3.7 billion barrels have been forecast, and production has risen by 16% since 2014 figures, with a reduction in the production costs. The issue was forced by what happened to the price, but those cost reductions will remain and be improved on.
Optimism is returning to the North sea. My hon. Friend the Member for Gordon (Colin Clark) mentioned the amount of mergers and acquisition activity over the past couple of years—about $8 billion-worth last year—with some significant investment involving new players to the basin. Divestment by some of the supermajors does not mean that they are losing interest; it is part of the natural order of a mature basin, with newer, smaller companies coming in. Shell is investing in new frontier areas, and BP’s development is moving well. There is huge potential.
To determine the industry’s potential, we obviously need responsibly regulated exploration, and the Government support that. There are a lot of challenges, and we understand that. The Government all realise that exploring and drilling for the upper reaches of the remaining resources is more difficult than doing so for the original resources—that is a statement of fact—and the measures that we have put in place since 2014 will contribute significantly towards that.
The focus of the debate is on the future. My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) asked me to comment on the IPCC report, and our clean growth strategy is clear. We are focused on meeting our Paris agreement climate change targets, and we have asked the Committee on Climate Change for advice on our targets in the light of the new evidence.
Whatever happens, oil and gas will be part of the energy mix for decades to come. We know that we have to reduce demand to meet our climate targets, but this industry has a lot going for it. Gas can play an important role, and so can oil. My Department’s main interest will be to continue the security of the energy supply, which means that we have not seen the end of hydrocarbons.
I am running out of time, and I will do my best to talk briefly about the sector deals mentioned by several hon. Members. One of my responsibilities is the implementation of sector deals. We have had a lot of discussion with the industry, and I am confident that these will proceed. As my hon. Friend the Member for Banff and Buchan (David Duguid) pointed out, this is an ambitious sector deal to support the industry’s “Vision 2035”. We have not yet reached the final stage of the process, we will do so quite soon. It is a question of assessing the value for money of the amount of contribution expected in the deal from Government, which takes more time than people think.
This is a complex industry with a great future. My hon. Friend the Member for Banff and Buchan said that it is an industry with a lot going on, and we know that the Government, the industry and the Members who have spoken today will be an important part of its future.
On a point of order, Mr Hollobone. I may have misled the Chamber inadvertently by quoting a statistic erroneously. On the estimates for natural gas usage in 2035, the figure should be 59 megatonnes of oil equivalent and not 29, as I believe I said in my speech.
Thank you for correcting the record.
I thank the Minister for his kind and generous comments. All Members have been supportive of the debate. Many points were made about how vital this industry is to the economy in the transition to renewable and sustainable energy in the future. We are all agreed that we need a stable regime in place so that we are all aware of what will happen for the future of the industry. The points made about short-termism were excellent. We seem to have been practising short-termism for decade after decade, and that has to stop.
I particularly liked the emphasis on safety in the North sea and on how important it is to retain skilled, clever and well-trained workers. I was not actually around at the time of the Piper Alpha disaster—I was running businesses at the time the news started to come out. I was terrified, as everyone else was, and I read the papers and listened to the news to find out whose friend or relative had been killed and who had been injured. The long-term consequences of that disaster, such as post-traumatic stress, are still going on today. That should never be allowed to happen as long as we are in charge of safety, so the emphasis on safety is appreciated.
The need for a collaborative approach has been well versed. We are all singing from the same hymn sheet. We might want to get there in different ways, but I think we are all trying to get to exactly the same place. I am very appreciative of that.
Good and interesting observations were made during the debate, which showed a good understanding of local and global issues and of the importance of the sector, in particular to our constituents and the businesses in our constituencies, including all the support industries. The basic thing that most people like in their life is stability and an understanding of where the future is going. I hope the Chancellor and the Government have listened to the points made today. We need certainty of policy and of investment—everyone present agrees that that is what needs to happen. I am extremely happy with the debate.
Question put and agreed to.
That this House has considered the future of the oil and gas industry.
Antisocial Behaviour: Hull and the East Riding of Yorkshire
I beg to move,
That this House has considered anti-social behaviour in Hull and the East Riding of Yorkshire.
It is a pleasure to serve under your chairmanship, Mr Hollobone. It was with a mixture of relief and disbelief to the point of amusement that I heard that austerity is over. Perhaps the Prime Minister could let us know when to expect to feel or see any difference, because many of my constituents feel only anger and upset that their lives are blighted by antisocial behaviour. I blame austerity for the unacceptable rise in antisocial behaviour. As always, those who deserve it the very least are expected to pay the highest price. Surely, it is not too much to say that in our modern society, everyone has the right to feel safe and secure at home.
I represent everyone in my constituency whose life has been made a misery by antisocial behaviour. My constituents and I have clear demands and expectations for the Minister that I hope will be listened to carefully and addressed. I want the Government to reverse the 31% funding cuts they have made to Humberside police since 2010. Will the Government follow Labour’s lead by committing to a fully funded statutory youth service, change the school accountability system and increase funding for schools to stop an increasing number of children being off-rolled and excluded? Will they increase funding for social workers and early intervention programmes by increasing the children’s services budget and support community groups with grassroots solutions to antisocial behaviour?
Some people dismiss antisocial behaviour as a mere nuisance, but not me. Crime and antisocial behaviour affect people of all incomes and backgrounds, but unfortunately it seems that the poorest and the most vulnerable are always disproportionately affected. Although antisocial behaviour may be a different category of crime from those that capture the headlines in our national newspapers, it still has a huge impact on the lives of my constituents. One, whose property was vandalised, told me that she worries
“what the next level is, for the perpetrators. What will they do next, where and to whom? Whilst I realise, it’s just to property and not to humans, it’s what it represents, in our society.”
One young man was subjected to daily shouting and swearing from a neighbour and her friend. They damaged his car and personal belongings, constantly banged on his door at all hours of the days, and intimidated him by approaching him when he was outside and looking into his flat’s window when he was inside. That young man had severe mental health problems and was attempting independent living for the first time. This antisocial behaviour caused a huge setback for him. My constituent Chris from Hessle contacted me today to share the frustration and anger of the biker community at the high number of motorbike thefts. The police used to run an operation called Yellowfin, but everything has had to be reduced because of funding cuts.
The first reaction of most people to antisocial behaviour would be to call the police. Before the summer recess, I spent a morning with Humberside police. Whenever I spend time with our public servants, be they nurses, doctors, firefighters or others, I am always amazed by how dedicated they are to their vocation and to helping people. The police were no exception. I hope hon. Members join me in giving special thanks to Inspector Kirsty Tock, who is in my thoughts at this particularly difficult time for her. If it was up to them, all police officers would work every case until they were solved to the victims’ satisfaction, but unfortunately we live in a world of limited resources. Because of the decisions made by this Government, those resources are getting more limited.
Since 2010, Humberside police’s budget has been cut by 31%. In reality, that means 392 fewer officers and 54 fewer police community support officers. In order to service 999 calls, officers and resources are being diverted away from neighbourhood policing because there are simply not enough police officers to do it all. We understand that high-quality, well-resourced neighbourhood policing is vital to deal with antisocial behaviour. Officers who know the area and who know the children and families who need support are crucial to identify when intervention is needed and to gather evidence so that there are consequences for antisocial behaviour. That policing model is broken, because of the cuts. The police have to divert their neighbourhood policing team to deal with 999 emergencies. We need enough police to do both.
The visible police presence in our communities has shrunk and police stations have disappeared. A notable example in my constituency is the complete lack of a police station in Hessle. The Labour group of councillors in Hessle and I completely opposed that move, and we are working with Humberside police to try to ensure that some kind of police presence is brought back.
I do not hold any police officer or PCSO responsible for the rise in antisocial behaviour; I blame the Government and their deliberate choice to cut our public sector—a policy that they have pursued with relish since 2010. In fact, I wholly support our police services; I am as disgusted as they are with the pathetic pay increase that they have just been given. I support an increased police presence, but I do not believe that increasing police numbers will magically solve all the problems associated with antisocial behaviour. In west Hull and Hessle, when the police deal with an antisocial behaviour problem, that problem just moves somewhere else in the constituency. A holistic approach is needed to tackle the problem.
I congratulate the hon. Lady on bringing forward the debate. I am interested in the issue of antisocial behaviour and I want to suggest some possible solutions. In my constituency, there were high levels of antisocial misbehaviour over a period of time. We took an initiative from the churches, which came together in concern for their community to work alongside a faith-based group called Street Pastors. In conjunction with the council, the police and social services, they have endeavoured to bring antisocial misbehaviour levels down, and they have succeeded. I suggest the Street Pastors initiative to the hon. Lady as something that is outside the normal sphere of what is on offer, and I would be happy to send her the details. I think that initiatives that come from people within the community can achieve change.
I thank the hon. Gentleman for his intervention and I will certainly look into that initiative.
One of the most striking things about the antisocial behaviour in my constituency, especially in Hessle, is the number of constituents who report young people as the cause. Although this issue is not exclusively about young people, antisocial behaviour tends to be carried out by younger people. Earlier this year, I co-sponsored a Bill brought forward by my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) to make youth services provision statutory. In his speech to bring in the Bill, my hon. Friend quoted a 2016 survey that found
“600 youth centres had closed around the country, 3,500 youth workers had lost their jobs, and 140,000 places for young people had been lost… In 2010 we spent £1.2 billion on youth work, youth services and related youth activity; last year we spent £358 million…a 68% cash-terms cut.”—[Official Report, 6 June 2018; Vol. 642, c. 314.]
A parent of a child who has been involved in some antisocial behaviour contacted me to ask me for help. She asked,
“Where can my child go? What services are out there? What support can I have?”
Youth services provide a vital role in supporting young people across the country. They are described by Anna Barker, chair of the British Youth Council, as
“a supportive place for young people to become a force for good in society”.
When I look at incredible youth services like The Warren and Hessle youth club, I completely agree. Our youth services have been targeted for budget cuts, which have created the conditions in which crime can thrive, leaving young people vulnerable to violence and denied the opportunity to build a positive future. I am glad that Labour has promised to consult on making those services statutory. I plead with the Minister to look at doing the same.
The Minister will be pleased to know that I am not just asking for more money, but for a change in attitude through a change in policy. As a member of the Education Committee, I am deeply concerned about the increasing number of children being excluded and off-rolled from our schools. A recent study proved that dozens of schools exclude more than one in five children. Those children are not leaving school for a high-quality education somewhere else, but are often found wandering around public spaces in our cities. They have been written off by society at a young age. Is it really a shock that their anger is felt as antisocial behaviour?
The double whammy of this Government’s school accountability system and school funding cuts of £2.8 billion since 2015 have the unintended consequence of driving perverse behaviour by schools to try to remove children who are less likely to achieve and more expensive to educate. A report by the Education Policy Institute found that one in four children referred to children and adolescent mental health services in England is rejected, and that school staff are required to respond to children who self-harm, despite cuts to support services. How effectively does the Minister think schools will be able to support pupils with the staffing cuts they face? What does the Minister think will happen to our children who do not get the support they need in their formative years? We need a new accountability system that values all children, and schools need the funding to support every child.
Good social work can transform people’s lives, protect them from harm and help stop the increase in antisocial behaviour. Helping children and young people to fulfil their potential is a key ambition of all councils, but our children’s services are under increasing pressure. They face a funding gap of around £2 billion by 2020, yet demand for their services has never been higher. Councils seek to support children to live with their families where possible through family-based support and early intervention.
Early intervention is crucial, but how can councils provide it when Government funding for the early intervention grant has been cut by almost £500 million since 2013 and is projected to drop by a further £183 million by 2020? Our councils need more money for early intervention. We can never prove statistically that early intervention prevented someone from engaging in antisocial behaviour, but we can certainly feel what happens in our communities when those services are cut—problems with antisocial behaviour increase.
The Government should follow Labour’s lead and make it easier for tenants and residents associations to come together to deal with antisocial behaviour in their own streets. DARTS in my constituency—each letter represents a different street off Hessle Road—is the perfect example of a tenants and residents association. DARTS is led by Peter and Trevor, who are brilliant, properly no-nonsense people who came together to tackle antisocial behaviour in their area. They get amazing results. I would love there to be a DARTS group in every area of Hull, but Hull City Council has lost one pound in every three since 2010, which has meant cuts to services. It is harder for councils to offer the support that is needed to get such groups up and running—and I am yet to work out how to clone Peter and Trevor.
The Government’s short-sighted and narrow-minded obsession with austerity has created the perfect climate for antisocial behaviour to thrive. Undoing the damage that has been done to communities such as west Hull and Hessle will take time and investment—there is no quick fix. However, if the Minister truly believes austerity is over, she should properly fund and equip our police force and reverse the 31% cut to the Humberside police budget; make youth services statutory, fund them and train youth workers; fund our schools and CAMHS; change the accountability system to stop the unintended consequences of increased exclusions and off-rolling; increase funding for social workers and investment in early intervention; and properly fund councils to support local residents groups to solve problems in their own communities.
I hope the Minister does not insult me or my constituents by claiming that Humberside police have all the money they need, because that simply is not true. I also hope she does not claim that antisocial behaviour is not on the rise. I am sure she is as aware as I am of the number of dropped calls to the 101 service and the number of incidents that actually get reported. If she goes out and talks to people in the community, she will find that most of them never even bother ringing 101 to report antisocial behaviour, because they know they may be on hold for more than 40 minutes.
My constituents and I have had enough. Antisocial behaviour causes problems for nearly everyone in my constituency. We expect action and serious investment. I repeat that we need a holistic approach to dealing with this problem—its causes as well as its consequences. I am afraid we will hold the Government to account if they fail to do anything.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy) on securing this debate about a matter that I know is of huge importance to her and her constituents—particularly those who are suffering in the way she so eloquently described. She made a wide-ranging speech, and I will try to respond to as many of her points as I can. I hope she understands that I do not have the details of those that concern other Departments immediately to hand, but I will ask the relevant Minister to write to her about any points to which I do not manage to respond.
Anyone who represents a constituency knows just how terrible antisocial behaviour can be. The hon. Lady will never hear me diminish its impact. Individual incidents sometimes have the most extraordinary effect on communities. So-called low-level behaviour may not seem that significant, but if it develops into a pattern of behaviour it becomes incredibly wearing for those who have to live with it day in, day out. Antisocial behaviour can be anything from people running amok, swearing at people or frightening residents to drunken and drug-related harassment, intimidating behaviour, and noisy and abusive neighbours. All those things can have a profound and debilitating effect on the people we were elected to serve.
That is why the Government gave the police, local authorities and local agencies a range of flexible powers to keep the public safe through the Anti-social Behaviour, Crime and Policing Act 2014. We fully agree that antisocial behaviour is not just a policing issue, important though policing is in this context. Solutions must often be part of a holistic approach that draws in local authorities and other agencies. We expect those agencies to respond and use those powers flexibly to protect their communities from all types of antisocial behaviour. However, where antisocial behaviour tips over into far more serious offending that is clearly criminal—the hon. Lady will know that serious violence and other forms of criminal behaviour fall within my portfolio—we expect the police and others to use the full force of the law to bring people to justice through the criminal justice system.
The 2014 Act provides six flexible powers, which are designed to enable the police and local authorities to respond quickly to antisocial behaviour in their communities and stop it reoccurring. Those powers include court orders to stop the behaviour of the most antisocial people, powers to close premises that are a magnet for trouble, and powers to stop antisocial behaviour in public places. They also include measures such as civil injunctions, which are interesting because they do not just prohibit people from engaging in certain behaviour but can place positive requirements on perpetrators to address the underlying causes of their antisocial behaviour.
Sadly, there are themes that run through the backgrounds of many of the young people who fall into my portfolio. Domestic abuse is a particularly strong theme, and I am concentrating on protecting direct victims of domestic abuse and on the ramifications for young people who are vulnerable to being ensnared by criminal gangs of witnessing domestic abuse in the home and being desensitised to violence outside the home. The Government and I are looking at many themes to address the background factors that feature in the lives of many young people who behave in an antisocial or indeed criminal way.
Other types of order, such as community protection notices and criminal behaviour orders, are directed at the most harmful behaviour. Local authorities also have the power to impose public spaces protection orders to protect public spaces from antisocial behaviour and nuisance, and the police can use their dispersal power to direct any individual who engages in antisocial behaviour away from a particular place.
Those powers have been used effectively in Hull, but the Minister will recall—I have spoken about this previously—that they just move the problem somewhere else in the city. We can use only so many of those orders, and they just seem to make the problem appear somewhere else. It is like a game of whack-a-mole—we do not seem to be able to whack them all down at the same time. I was heartened to hear her mention looking at the causes of domestic violence. I wonder whether she will say a little about what we are doing to prevent antisocial behaviour from happening in the first place—not just to deal with it when we see it through criminal convictions, but to look at its causes and how we can stop them.
I was about to come to that, so I apologise for incorporating my answer into my speech. We want to give people on the ground the ability to use those powers as they feel is appropriate in their local community. The hon. Lady will understand that the challenges in her inner-city area are very different from those in my area of Lincolnshire, which is just down the road from her area but is very rural. Although we have antisocial behaviour, I suspect it takes a different form from that in a city centre, given the local geography and so on.
The Government want to give local people the powers to respond in the most effective way in their local area. Indeed, in December last year we published refreshed guidance on the use of those powers by councils, police officers and so on—we understood that some councils were using PSPOs in particular in a way that was perhaps not intended by Parliament, so we refreshed the guidance to help local councillors. A couple of months ago I spoke to local councillors at the Local Government Association to help them with that.
The hon. Lady asked me about a community response. She will know that as part of the serious violence strategy we are pulling together across all Government Departments, along with local government colleagues, the Mayor of London, police and crime commissioners and Mayors across the country, to try to have a more joined-up approach to serious violence. That will have a beneficial effect on lower-level offending behaviour as well, because if we can help young people with issues at home, mental health issues and so on, as she described, that will have an impact on their behaviour generally. That is why I am delighted that not only are we helping the Vulcan Learning Centre, a local charity in Hull, through the knife crime community fund, which will help local children who are perhaps falling into crime. There is also a bigger, national effort through the early intervention fund for young people announced in the serious violence strategy as well as the endowment fund that the Home Secretary announced last week—£200 million that will be invested in long-term projects to help young people across the county. A great deal of work is going on.
The hon. Lady rightly mentioned concerns about children who are not in full-time education but are perhaps in alternative provision. The Government have commissioned a review by Edward Timpson, the former Care Minister, who has a great understanding on a personal and professional level of the issues facing looked-after children or those in alternative provision. He is looking at alternative provision through the schooling system to see what is working, what is not and what we need to improve. Again, through my work in other areas, I know that that can have an enormous impact on children’s behaviour and their ability to lead productive lives.
If I may, I will let the hon. Lady know about the ability of victims of antisocial behaviour, or someone acting on their behalf, including a Member of Parliament, to request a formal antisocial behaviour case review—I do not know whether she is aware of this—which is called a “community trigger.” I like talking about it, because colleagues should be aware of it and they can use it if requested by their constituents. It enables victims of antisocial behaviour to ensure that their voice is heard when they believe they have not had a satisfactory response to repeated complaints of antisocial behaviour, and it forces agencies to act. The relevant bodies in a local area must agree on and publish their case review procedures. Therefore, if she believes that the relevant agencies in her constituency have not acted on reports of antisocial behaviour in Hull and the East Riding, that is a possible solution for her constituents. I note that her police and crime commissioner cited tackling antisocial behaviour as a priority in his policing plan, so perhaps she can ask him what he is doing to fulfil that pledge to the electorate.
The hon. Lady mentioned the police station in Hessle. Again, that is a decision taken by the PCC, so I hope she will forgive me if I do not comment on it. She also mentioned funding, and I think she said that we “relish” austerity. We really do not. I am always careful not to revisit history in too much detail because, apart from anything else, we should be forward-looking, but the situation in 2010 was that as a country we had run out of money and we had to start to live within our means. That meant we had to take very serious, tough decisions on funding. She will know that the then Home Secretary—now the Prime Minister—insisted that police funding be protected from 2015 onwards, and that last year, as part of the preparations for the police funding formula exercise that happens at the end of every year, the Minister for Policing and the Fire Service spoke to every constabulary in the country to ask them what they needed. Through that process, with the help of PCCs, we are able to put a further £460 million into policing this year. I am pleased that that means an increase of £4 million for Humberside constabulary, and it has managed to add 153 officers to its cadre since March last year.
I am sure the Minister recognises, as everyone out there does, that the number of criminal incidents is increasing, and the cuts have not stopped yet. She talks about the Government giving with one hand, but they are surely taking with the other, because there is still another £14 million to £17 million of savings to be found in the next few years. That will result in job losses for our PCSOs, which will have an impact on antisocial behaviour. I am sure she recognises that.
I invite the hon. Lady to speak to her PCC—she is not just entitled to do that; it is part of all our duties to hold our PCCs to account. As of March last year—the last figures I have available—her police and crime commissioner had reserves of £34.3 million. To put that in context, the reserves as a percentage of total cash funding for 2017-18 were 20%, which is 5% higher than the average for England and Wales. She could ask her PCC what he is doing with that money.
The Minister has been generous in giving way. In fact, I meet with the PCC regularly and talked to him about the reserves only last week. They are currently being used to try to increase the number of police officers we have, to mitigate the cuts seen since 2010. I am sure by next year the reserves will not be there any longer.
That is a matter for the police and crime commissioner. We brought in police and crime commissioners in 2012 precisely to give a local person the power to hold the police and chief constable to account and to spend the police budget in ways they feel are priorities for their local electorate.
As I say, we are injecting more money into policing this year. The Home Secretary has very much listened to the chiefs and police and crime commissioners across the country. We know that policing is changing and that pressures on the police through different crime types are developing. Ten years ago, online child sexual exploitation did not feature, but now, sadly, as the Home Secretary laid out in his recent speech, it is an incredible pressure on policing.
I am conscious of the time, Mr Hollobone, and I do not know whether the hon. Lady wishes to sum up. If she does, I will sit down in a moment. Again, I invite her and colleagues around the House to speak to their local councils about innovative ideas on how to engage young people and help young people who are at risk of falling into trouble.
Yesterday, we had the first of the Home Office’s national programme of engagement events on the serious violence strategy here in London. We had a fantastic turn-out from councils across the capital, including the deputy Mayor for policing in London. I listened carefully to the chief executive of Islington Council, who gave some really interesting ideas on what it has done to protect youth services—what it is doing is really innovative. I urge all colleagues to engage in that conversation with their local councils, because there are some really innovative ideas.
Order. I am afraid that the Minister has been badly advised by her officials. In a half-hour debate, I am afraid the Member in charge does not have the right of reply. This is now the second time I have been in this Chamber when the Minister has been badly advised. We are going to have to get some advice to Whitehall Departments that in a half-hour debate the Member in charge does not have the right of reply.
Mr Hollobone, I feel honour-bound to say that it is my mistake. Please direct your understandable consternation towards me, not the officials. That is my fault, and I apologise profusely.
Question put and agreed to.
That this House has considered anti-social behaviour in Hull and the East Riding of Yorkshire.
Business Banking Fraud
[Mr Laurence Robertson in the Chair]
Before I call Mr Wragg to move the motion, I say to Members that I will ask Back Benchers following him to take just five minutes each initially. That is not a time limit imposed from the Chair, but I ask for self-restraint, and we will see how we go so that we can get everyone in.
I beg to move,
That this House has considered the investigation of business banking fraud.
It is a pleasure to serve under your chairmanship, Mr Robertson. We have had many debates in both Westminster Hall and the Chamber that have focused on the mistreatment of thousands of small and medium-sized enterprises at the hands of financial institutions which, in the wake of the financial crisis, sought to shore up their balance sheets as they plundered those of their business customers.
The subject is becoming an all too familiar one for debate. Indeed, this is the fourth such debate in which I have spoken. Looking around at my distinguished colleagues from across the House I see many familiar faces who have taken part in previous debates. Many Members will be familiar with the cases of hard-working businessmen and women who have had their businesses broken up and livelihoods destroyed by acts of deliberate deception and fraud, systemic asset stripping and inflated charges and fees, all at the hands of their banks.
I thank my hon. Friend for securing the debate. It is sad and disappointing that this is the fourth time he has had to speak on the subject. Does he agree that it is an indictment of the Financial Conduct Authority that proper, independent redress schemes have not been set up and that, 10 years on, no one has been brought to justice for destroying many people’s lives?
My hon. Friend is absolutely correct. In his remarks in previous debates he has shown his personal experience, and he speaks for many on the issue. With the passage of time, the issues that are exposed only multiply rather than diminish. I have spoken before at length about my constituent Mr Eric Topping, who lost hundreds of thousands of pounds, including his home and retirement savings, when his profitable building company was forced into liquidation by the Royal Bank of Scotland. For every constituent like him, there are a thousand more SME owners across the country who were similarly victims of the widespread malpractice across the entire banking sector, and today we speak for them collectively.
Does the hon. Gentleman accept that what makes it even more difficult for people is that those banks have been financed by taxpayers? They are using taxpayers’ money to fight these legal cases when they know that they have done wrong but that their victims do not have the resources to take them all the way through the courts.
The right hon. Gentleman is correct. The actions of the banks are entirely indefensible. It is, I hope, for the Government to seek appropriate redress.
While the Hansard column inches increase, meaningful actions to properly investigate business banking fraud and seek redress for its victims have been woefully insufficient so far. I would like to turn attention to the investigation of allegations of fraud by our crime prevention agencies and regulators, to the role of financial institutions, and to the role the Government play.
As a nation, we pride ourselves on the rule of law. Above the Old Bailey stands the gilded statue of Lady Justice. She carries the sword of justice in one hand and the scales of justice in the other. She wears a blindfold to symbolise that justice is blind and does not distinguish between the powerful and the weak. Yet for those who have been the victims of the systematic fraud practised by UK banks and financial institutions, such sentiment is nonsense. The statue representing their experience of justice would be heavily rusted rather than gilded. It would wear a blindfold to avoid having to see the activities of the financial institutions whose wrongdoing has ruined individuals and families, and its arms would be firmly tied behind its back to symbolise the lack of activity by both the police and the regulators.
It is 10 years this week since the taxpayer bailed out the financial services sector, and the state continues to control a significant stake in certain institutions. Ten years on, confidence in the sector is low, particularly among small and medium-sized enterprises. The nation has yet to fully recover from a decade that saw the destruction of viable businesses, jobs and thousands of individual lives as banks frantically rebuilt their balance sheets following the crash, at the expense of their customers’ financial wellbeing and their own reputations. We need to be clear: the process of shoring up a balance sheet is a zero-sum game. For every winner there is a loser. The losers here were small and medium-sized enterprises, the backbone of our economy. They lost because they did not have the resource or the legal firepower they needed, or a system to support them.
We are not saying that every SME business that folded over the last decade was viable, nor that every business was the victim of fraud. But we have seen clear evidence of tampering with documents, false witness statements and the leveraging of a position of power and clout to drive many thousands of good businesses into insolvency. In a free economy there will always be legitimate failures alongside legitimate successes. Many businesses may not have been viable and may not have survived, but that did not make them fair game for mistreatment or, even worse, fraud. It just made them easy targets.
Is my hon. Friend aware that in one year alone the Global Restructuring Group division of RBS made over £1 billion in profit? He says that some of these businesses may have failed, but rightly points out that a lot of them were viable and had a lot of hidden assets.
My hon. Friend is absolutely correct about the role of GRG.
Following the cases of, at times, blatant mistreatment and fraud, which we saw consistently and across the board, there is either a lack of willingness or lack of capability from our investigative bodies, both civil and criminal, to pursue complaints. Instead, the victims of mistreatment and fraud are left to go round in circles making a series of fruitless complaints. The complaints are either made directly to the institutions that defrauded them in the first place, which have a vested interest not to investigate properly—as was the case with my constituent and the Royal Bank of Scotland—or referred to a series of industry-led trade bodies or the Financial Conduct Authority, which does not take on individual cases. It is simply not good enough.
The only successful prosecution for fraud thus far has been that of HBOS in Reading. That was not down to the actions of our regulator or the Serious Fraud Office relentlessly pursuing the truth to bring the perpetrators to justice. Indeed, the bank—first as HBOS and then as Lloyds, after the takeover—insisted there was no fraud, despite there being a victim with losses in the hundreds of millions of pounds.
I want to put on record my personal admiration for the police and crime commissioner for Thames Valley, Anthony Stansfeld, who personally saw to it that the fraud was prosecuted.
I hope that my hon. Friend will agree that the current situation is not good enough. If the state is to fulfil its duty to protect the public from fraud, it will be necessary for the Government to find the money to equip the authorities to prosecute fraud cases without funds coming out of individual PCCs’ budgets.
My hon. Friend hits the nail on the head. I pay tribute to the police and crime commissioner, but I also wish to pay tribute to a couple of people who I believe are here in the Gallery today. Instead of the authorities investigating, it was left to a couple of music producers from Cambridge, Paul and Nikki Turner, to crack the case. I hope they are here in Parliament. They are still fighting for compensation for other victims of the crime.
I endorse what has been said about Anthony Stansfeld.
Does the hon. Gentleman agree that this is not just about RBS, as some people seem to think? My constituent, Mike McGrath, went out of business because of his treatment by Lloyds bank.
The hon. Gentleman is absolutely correct: it was systemic across the whole business lending sector. He is right to put that on the record.
The Turners’ reward for bringing the case to the bank’s attention back in 2007 was to be branded conspiracy theorists. The bank—first as HBOS, then as Lloyds—tried to evict them from their home 22 times, spending more on legal action than the value of the home itself. It sent a top partner from one of the country’s best regarded law firms to Cambridge county court to watch the hearings. The Turnbull report, which details a comprehensive cover-up of the fraud from within the bank, notes lawyers as saying that, once the Turners were out of their home, they would have to accept their fate. This was not the pursuit of justice but a witch hunt to silence whistleblowers.
The Turners approached the Financial Standards Authority, the Serious Fraud Office and the Treasury. Indeed, there was a debate in this very room in June 2009, during which Members urged the authorities to investigate. However, all they encountered was denials and deflection. As my hon. Friend the Member for Wycombe (Mr Baker) pointed out, the case was eventually taken seriously only after Thames Valley police recognised that a crime had been committed. The investigation took seven years to complete and the resource of 151 officers and staff, and it cost £7 million, with only £2 million eventually recovered from the Home Office. Thames Valley police stated that they could have done it in half the time and for half the money, if only the bank had co-operated fully. Unfortunately, the scale and difficulty of investigating the fraud only serves as a warning to other cash-strapped police forces: “Investigate at your peril”.
The reality is that white-collar crimes such as this are expensive and difficult to prosecute, and the agencies responsible for fighting economic crime simply do not have the necessary resources to tackle complex, mid-tier banking fraud. The SFO takes on only a small number of very large cases and has a budget of £53 million. The National Crime Agency’s economic crime command has a budget of £10 million, and the newly established National Economic Crime Centre has a budget of just £6 million. Compared with the sheer scale of fraud in the United Kingdom, which is estimated at more than £190 billion a year, and given the potential for consequential losses, these investigative budgets are, frankly, insignificant.
For those who may think that this is a one-off, it is important to note that the processes employed by HBOS in this case—turnaround units, business valuations and the use of insolvency—are exactly the same tactics seen in the case of other complaints that the all-party parliamentary group on fair business banking has investigated. Such complaints were found to be commonplace, as the hon. Member for Cardiff West (Kevin Brennan) alluded to, across most financial institutions. The system is ripe for abuse, and we have serious concerns about it.
At this point, I pay tribute to the incredible dedication of the co-chairs of the all-party group, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for North Norfolk (Norman Lamb). In addition, I thank the group’s officers and members for their significant work in running a thorough inquiry into how so many SMEs were abused by their banks, exposing the scale of the issue and the mechanisms by which the frauds were conducted. The APPG has produced an important report that identifies the shortcomings in the current investigative tools and bodies and makes vital recommendations as to how we might start to unpick this sorry mess.
I reiterate the APPG’s calls for a full public inquiry into the treatment of businesses by financial institutions. There are currently more than 10 different inquiries looking at different, isolated issues. It is time that we had a holistic approach and investigated the system as a whole.
I thank my hon. Friend for his work in this area. Two of my constituents have been affected—one through a mis-selling of swaps by RBS and the other through the dreadful situation at HBOS that my hon. Friend has mentioned. Does he agree that the tragedy of this case is partly the lack of transparency and independence, and that people feel that they cannot get fair redress? A decade later they are still not being treated fairly by those institutions.
My hon. Friend is spot on. The level of obfuscation by these institutions would be quite suspicious if one were to suspect them of any wrongdoing. I am sure that we can deduce our own conclusions from their behaviour.
On a civil level, the APPG’s proposal for a financial services tribunal has been well received, and we look forward to the Government’s response. That may at least provide a civil remedy for those who have been wronged. However, we have been asked what will happen when civil mistreatment tips over into the criminal abuse of power. Where is there to go? At this point, there is no satisfactory answer. The Thames Valley police and crime commissioner believes that we should have regional fraud squads akin to our counter-terrorism squads, funded by the Treasury via FCA fines and funds recovered from criminal gangs. We wholeheartedly support those proposals. Whatever action is taken, it requires the utmost degree of urgency, so that more and more cases do not—as has already started to happen—run into statutes of limitations, lose documents and evidence to the sands of time or see responsible and culpable individuals leave the industry and witnesses become unavailable.
I look forward to Members’ contributions and the Minister’s response. As I mentioned at the start, this is becoming an all too familiar debate, and I rather hope that we are not all back here in six months reliving it again. I also hope that we can resolve to agree a path of action that will see the tarnish start to be scrubbed off Lady Justice and allow her to start to uncross her arms.
It is a pleasure to serve under your chairmanship, Mr Robertson. I thank the hon. Member for Hazel Grove (Mr Wragg) for securing the debate. It is a pleasure to speak after him. I have raised the plight of my constituent, Mr Kashif Shabir, for many years. His case is about corporate collusion between Lloyds bank and a firm of receivers in Bristol, Alder King, which was embedded in the bank’s recovery department and effectively destroyed businesses to pick up work for itself.
I led a debate here in September 2016 concerning the role of the SFO, and there was a second debate here in April 2017 about the role of the Royal Institution of Chartered Surveyors as an adequate regulator. Both debates followed a March 2014 Select Committee inquiry into the regulation and policies of the insolvency sector. There have also been many other debates, as has been referenced. The HBOS six have been jailed, the Turnbull report has been released and many victims of quite appalling practices have come forward. My question to the Minister, therefore, is why are the owners of SMEs that were destroyed by the actions of Lloyds bank and RBS still suffering 10 years on?
My constituent’s experience is a case study in the cynicism and arrogance with which Lloyds refuses to right the effects of its wrongdoing, and of the ineffectiveness of organisations such as the FCA, the police and the regulators that are supposed to oversee and enforce the integrity and honesty of businesses in this country. Mr Shabir has been fighting Lloyds bank for 10 years. As far back as 2011, Lloyds acknowledged fault by making an offer of settlement—the bank would not pursue him for the balance of losses, which it had itself created, in return for a gagging order. Mr Shabir quite rightly refused to sign up to that.
Subsequent approaches by Mr Shabir, myself and many people working on his behalf to both Lloyds and Alder King have either been ignored or met with deliberate stonewalling tactics, because those organisations know that they hold the power in this relationship. Their actions have impoverished hundreds of businesspeople, who cannot sue, because they cannot afford to litigate. The banks and others know that and are taking advantage of it.
At the same time, Lloyds has openly stated that it will co-operate and work with the APPG on fair business banking, but we know that, in reality, the opposite is true. If the bank cannot settle with a victim to whom it has already made an offer, even if that offer is derisory, it is clear that that stance is completely disingenuous. In such instances one would expect the regulators to redress those shortcomings, and investigators and prosecutors to look at them. As we have heard, however, they have not done so far.
In the September 2016 debate, I asked the Solicitor General to look at this and explain the threshold for prosecution. He outlined the criteria and the threshold for prosecuting, and said that these cases would not reach that threshold. We know, however, that while individually none of these cases will reach the FCA’s prosecution threshold, collectively they will.
My hon. Friend the Member for Norwich South (Clive Lewis) summed up the matter well in the debate in the main Chamber in January:
“We do know that 90% of GRG-administered businesses never made it back to mainstream banking…The cost is immeasurable, but we believe it to be in the tens of billions…If it is indeed that big, it may be the largest theft anywhere, ever.”—[Official Report, 18 January 2018; Vol. 634, c. 1086.]
If that does not meet the criteria for an SFO investigation, I do not know what does. Why is it not investigating? We have heard many times that hundreds of victims of this fraud have lost large sums individually and collectively.
Mr Shabir tells me that there has never been a rejection of his complaint on the evidential merits; it has been purely on the basis of the threshold. The Avon and Somerset police economic crime team refused to investigate the case, because it said it had already been investigated by other bodies. The Royal Institution of Chartered Surveyors turned it down. The Financial Conduct Authority and the banking ombudsman said they had no locus to investigate it. The police have refused to properly investigate this fraud. Mr Stansfeld has had to write to that constabulary to ask it to look into the case based on the evidence that he has seen.
Mr Shabir will not go away, and nor will the other victims. Whatever the shortcomings of the regulators, investigators and prosecutors, they must not detract from the main issue, which is the fraudulent actions of the banks and the question of where the responsibility for such actions ultimately lies. It lies with Lloyds bank and RBS. It is time for the people in charge of those organisations to take responsibility for their actions.
I congratulate my hon. Friend the Member for Hazel Grove (Mr Wragg) on raising this important issue. It is a shame that he continues to have to do so.
Several of my constituents have been adversely affected by the unscrupulous behaviour of the banks mentioned today. I want to bring attention to the despicable actions of Clydesdale bank, which has not been mentioned, under the tutelage of its parent company National Australia bank.
The NAB Customer Support Group was set up by a small group of SMEs that were crippled by long-term, fixed-rate loans made via tailored business loans issued by the Clydesdale and Yorkshire banks. Many of the businesses have closed down, but most are struggling to survive, burdened by unmanageable interest rates and unable to break from the fixed rate due to extortionate breakage penalties of up to 40% of the loan, arising from the bank’s alleged signing of interest rate swap agreements with third parties.
The bank charges costs arising from exiting embedded interest rate swaps via the small print in the terms and conditions. However, with the passing of time, the bank admitted that there were no such micro-hedges, or match hedges, in place and that all interest rate risk was dealt with by the parent company, National Australia bank. The uncontrolled promotion of these products—driven, as always, by generous commissions—has caused enormous damage to the SME sector and the wider economy, especially in Scotland, including the west of Scotland.
Members of the support group are here today, including my constituent Ian Lightbody, and their objective is to bring the bank to account for the damage it has caused and to persuade or force it to apply satisfactory redress to all affected SMEs. Over the past few years, the FCA has been shown to be impotent. That must change, particularly now that some of these cases are so serious that even Police Scotland feels they merit investigation.
In June 2014, representatives of Clydesdale bank appeared before the Treasury Committee. The bank’s evidence was weak and, to be frank, misleading—apparently, with the benefit of hindsight, deliberately so. It said it would investigate fixed-rate tailored business loans, but it investigated only cases where a complaint was already live or had previously been made. That meant that around 7,500 people were not contacted or given the opportunity to have their loan investigated. The bank’s chief executive officer confirmed to the Treasury Committee that he did not believe that his bank’s tailored business loans were deliberately designed to avoid FCA regulation. However the Committee’s subsequent report, “Conduct and Competition in SME Lending”, concluded:
“The lack of public oversight, minimal transparency and limited coverage of the scheme mean that the Committee cannot be confident that Clydesdale’s separate internal review will deliver outcomes equivalent to the FCA review upon which it is intended to be based.”
The report went on to state:
“To protect themselves against the risk of providing a TBL’s hedging function, banks need to hedge the risk themselves. The FCA said that ‘the bank will have entered into a separate IRHP’”—
interest rate hedging product—
“‘with a third party in order to manage its financial risk of entering into the loan’.”
The Bank’s CEO, Mr Thorburn,
“confirmed that this was the case for Clydesdale Bank.”
Clydesdale bank subsequently confirmed that there was actually no third party and that, in effect, all the loans were self-funded. Despite that, and despite it charging and receiving substantial break costs from customers, it refused to address the devastation it caused to businesses and lives across Scotland. It charged for long-term interest rate hedges that, it can be proved, it and its parent company never matched.
Ian Lightbody’s firm was informed in 2012 that to break its loan it would have to pay a 22% break cost on a loan of hundreds of thousands of pounds. It had cashed in personal pension funds and arranged alternative funding to secure the future of its companies and, in particular, of long-standing employees. Naturally, that became untenable, and it had to close several companies.
Another of my constituents, Craig Brock, had long-standing companies with loans amounting to substantial millions of pounds with Clydesdale bank. In 2012 it gave him just 30 days to refinance. It appointed BDO as administrators, and the companies were sold on to Paradigm Ltd, allegedly at arm’s length. It turned out, of course, that Paradigm was another Clydesdale-funded company. The FCA confirmed to the 2015 Treasury Committee inquiry that it wanted more power to investigate Clydesdale’s tailored business loans:
“The FCA has written twice to the Treasury to raise concerns about the sale of loans with embedded interest rate hedging features and the FCA’s inability to address the problem under the current perimeter of regulation. However, the Treasury appears not to have responded formally to the FCA on the matter”.
There can be no doubt that these products were, at best, mis-sold and, at worst, fraudulently pitched and designed to fall outside the FCA rules. The bank and these products should be investigated by the FCA without delay. Thousands of SMEs and businesspeople across the UK took these products with no proper explanation of either the conditions or costs associated. They deserve our support, and they deserve justice.
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Hazel Grove (Mr Wragg) on securing this debate. I have to say, however, that this is the fifth debate I have taken part in on this matter in my two and half years in the House. It is disappointing that we are here again. We are not making the progress that we should be making and that our constituents deserve.
As we have heard, many colleagues have experience of many examples of serious malpractice within the banking sector. Indeed, from discussing my experiences of this issue with colleagues from across the House, it seems that the majority of cases remain unresolved. I wholeheartedly agree with my colleagues from the all-party parliamentary group that it is now time the Government provided adequate resources for these cases to be reviewed, to ensure that those who have been treated poorly receive the justice they deserve.
I would like to raise the case of my constituent Mr Alun Richards, which I have raised many times since I was first elected. This case has been going on so long that my predecessor, Huw Irranca-Davies, raised it nine or 10 years ago. Until around a decade ago, Alun Richards was one of Wales’s most successful businessmen. By the early noughties, Mr Richards’s farming and property enterprises had received award recognition and his efforts soon attracted—at the time, welcome—attention from Lloyds Banking Group. Lloyds offered Mr Richards a gold star account and an interest rate of 1% over base. After weighing this up against other offers, Mr Richards accepted the Lloyds offer, and his business continued to thrive.
The financial crash in 2008 was a global turning point. Mr Richards believes that his relationship with Lloyds acutely deteriorated at that point. Suddenly, with little notice, Alun’s bank managers in Carmarthen, Gwilym Francis and Ian Richards, transferred his accounts to a larger branch based in Bristol. After a short period, Alun approached his new branch and was alarmed to discover that his new bank manager, Max Meredith, was from the business support unit, which focusses on recoveries. Alun was deeply worried about this change as, prior to that, he had considered his business to be booming. Mr Meredith agreed with Alun that his circumstances were not typical for such a transfer and agreed to transfer his account back to Carmarthen. To Alun’s dismay, Gwilym Francis and Ian Richards refused to accept the account back in Carmarthen.
Alun soon received a visit from Mr John Holiday and Mr Jonathan Miles from the business support unit in Bristol. During this meeting, one of Alun’s accountants questioned Mr Miles’s behaviour and background. Mr Miles claimed that he worked for Lloyds Banking Group, and repeated that claim for the following two and a half years. Mr Richards has since discovered that Mr Miles was a chartered surveyor, a member of the Royal Institution of Chartered Surveyors and a partner of Alder King. It appears that no official secondment was in place. Mr Miles even appointed partners from Alder King—Julian Smith and Andrew Hughes—as the Law of Property Act 1925 receivers. When that initially surfaced, Mr Hughes temporarily resigned. RICS has refused to take any action and, following complaints against Bristol-based lawyers TLT, so have the Solicitors Regulation Authority and the Insolvency Practitioners Association.
Alun Richards’s decade-long struggle has involved Lloyds Banking Group, Alder King and the Royal Institution of Chartered Surveyors. Surely it cannot be right that Mr Richards, whose enterprise was worth about £5 million, has been left with nothing as the direct result of the actions of Lloyds bank and the others I have listed, as he believes.
Mr Richards and many others across the country feel that their cases have not been investigated properly, despite my appeals and those of other hon. Members from across the House to many different bodies. Most recently, we wrote to the Chair of the Treasury Committee, the right hon. Member for Loughborough (Nicky Morgan), asking her to open an inquiry into these alleged malpractices. Disappointingly, she was unable to give us that inquiry, but I sincerely call on the Minister to take action to ensure that these unresolved cases are comprehensively reviewed to ensure that those individuals who have been wronged receive the justice they deserve.
There is a real need to give the Serious Fraud Office extra funds to investigate the ever-increasing list of actions by Lloyds and those other organisations. The FCA’s line—that the alleged fraud does not reach the limits to investigate—simply will not wash any longer. There are too many cases involving large sums of money—millions and millions of pounds—for the FCA to simply say that the figure is not high enough to investigate.
Ten long years on from the crash, it can only be right that the Government provide adequate resources for these cases to be reviewed. It is their duty to investigate these malpractices to ensure that they never happen again and that constituents such as Mr Richards, and those of all hon. Members from across the House, get the justice that they rightly deserve.
It is a pleasure to serve under your chairmanship, Mr Robertson. I, too, congratulate my hon. Friend the Member for Hazel Grove (Mr Wragg) on securing the debate. He is a great advocate on behalf of victims.
I will start with a few words in support of banks and bankers. I have been in business for 25 years, and I could not have achieved anywhere near as much as I achieved without the support of bankers, the vast majority of whom do a good job of supporting the UK economy by offering vital support to businesses. I am sure that most people in the banking world are as shocked as we are by some of the scandals of the last 10 years.
It is critical for us all to play on a level playing field—that is the free-market economy principle. We need to adhere to some basic rules, which must be the same whether someone is a business person or a banker. As my hon. Friend the Member for Hazel Grove said, the key principles that we must all adhere to are that justice is blind, no one is above the law, and justice must be done and be seen to be done. Where we are is a mile away from that, because there is so much evidence not just of malpractice and mistreatment, but of fraud throughout the banking sector, particularly in RBS and in Lloyds and HBOS.
For a while, the accusation was that the people who were bringing forward these claims, such as the Turners, were conspiracy theorists—they had failed businesses that could not survive anyway, so it was something that we did not need to look into properly. Then along came the section 166 report into RBS, which clearly identified that RBS had mistreated thousands of businesses. Of course, that report nearly never came out, but when it did it was a critical moment.
It is the same with Lloyds and HBOS: but for the persistence of one or two individuals, the case would never have come to trial and those people would never have been convicted. They are not isolated cases; there was widespread abuse.
I am quite concerned, because I have looked through the banking code of conduct and it seems to mention only banks. Is there any personal responsibility in it, so that the people who make the decisions can be brought to account for them?
My hon. Friend makes a good point, which I will come to. Interestingly, our campaign, which is supported by so many of the hon. Members present, is also supported by some interesting people. Gordon Brown, the former Prime Minister, has said that he fears another crash because the bankers have no fear of imprisonment—the personal accountability that my hon. Friend referred to. Andrew Bailey of the Financial Conduct Authority expressed real concern in a recent newspaper article that no one
“has been banned as a consequence of the financial crisis.”
My hon. Friend is absolutely right, because the problem goes beyond mistreatment. We have seen evidence of forged signatures, manipulated valuations, manufactured covenant defaults, asset acquisition opportunities being sought out, and conflicts of interest almost everywhere we look. That includes the case of Julia Davey, who is present today.
Julia Davey is one of the most successful businesspeople in the UK, but Lloyds and KPMG forced her into the business support unit. David Crawshaw of KPMG was the independent reviewer of the business, the consultant advising the business and the administrator to the business. How can that be right? That multimillion-pound business was taken down by a £100,000 utility bill, when there were ample moneys in the bank. That money was used to pay the advisers, not the debt. It is outrageous.
The banks’ default position has been denial all the way. When Lawrence Tomlinson first established that there was abuse, they tried to withdraw the funding for his business to keep him quiet, which is a disgrace. Throughout the section 166 report, there is clear evidence of malpractice that goes beyond simple mistreatment and into fraud. The same is true for Lloyds and HBOS. The regulators’ attention was drawn to the fact that the abuse was going on thousands of times, but there has still been no action.
The FCA still says that the banks must be trusted to run their own internal redress schemes for the abuses. At Lloyds, the Griggs review is an internal scheme with no independent verification of the settlement that is made. At RBS, the situation with Sir William Blackburne’s review is similar. I do not dispute the fact that they are honourable people, but how can justice be seen to be done if these matters are decided internally? It cannot be right. What if those people, who are working internally for those banks, find evidence of fraud in their investigations? Would they put it in the shredder or would they hand it to the police? I will leave that for those in the Chamber to decide.
We need action. We need regional fraud squads and a twin-track approach, so that the Serious Fraud Office works with the Financial Conduct Authority, as happens in the US. There has to be criminal liability for the failure to prevent economic crime, as we have for the failure to prevent bribery and tax evasion. We need to introduce conduct of business rules to SME banking, so that regulators have a basis on which to judge a claim. We need our financial services tribunal and a public inquiry. There are 12 separate inquiries and counting into various parts of the banking system—a piecemeal approach to a systemic problem. We need cultural change. We need to restore faith in the system. Justice must be blind. No one is above the law. Justice must be done, and justice must be seen to be done.
I, too, congratulate the hon. Member for Hazel Grove (Mr Wragg) on securing the debate. He is right that we have discussed the subject many times, as the hon. Member for Thirsk and Malton (Kevin Hollinrake) also mentioned. We look to the Minister, who understands the issues that we bring forward very well, for a substantial response. I am grateful to other right hon. and hon. Members for their contributions to the debate about the mis-selling of interest rate hedging products since 2001.
It is important to say, as the hon. Member for Thirsk and Malton did, that my relationship with the banks has been good. My mother and father’s relationship with the banks was also good, because in those days banks were easier to get on with. The borrowing of money was probably very simple. To be fair, the sums involved then were not the large sums that are involved today. Nevertheless, as elected representatives, issues and complaints come forward to us, and in the Gallery behind us there are many constituents who have been wronged, abused and disenfranchised by the banks, and we are here to put their cases forward.
Some of my constituents have been appallingly and despicably treated. I will mention a couple of them, without giving too much detail, just to put their cases on the record. As Members will know, the Democratic Unionist party has consistently said that there is a role for a financial services tribunal and a competent ombudsman service for banking complaints, which would follow the parliamentary intent that such cases should be treated fairly and reasonably, and with timeliness.
In Northern Ireland, we use the terminology of “keeping people’s feet to the fire”; we do not want them to get burnt, but we want people to feel the heat of what we are saying in this Chamber. So I look to the Minister to ensure that the people involved feel the heat, and will thereby respond and look after the people in the Gallery today, as well as my constituents who have been disenfranchised despicably.
The small and medium-sized enterprises are the ones feeling the pain. I will name two in particular in my constituency: the Armstrongs and the Semples. Their cases have been recorded in Hansard before and in the short time that I have today I could not do either of them justice, but Hansard will record the fact that I have put their cases in the main Chamber on two occasions in the past.
The Semples are large dairy farmers who had borrowed a lot of money. They were then squeezed to the point where they had to pay back almost a million pounds. The Armstrongs had made some land acquisitions, but the banks involved squeezed them. They offered them the money and then squeezed them to a considerable extent. The effect on these people’s health, their families and their relationships has been absolutely enormous—we cannot begin to understand that. Without mentioning the person specifically, one of the people I have referred to has serious health issues. Family relationships become strained or break down; they do at the best of times.
Very quickly, I just want to say that we believe that in the discussions about this issue a broad consensus has emerged, similar to that concerning the Financial Conduct Authority consultation.
I will refer to the issue of compensation, because it is very important that the Minister takes it on board. An upper level of £600,000 is appropriate where the complainant is still trading and has a choice of which route they wish to pursue. Latterly, a few people sought the view of the DUP and that of a few other parties on the idea that there should be lower and upper limits of compensation. After much research and reflection, we now believe that Her Majesty’s Government should consider that claims of less than £25,000 should only be eligible for an ombudsman-type service and that the upper limit should be £600,000, which is the figure I mentioned earlier. For those affected businesses that are still trading, the lower limit for a financial services tribunal should be £25,000 and the upper limit should be £5 million. Those are the changes we ask the Minister for in respect of compensation.
For those businesses that are now insolvent as a result of alleged bank conduct and behaviour, the upper claim limit should be £10 million and of course such cases can only be dealt with by a financial services tribunal. In all cases where there are claims above that sum, it should be a matter for the commercial courts.
We have met the Minister who is here today, and tomorrow the hon. Member for Thirsk and Malton will meet the Chair of the Treasury Committee. I met a former Chair of the Treasury Committee some time back, and we have met the FCA and the Financial Ombudsman Service as well. We have done all the door-knocking that we can possibly do and what we need, with respect to all those people we have met, is not to hear words; we need to see action and that action has to come from the Minister who is here today.
Once again, I will just reiterate our view in the DUP that all legacy complaints should be the subject of a voluntary review in the first instance by the bank concerned, with priority given to those complaints that Members of Parliament have already brought to the attention of the House—every Member in this Chamber today has done just that—or to the attention of the FCA or the FOS, as set out in early-day motion 1162 in April 2017.
We need accountability in this process; we need those who have been guilty of criminal acts, as has been alleged, to feel the punishment for their wrongdoings; and I believe that the responsibility that I have as the Member of Parliament for Strangford is to speak up for the Armstrongs, the Semples and for many others in my constituency. There are at least half a dozen others who I cannot mention because they are embarrassed; they are in business and they do not want to have their names mentioned. People should be sure that when we mention names, it is like an iceberg, with nine tenths of the people affected not being mentioned, and they are not being mentioned because of the embarrassment. The enormity of this issue cannot be underestimated. However, I have already spoken for too long, Mr Robertson.
It is a pleasure to serve under your chairmanship, Mr Robertson. I thank my hon. Friend the Member for Hazel Grove (Mr Wragg), who secured this debate, for an excellent and powerful speech.
I will refer straight away to the speech made by Andrew Bailey of the Financial Conduct Authority at its annual public meeting just a month ago, in which he said the following, which I find quite shocking:
“Given the serious concerns that were identified in the independent review it was only right that we launched a…investigation to see if there was any action that could be taken against senior management or RBS.”
He was talking about the Global Restructuring Group, or GRG. He went on to say:
“It is important to recognise that the business of GRG was largely unregulated”—
what a telling statement—
“and the FCA’s powers to take action in such circumstances…are very limited.”
Surely that is where we have gone wrong—commercial lending to businesses was “unregulated” to the extent that those businesses were vulnerable to the indiscriminate action of the banks. I will leave the rest of that statement unread.
I also thank my hon. Friend for his fitting use of the metaphor of Lady Justice to represent the dire situation that so many business owners face. Indeed, I suggest that Lady Justice is not only blind and has her arms tied firmly behind her back but is gagged and silenced. Onerous gagging clauses were incorporated into confidentiality agreements, with the effect of silencing witnesses and ensuring that justice is never done. The use of those gagging clauses ensures that organisations responsible for wrongdoing can not only conduct an operation of denial and obstruction of justice but use the clauses as a tool of abuse, to suppress any evidence of criminal behaviour. We are aware of several instances of gagging clauses that specifically state that an individual is unable to voluntarily approach the police or regulators with concerns about potential criminal activity. Let us be clear: that is unacceptable.
At this point we need to turn to the solicitors who are, quite frankly, aiding and abetting concealment of potential criminal activity by writing contracts that contain such onerous gagging clauses. In essence, they are bullying victims into silence and preventing them from discussing their case with those who are there to protect them: the police, Members of Parliament and regulators. That is a deeply troubling fact.
One pertinent example of such practice, cited on numerous occasions by the hon. Member for Cardiff Central (Jo Stevens), is a constituent of hers who accused Lloyds Banking Group plc and the Law of Property Act receivers, Alder King LLP, of a fraud that robbed them of their business and their livelihood. Once the allegations were made by the individual to the bank, Lloyds Banking Group plc proposed to forgive the constituent’s indebtedness, which had ultimately been caused by the actions of the bank and Alder King LLP, in exchange for the signing of a confidentiality agreement that would have prevented any further discussion of the case. Thankfully, the constituent declined the offer, making it possible to discuss their case here today. It will be clear to everyone in attendance today that that tactic was used by the banks and their solicitors to hide abuse and allegedly criminal activity.
The Solicitors Regulation Authority, which is the regulatory body for solicitors in England and Wales, has a duty to society, and I encourage it to issue very firm guidance to prevent solicitors from contractually silencing allegations of criminal conduct.
I am grateful to the hon. Gentleman for giving way and for his reference to my constituent, Mr Shabir. In Mr Shabir’s case, not only was a gagging order presented to him, but he also has a legal opinion from Queen’s counsel saying that a criminal fraud has been committed against him. That is exactly the sort of circumstance that the hon. Gentleman is talking about.
I thank the hon. Lady for her intervention. She made the point that I was just about to make, namely that it is not possible to contract out of criminal behaviour, and it may be that these gagging clauses are in fact unenforceable. However, that is not the point. Such clauses serve the purpose of instilling fear and effectively silence concerns, and potentially suppress valuable evidence. The all-party parliamentary group on fair business banking and finance has found dozens of cases like that one, and people are scared.
Time and time again in this House, we call for transparency and we hear a lot of lip service about the industry’s commitment to it, but there can be neither transparency nor fairness if people are being subjected to onerous confidentiality agreements that prevent the investigation of allegations of criminal activity and obstruct justice, stopping it being served.
This issue should be deeply troubling for all Members of the House. Greater scrutiny must be applied to the use gagging agreements and the role they play in the concealment of criminal activity.
It is always a pleasure to serve under your stewardship, Mr Robertson. I thank the hon. Member for Hazel Grove (Mr Wragg) for raising this issue, which is very important, particularly for our small and medium-sized enterprises, which work extremely hard to build their businesses, and which want to move forward and contribute to their local communities, employing people in the process.
One of my constituency cases is to do with HSBC. The director of a company that was not failing—it had a huge number of assets—was asked to sign over to a new loan agreement, but he was attending his dad’s funeral in India so the agreement was signed on his behalf by someone in the bank. Someone faked his signature on the document. On his return, he was told he had no choice but to proceed. The loan was offered to the company without its asking for it, to invest further in the capital assets into which it wanted to expand its business. It was forced into the position of having an additional loan and, because of the terms and conditions of that loan, the company was offered restructuring. So a company that was fluid in its assets and able to function normally was forced into restructuring. The personnel initially involved in the restructuring—those who were forcing the company into that corner—then turned into the recovery personnel, so there were people in the bank with the dual role of restructuring and recovery.
The company has fought the case for more than 10 years. It has fought extremely hard, despite the main director having lost his father and the huge stress caused throughout the family. There has been continuous suffering. The company was bound into a non-disclosure agreement and was stuck for many years. Through a lot of hard work and pain, with my office and one of my senior advisers dealing with the case, we have managed at least to get to the stage where the NDA has been removed. Yet the company cannot get any recourse for the losses incurred, let alone the initial debt problems that the bank caused, which put the company in such a predicament. Those are the problems we have; that is what these banks do.
There are two of my constituents in that position with HSBC, and two in that position with Lloyds. Both banks operate in exactly the same way. Another constituent who is involved with Lloyds bank had the bank decide to call in the receivers on a Friday at 5 pm, so it was not possible to have recourse through lawyers or anyone else to stop the injunction. That was someone rich in assets being closed down and locked into this process. The modus operandi of these banks is clear. All four of my constituents who have been dealt with in this way were fluid in their asset base—they were not struggling for money—yet, at the moment, one of them is unable to go to another high street bank because of what the people in HSBC have put them through. That is where the real issues are.
I have another constituent, Mr Elliott, who is here today. He has a significant number of companies that are doing well. He fought his case and managed to get to the court stage. Two weeks before the trial, he got an order from Lloyds saying that it would sue him for £1 million a day for every day the trial took place. Having taken that huge step, it was fundamentally difficult to tolerate that sort of pressure.
The individuals involved must be held criminally responsible for their actions. It is high time that the Government took charge and that all such businesses, which bring huge benefits to our local communities, were protected from the sharks and the way in which they operate.
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Hazel Grove (Mr Wragg) on securing the debate and commend him for his tenacity in maintaining the focus on this issue.
I want to raise the issue of the resources and expertise of those investigating the usually very complex cases of business banking fraud. We are seeing a huge increase in financial crime in our country. Some of it is well known—most of us will have residents who have been scammed out of money by transferring huge sums. That straightforward fraud is hard enough to pursue, but much harder again is complex business fraud.
One such case that has been raised with me has been discussed in this place twice before, in 2013 and 2015: that of the successful, growing and profitable business, Premier Motor Auctions. The detail of the case and the role of the various players was highlighted by the former Member of Parliament for Great Grimsby, Austin Mitchell, and can be read in Hansard. He did an excellent job highlighting the extreme closeness of the working relationship between Lloyds bank and PricewaterhouseCoopers. I do not intend to go over the details of the case in the time allowed; I simply refer Members to that debate, which was clearly feisty and shows just how long Members have been concerned about banking practice.
I have now taken up the case, and my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and I wrote to West Yorkshire police asking it to commence a criminal investigation. It has decided not to do that, citing the scale of the resources required and the fact that the victim pursued civil recourse—though in fact that was a case taken by the liquidator, which was dropped under extreme pressure from Lloyds bank and PWC. I understand that that pressure was the threat of being sued for £1 million a day—real David and Goliath territory, though with a less satisfactory outcome. The other point the police made was that the case would be more suitably investigated by another body. I am a strong supporter of our police services and I can see their point of view—resources are under pressure. The case referred to here today, which has been investigated by Thames Valley police, took 150 dedicated officers and cost £7 million.
West Yorkshire police has a point when it says that other bodies could be better placed to carry out the investigations, which leads to the underlying question I would like to ask the Minister: do we, in the UK, have the right people investigating the right cases, and are they working as closely as they could be with regulators? That is the two-track approach that my hon. Friend the Member for Thirsk and Malton highlighted. Do our regulators have enough teeth and are they using them? Who is looking at the relationship between banks and accountants? Are local police services the right bodies to be tackling complex corporate cases? Such cases are difficult and require specialist knowledge. If the decision is taken that the local police service is the right body, can more specialised resource or extra funding be provided to help it undertake the work?
It is not at all clear to me that we have this right. I think we need to reconsider it. I can see the challenges the police service faces, but I also see cases, such as that of Premier Motor Auctions, where questions need clear answers and victims need and deserve those answers. It is the underlying national issue, brought into perspective by the local cases, that needs consideration, and I ask the Minister to consider that as he reviews whether our financial system serves our country as well as it could and whether it has addressed the wrongs of the past.
I think I have spoken in all four debates on this subject, and I am beginning to feel like my colleagues: we are voices crying in the blooming wilderness. We have asked for something to happen, and nothing is happening. It is wrong. It is scandalous that decent people have been so incredibly robbed by banks. I cannot understand why we have not been able to get a grip on this matter and sort it out. It is wrong, and we are meant to be the people who sort these sorts of problems out.
One part of National Westminster is particularly to blame. One of my constituents, Dean D’Eye, started an association with that bank’s Romford lending branch in 2000. For eight years, it was all great. That association worked well, and both the bank and the business were profiting, but just after the banking crisis 10 years ago, the destruction of Mr D’Eye’s investment and property development business began. At that time, his company was worth about £11 million and had a debt of about £5.8 million. All his interest payments for debts were on time, and he had a gearing ratio of 60%, which was pretty good.
However, in September 2008, Mr D’Eye began to be inundated with requests for information, which took up a great deal of his team’s time and stopped them doing business. Then, in December, the National Westminster bank suddenly robbed £139,000 from the company’s business accounts, without any reference to Mr D’Eye and despite letters from the bank saying that money could be used by the company. In early 2009, the demands for more information continued, and Mr D’Eye’s group was placed under the watch of that wonderful organisation called the Global Restructuring Group. The situation then grew rapidly worse: suddenly, in April 2009, the bank appointed administrators, who appeared to investigate the business. On 28 May 2009, NatWest formally cancelled Dean D’Eye’s overdraft. Considering the size of the businesses, that overdraft was pretty small, at £40,000.
Within a week, on 1 June, all Dean D’Eye’s loans were called in. By 10.17 am on 5 June, administrators had full control of his companies and were effectively running those businesses from his offices. That decision meant the group lost its cash flow, which in turn created a default with the Dunbar bank, owned by the Zurich insurance group. Dunbar bank has a pretty bad reputation, and is often more ruthless than anyone else.
My constituents, the D’Eye family, have lost their family home, and Mr D’Eye has lost his father’s house as well. Mr D’Eye continues to hope that he can get litigation funding to take NatWest to court for the way it has ruined his business. Who can blame him? A generation ago, banks usually encouraged and supported their customers, giving them a fair shake. How tragic is it that that is no longer the case for so many people?
My hon. Friend is making an excellent speech. He said earlier in his remarks that Mr D’Eye was not behind on his payments when the bank first took action. My hon. Friend may be aware that Australia has brought forward a royal commission because of similar abuses there, and one of the changes that has come out of that process is that a bank cannot take action against a business if that business is not behind on its payments. Does that not underline the need for a full public inquiry?
I thank my hon. Friend for that very good point. Of course it does. We need to get on and sort this matter out.
In the 18th century, highwaymen used to stop coaches, get people outside them and say, “Stand and deliver. Your money or your life.” Those guys had a choice. Now, the 21st century equivalent of highwaymen—some in the banks—shout, “Your money or your lifestyles”, and they take both. Thank you, Mr Robertson.
I am grateful to hon. Members for their self-restraint and to Opposition Front Benchers for offering to make slightly shorter speeches.
It is a pleasure to serve under your chairmanship, Mr Robertson. I thank the hon. Member for Hazel Grove (Mr Wragg) for being here. I am not going to say it is a pleasure to take part in this debate, because I do not think we should still be having these debates. The hon. Member for Beckenham (Bob Stewart) is absolutely correct: this subject has been discussed in the House so often, because so many of us have been approached by constituents, that we should not still be at this stage.
A number of hon. Members have raised issues that their constituents have brought to them and that, to me, scream of illegality. People have had things signed against their will, bank accounts opened in their name, or money taken from their bank accounts. Companies have been gone after because they are asset-rich; in Scotland, that particularly affected agricultural businesses, for example, because they had large assets that the bank could chase after. It baffles me that there have not been convictions in relation to those things, because I do not understand how they are not illegal.
Given the number of Members who have come forward about this matter, not all of our constituents can possibly be coming to us with falsehoods. So many people have been affected by this that it absolutely must be true. That was one of the most difficult things for individuals to come to terms with: I heard people talking about the fact that they were going through a total nightmare, and they did not understand how this could possibly be happening to them. In fact, they believed it could not be happening to them and that something must have gone horribly wrong. That has not helped to make sure that many people can come forward.
I will raise a few issues that the Scottish National party is asking to be addressed. I will focus a little on GRG, because that is the organisation that the majority of Scottish constituents have been hit by, but we have also had constituents hit by HSBC, Lloyds and Clydesdale. We believe that the UK Government need to pick up where the FCA has failed in relation to the comprehensive review of banking culture. The FCA produced a discussion document, but that is not enough. If the FCA cannot do these things comprehensively, the UK Government can step in, take action and make sure that positive changes are made to banking culture, because it is not the case that banks are now perfect.
The SNP will continue to call for the UK Government to create a permanent commercial financial dispute resolution platform to alleviate the suffering of victims of mis-selling. Given the issues that have been raised today, we will continue to say that asking victims of mis-selling to take the banks to court is totally inappropriate, and financially unworkable in the vast majority of cases. If the Government could step in and create that commercial financial dispute resolution platform, individuals would welcome that.
The UK Government have had a significant stake in RBS, and could have done more to highlight the issues there have been in that organisation and to ensure that RBS has told the truth. The internal resolution mechanisms that RBS has put in place could have been stronger and easier for individuals to navigate—particularly given the consequential loss issues involved, it has been very hard for constituents to access justice.
As the hon. Member for Thirsk and Malton (Kevin Hollinrake) said, it is vital that banks lend to small businesses, both for our economy and for those small businesses. These issues have had an economic impact on growth, because businesses have not been able to grow and be successful. There has been a huge impact on individuals’ lives. There has been homelessness, there have been marriage breakdowns and there have been suicides. I have spoken previously about my cousin and her family. She, her husband and their four children were made homeless as a result of what RBS GRG did to them, because they had an agricultural farm, and that farm was an asset that could be taken from them. A constituent also came to me who had suffered huge personal tragedy, as well as financial tragedy, as a result of what happened specifically with RBS GRG.
I have already said that people do not come forward. That is because of the confidentiality clauses that they have had to sign, because they are embarrassed, as has been mentioned, or because they are suffering from financial ruin and have enough to worry about without trying to take on a massive financial institution as an individual. More could be done so that those individuals get justice.
To conclude, we should have a comprehensive review of banking culture and a permanent commercial financial dispute resolution platform. The Government need to take action now so that this can never happen again.
I, too, thank the hon. Member for Hazel Grove (Mr Wragg) on securing today’s debate. Colleagues will know that he and I are constituency neighbours. The powerful case study that he gave on behalf of his constituent could quite easily have been on behalf of one of mine. I first became aware of the scale of the issues through constituency examples. Every Member who has spoken in today’s debate has presented those testimonies extremely well. I also thank the all-party parliamentary group on fair business banking and finance, especially for the efforts of its chair, the hon. Member for Thirsk and Malton (Kevin Hollinrake), who gave an authoritative and powerful account of some of the problems that have come to the group’s attention.
Many of us have participated in similar debates before, but as we mark the 10th anniversary of the financial crisis it is a good time to consider the relationship between businesses and their banks. All of us in the Chamber, even though we have come today with powerful case studies of inappropriate behaviour, want to see a strong relationship between businesses and banks. Having a good relationship between banks and businesses is critical to our economic growth, prosperity, employment and much more.
Unfortunately, research shows that frighteningly low numbers of small businesses trust their bank to do the right thing for them. That is unsurprising given some of what we have heard today. We have to improve that. We have to look at why that is, and how we can change it. We have to restore confidence that the regulatory system is fair, and crucially that there will be a level playing field for businesses when they find themselves in conflict with their bank, especially if their bank is suspected of having committed fraud, as we are discussing today.
The central premise of today’s debate and of all the speeches has been that there are insufficient resources available to tackle business banking fraud. Colleagues will be aware that I agree with that premise. The National Crime Agency, the Serious Fraud Office, local police forces and the Financial Conduct Authority do not have sufficient capacity, either individually or collectively, to look into the matter with the attention that it deserves. I am sure that the Minister will refer to the new National Economic Crime Centre—the NECC—a new unit of the National Crime Agency. An initial budget of £6 million does not seem sufficient when compared with, as I think the hon. Member for Harrogate and Knaresborough (Andrew Jones) mentioned, the £7 million cost of the Thames Valley police investigation into HBOS in Reading, and given the scale of the issues raised today.
I want to say quite a bit more, because I do not think that we can simply say, “This issue requires more resources and that will solve the problem.” It is about how we can change the culture that has led to such outrages happening time and again. I will talk about three different ways in which I believe we could contribute to achieving that. First, we could launch a full public inquiry into recent business banking scandals. Secondly, we could introduce an independent tribunal system for small and medium-sized enterprises to resolve disputes. Lastly, we could put in place a more robust system to better protect and enable whistleblowing.
The first step has to be securing proper redress for SMEs that have been mistreated by their banks. Scandals such as GRG and HBOS mis-selling have been outrages, and have seriously dented business and customer confidence. The shadow Treasury team has consistently called for a judge-led independent inquiry into RBS GRG and other small business banking scandals, so that victims can get proper redress. I know that several colleagues in the Chamber have argued strongly for the same measure. There is clearly cross-party support for that to take place.
Such an inquiry would not just get to the bottom of the case studies that have been raised today; it would establish whether there is further criminal liability to be addressed, and examine the wider systemic issues that have allowed such events to take place. We are talking about people’s livelihoods, homes and relationships. Some people have simply been ruined. These issues are too important for us to sweep under the carpet, with the risk that such events could happen again. We have to be able to go out from a debate such as today’s and promise constituents that this will not happen again. In my view, a full public inquiry is required to do that.
Secondly, in terms of disputes, part of the problem is that it is well recognised that the gap between the financial ombudsman for individuals and the full legal process for very big firms is just too great. I support the all-party parliamentary group’s proposal to establish an independent tribunal to help create a level playing field between businesses and the banks in order to fill that gap.
We all await with interest the outcome of the UK Finance independent review, chaired by Mr Simon Walker, into complaints handling and alternative dispute resolution for SMEs. I have met Mr Walker and I understand that he will report very soon. The review will examine dispute resolution processes in different sectors and countries, and provide some evidence-based conclusions on how we can meet the needs of businesses for larger or more complex disputes.
Other initiatives are under way that will hopefully progress the situation. In July 2017, 20 banks signed up to the new standards of lending practice for business customers, which outlined what businesses should expect from their bank when in financial difficulty. Although such moves are welcome, my view is that ultimately we cannot rely on the industry to self-regulate. Look at the RBS GRG complaints resolution process as evidence. Concerns are being raised about how the goalposts have been moved regarding compensation, and how the process has been subject to quite a lot of individual discretion. That is why an independent tribunal system is necessary.
Lastly, an answer could lie in exploring a change in our approach to whistleblowing in financial services in this country. Whistleblowing will never be a substitute for effective action by regulators, but it can play a part. That is especially important in a time of scarcer resources as a result of public spending cuts. The Dodd-Frank Act in the US, which was introduced as a central piece of post-financial crisis legislation in 2010, is a demonstration of how much more robust the whistleblower protection framework could be. Whistleblowers in the US are entitled to awards where their information leads to enforcement action. The framework is structured in such a way as to disincentivise false reports, but to provide protection in the event of dismissal.
The UK legislation, on the other hand, is much weaker. Although the Financial Conduct Authority can assist whistleblowers under the Public Interest Disclosure Act 1998, it has not been enshrined in regulation in the way the Dodd-Frank Act has been used in the US. There is a case for examining how we could introduce specific financial services whistleblower protection in order to seriously improve conduct in banking. I have encountered significant support for that within the sector itself. I think the hon. Member for Thirsk and Malton mentioned that many good people are working in the sector who want to see such issues improved so that today’s debate does not have to happen again.
Having a banking system that we can trust is essential to our economy. Entrepreneurs who have taken the risk of setting up their own businesses deserve to know that there will be proper redress if they have been the victim of unscrupulous practices. SMEs are the backbone of the British economy. If they cannot trust the financial institutions that are meant to serve them, we will all pay a price.
If we are to begin to restore trust to UK business banking, there are two outcomes we have to achieve. The first is to ensure that the victims of the GRG and HBOS banking scandals get proper redress for the damage done to their businesses and livelihoods, and individuals, as well as the institutions they worked for, must face sanctions for their actions. The second outcome is that we must create a framework in which such a flagrant abuse of the bank and business relationship can never happen again.
With the combination of a full public inquiry, the establishment of an alternative dispute resolution mechanism and a radical rethink of how we treat whistleblowers, we could begin that process. These businesspeople, many of whom are in Parliament today, were badly let down. We must all commit to less talk and more action to get them the redress that they deserve.
I would like Mr Wragg to be left a minute to wind up at the end. I call the Minister.
It is a pleasure to serve under your chairmanship, Mr Robertson. This has been the fourth such debate since I was appointed on 9 January. In each of those debates we have had a number of passionate contributions from Members across the Chamber. Today has been the same. We have had 10 speeches, each of which has contained compelling evidence of a situation where banks have failed small businesses. We must be honest and true to the reality of the experiences of the many people who have come to the House today to challenge me, as the Government’s representative in this area, over what can be done to achieve proper redress.
I pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for his campaigning on the matter and to my hon. Friend the Member for Hazel Grove (Mr Wragg), who set out powerfully the case that justice needs to be blind, that it needs to be done and that it needs to be seen to be done.
My deliberations will reach a conclusion imminently; I have not been putting the matter off. As has been discussed, a series of pieces of work are being undertaken, two of which will report in the next few weeks, and I will then make a judgment about the best way forward. Financial sector fraud has had a severe impact on SMEs—we heard today about several individual cases in which lives have been destroyed and families ruined. This is not a subject that I treat lightly; I have been very focused on it over the past nine months.
The Minister is a decent and honourable man. Will he please, please concentrate very hard on getting redress for the people who have lost so much money and so much of their lifestyle?
I am very grateful to my hon. and gallant Friend for his contributions, which I shall address in a moment. I will also set out some of the changes that have taken place, but let me say from the outset that the cases that have been raised today all demonstrate that, whatever mechanisms we have implemented—from the tripartite regulation of banks and the financial system to the redress schemes of recent years—the banks need to deal with the very real legacy of this issue. Simon Walker’s review for UK Finance must listen to what has been said today about that legacy, which will not go away unless the banks face up to and take responsibility for what happened in the past.
Tackling fraud is a Government priority. I want to reflect on a new theme raised today: access to justice and the mechanisms by which it is delivered. The decision to investigate a crime rests solely with law enforcement; I cannot make it myself. Like any Member of Parliament, I can refer a crime to the relevant chief constable, but they will take account of available resources and the likely eventual outcome. It is the chief officer of the local force who is ultimately responsible for such operational decisions, and it is the responsibility of police and crime commissioners to set the budget for local forces, which the chief officer must take into account. Forces can apply for special grant funding to help meet the cost of unexpected events, but I know from conversations with my hon. Friend the Member for Thirsk and Malton that there is sometimes a gap between the costs covered and the actual costs accrued. These are real matters that need to be addressed.
The point is not whether the funds can be squeezed out of current budgets—police budgets are under huge stress at the moment. This is not a one-off; it is a long-standing issue about criminal activity by the banks, and resources need to be available to deal specifically with it.
I am grateful for the hon. Gentleman’s intervention, and I listened to his earlier remarks. I think that this is about co-ordination and the appropriate configuration of resources.
The Minister rightly mentions resources, which are always tight, but does he see a potential opportunity here? HBOS has not yet been fined for its scandalous abuses of 2007 and 2008, which tore apart many businesses. Would it be appropriate to use that fine to pump-prime a crime agency to deal with these issues? That agency could then be self-funding, because it would constantly be levying fines for abuses.
We clearly need to find an effective mechanism to deal appropriately with the scale of the unaddressed challenges, and I will look at all options for that.
The City of London police have secured funding from the Home Office police reform and transformation fund to provide training for 600 investigators across police forces. There is also now a national register of fraud specialists; I acknowledge that the sentiment in this Chamber is that that is insufficient, but I should point out that it exists.
The regulatory framework has changed considerably since the events of the crash 10 years ago. I will not go through the whole history, but we have now established a network of robust and specialised financial regulatory bodies, each with a clear mandate and a set of responsibilities. However, I understand the concern about the reach of those bodies to deal with outstanding historical matters that our constituents are still raising with us. As part of that network, the Financial Conduct Authority is focused on ensuring that the conduct of firms and the interests of consumers are placed at the heart of the regulatory system and given the priority they deserve. That statutory objective will continue to guide the FCA’s work as it ensures that the highest possible standards are applied to the sector.
On SME lending, I am acutely aware that concerns remain about past cases of misconduct, the effects of which are still being felt today. There has been a great deal of justified anger within Parliament and beyond about cases such as those of the RBS Global Restructuring Group, HBOS Reading and the mis-selling of interest rate hedging products. I have been clear that the inappropriate treatment of SMEs by RBS GRG was unacceptable; I have made that point personally to the chief executive of RBS. The issues surrounding RBS GRG are firmly on my radar in the Treasury and I continue to work on the matter. The case of HBOS involved criminal activity, and it was right that those responsible were brought to justice. RBS and Lloyds, which now owns HBOS, have rightly set up compensation schemes for businesses affected by GRG and HBOS Reading.
My hon. Friend the Member for Stirling (Stephen Kerr) and other Members raised gagging clauses and the need for transparency. I am very sensitive to the pattern of settlements being offered that are effectively gagging clauses, such as in the case of Mr Shabir that the hon. Member for Cardiff Central (Jo Stevens) raised. That does not seem an honourable way of dealing with legitimate complaints, so I will examine the matter carefully before I report back.
I am glad that to say that in response to direct loss claims relating to the GRG scheme, 978 outcome letters have been sent to customers and £15 million has so far been paid out in redress, on top of £115 million in complex fees. Offers have been also made to more than 90% of customers within the scope of the HBOS Reading review, and more than 85% of customers have accepted.
I am acutely conscious of time, but I think that it is important that I give a succinct update of what I will be doing over the next few weeks. I firmly believe that by increasing the emphasis on individual accountability, the senior managers and certification regime will prove hugely important in improving conduct standards in the financial services sector and allowing regulators to deal effectively with cases such as that of RBS GRG. The regime will be extended to the insurance sector in December and solo-regulated businesses will come in next year.
I look forward to Simon Walker’s review because it will allow me to reach a conclusion about what needs to happen. The Government have done a lot of work, but I accept that more is required. I have spoken to Andrew Bailey, to the retired High Court judge Sir William Blackburne, to Ross McEwan, to the chief executive of Lloyds, to the chief executive of the Financial Ombudsman Service and to UK Finance, and I have met members of the all-party group. I am keen to give my hon. Friend the Member for Hazel Grove the opportunity to reply, but let me confirm that there will be action and that I will come back in a matter of weeks.
Thank you for chairing the debate, Mr Robertson. [Interruption.] I can hear the crowds outside protesting at the thought that I will be back in six months’ time to make the same speech—I hope that I will not be.
I thank the many members of the public who are watching from the Gallery. They are the people we are fighting for across the country, so it was good to hear contributions from all four nations of the United Kingdom today.
My hon. Friend the Minister said that action would come “imminently”, at least from the Treasury—a drastic improvement on the “very soon” that he promised before. That action cannot come soon enough.
Question put and agreed to.
That this House has considered the investigation of business banking fraud.
Cost of School Uniforms
[Siobhain McDonagh in the Chair]
I beg to move,
That this House has considered the cost of school uniforms.
Ms McDonagh, this is the first time I have spoken under your chairmanship, so not only is today’s debate really important, but it gives me real pleasure to serve under you. I am sure that view is going to be shared by everybody, including the Minister, for whom I have some really good news. I am hoping to enlist him in a twofold campaign. One part of it is that all of us who want to intervene should approach the Chancellor and ask him to lift VAT on school clothing—full stop. We should also ask him to give a direction to school governors in a way I think is going to emerge during the debate, and I will touch on that as well.
We are facing an open goal, because the year that the Minister came into the House of Commons, the hon. Member for East Worthing and Shoreham (Tim Loughton) introduced a Bill saying how absurd it was that there was a 14-year cut-off—a point some of us may come back to. He pointed out that, for an average-sized 14-year-old, it means that VAT is applied where their collar size is over 14½ inches and where they wear jumpers with a 34-inch chest and upwards, trousers with waists of 28 inches and upwards or skirts with a 26-inch waist and upwards.
The key person supporting my hon. Friend—I will call him my hon. Friend because I agree very much with his views—was the Prime Minister. She was not then the Prime Minister; she was a Back Bencher. This was a topic dear to her heart, so I hope, when all of us together make an approach to the Prime Minister, and through her to the Chancellor, that we are going to get a massive amount of support for my hon. Friend and a constructive response.
I am hoping for a twofold response. The first part is that we scrap VAT on school clothing. If people can provide evidence that it is for a child at school, that will exempt the actual product, just as people with disability get some VAT exemptions when they can prove the status of their disability. Secondly, we want the Minister of State who drives schools policy to give a commitment that he will write to school heads and governors and ask them to do several things. First, school governors should undertake a pricing each year in local stores or wherever they request parents to shop on the cost of the school uniform. Secondly, there should be standard items from many suppliers rather than just one or, if lucky, two. Thirdly, if the school wants to distinguish itself from others, it should do it by standard colours that can be bought in many shops, not by specific blazers that are only to be bought in certain places.
I think other Members may want to come in on the actual costs of games kits, and I will quickly touch on all those issues. However, I also want to thank people from Birkenhead and beyond, because we had the most extraordinary response from there and from around the country about today—I did not know people wanted to follow a Facebook link to Birkenhead—and those people wrote in with their comments about the horrors.
I know how well this debate will be received in my constituency, where one parent contacted me to tell me about the extortionate £135 cost of their children’s school uniforms. The fact is that parents should be allowed to go to the high street, the supermarket or anywhere to get a school uniform. That is what happened under the last Labour Government—it was stated in the guidance, and it should be reintroduced.
That is a suggestion for the Minister. It could be guidance; I would love it to made be stronger than guidance—that schools must do this. I will come back to that.
I congratulate my right hon. Friend on securing this debate. I raised this issue when I was first elected last year, because a constituent had similarly come to me with the cost of uniforms. I was surprised that the Government committed to legislate to ensure schools did the right thing back in 2015. I received a letter from the Minister last month saying they are not going to do this until the next Session, which means at least five years since the first commitment was made. Does my right hon. Friend agree that, given the increasing costs of living that parents have to bear, a five-year delay to do something that the Government committed to do back in 2015 would be a pretty poor show?
It is a very poor show. There is a myth going around that we have no time to legislate because of Brexit. Ms McDonagh, I am sure you would think that the rubbish we debate in the Chamber would not be suitable for Westminster Hall and would just be filling up time. The Prime Minister believes we are all very busy with important legislation; we are simply not. I am really grateful to my hon. Friend. Why can the Cabinet Legislative Committee not give us time to introduce a Bill?
I am really grateful to my right hon. Friend for securing the debate. Millthorpe School introduced a new school uniform this summer and it has meant that children have been excluded from class. When the Minister is writing to heads, perhaps saying that no child should be excluded—this is doubly stigmatising a child because they are poor and because they cannot afford the right uniform—will he also instruct all schools that they must recycle uniforms, not just on cost grounds but on environmental grounds, to ensure that a school uniform is affordable for absolutely everyone?
It is very good giving way, because these are points that I would have made otherwise. I merely underscore the point my hon. Friend has just made about how it may not be a one-off set of costs but an increasing set of costs through the year. Of course, if someone has young lads, who are all too often separated from their uniform and their games kit, the costs mount tremendously.
In preparing for this debate, we had a Feeding Birkenhead meeting a couple of weeks ago, and we talked about this debate. There were 22 mothers in the room who support Feeding Birkenhead. Practically all of them were either grandparents or parents. They all said, “We can actually give you examples,” and all of them have given me examples. There have been examples on Facebook—the House of Commons Facebook for these matters has got a huge number of responses from parents. I said that, during this debate, I would do what Ernest Bevin did when he appeared before the wages committee for dockers, where he laid out how much food the dockers would get from their wages and asked the independent panel if it thought that was adequate. One mother listed the cost of the uniform—I will hold the document up so the camera can see it. I will give it to the Minister afterwards—I do not expect him to read it now, but I jolly well hope it is going into the camera.
I am very grateful to my right hon. Friend for giving way, and I congratulate him on securing this important debate. I, too, have had a number of examples from across my constituency. A school uniform often costs in excess of £120 in Barnsley East. Does he agree—I know he does—that that is totally unacceptable? We need to look at ways to bring down the costs. Perhaps one way to do so is for governing bodies and local authorities to use their power to bulk buy.
All these ideas are here for the Minister to pick up and run with, particularly given that he has the Prime Minister’s support on this issue.
Some of the parents who wrote to me from Birkenhead and beyond have bills that are £300-plus for a school uniform, and they also face the devastating cost of games kits. I hold up another document from a mother, listing a games kit. When my hon. Friend the Member for York Central (Rachael Maskell) saw it, she jumped and said, “Look at that—emblems are being put on the items, which adds enormously to the cost.” That parent—a young woman—has a child in school who has to have two different games kit cases to bring the stuff to school.
I was absolutely horrified about that. I met the staff of one school and asked why they put labels on trousers and skirts. They said that, previously, they tested girls’ trousers by pulling them away from the leg. Clearly, that is completely inappropriate. We need to set guidance to ensure that uniforms can be bought from standard retailers, so that badges are not put on trousers, skirts and other bits of kit.
Again, I see the Minister busily rewriting his speech—[Laughter.] We are laughing, but I know that nobody outside will mistake that: our comments are dead serious. I have heard horror stories about parents going without food to provide uniforms. They do not want their children to look different from other children, and they wake up at night worrying about it. This is an incredibly serious debate, but we are making some of our points as humorously as possible because we know we have got the Minister on our side.
My right hon. Friend is being very generous in giving way, and I congratulate him on securing this really important debate. The points he has been making are really serious. Buying school uniforms potentially plunges parents into poverty, but it also forces them to pick certain schools over others because of the expense of the uniforms. The previous Labour Government introduced a statutory school admissions code that explicitly required schools to prevent the cost of school uniforms from getting in the way of admission. Perhaps the Minister will consider reintroducing it.
It is really great that all my best points are being taken. The Government say they are concerned about social mobility, but school uniform costs affect parents’ choices about which school they send their children to, irrespective of where they come not in the 11-plus selection but in the selection of schools. I thank my hon. Friend for that immensely important point.
I am a Welsh MP, and these issues are devolved to the Welsh Government. There is a different way of doing it. I urge my hon. Friend the shadow Minister and the Minister to look at what the Welsh Government are doing on school uniform grants. In Wales, a £1.7 million fund is available for children on free school meals. Parents can apply for a £125 grant, which can be spent not just on school uniforms but on sports kits, school trips and technologies. There are better ways of delivering, particularly for the least well-off children. If they are on free school meals, their parents can apply for that grant, which is worth up to £125. It is for reception children and children aged 11 who are going into year 7, so it is across the age range. I am sure my right hon. Friend would agree that there are better and different ways of supporting the least well off.
That is a particularly good one, isn’t it, Minister? The Prime Minister has told us that austerity is coming to an end, so she will want ideas about how to bring it to an end. Copying a proven model—we are not making up something that may not work—seems an admirable way to advance.
I am going to conclude, because the spokesman on our side—if I can still refer to him like that—has quite a bit to say, and we all wish to quiz the Minister. We have heard about the huge cost and about how arbitrary the 14-year cut-off point is. Will the Minister tell us when it was last reviewed? One person wrote on Facebook:
“Our son is 14, going into year 10, 6ft 4, size 12 feet, 48 inch chest!”
He has to have men’s shirts with very long arms so he can feel part of his school. It is very important that we get promises about improving the situation, not just for some but for all. There is a really important issue behind many of our contributions: we should be able to buy uniforms in many shops. For the many, not the few shops—that is what the policy should be.
The Minister should think about how he will lead us in approaching the Prime Minister. I say that in all seriousness, because we actually want to help him with this deadly serious topic. We want to help him with the instructions he will give to schools about, for example, costing their uniforms every year, getting supplies from standard suppliers, and the absurdity of the price for a games kit. If people want a uniform to be distinct, they should pick a colour that is commonly available and different from other school uniforms, rather than one that is available only from a single supplier.
I am really grateful to the Members who have turned up to the debate. We have been surprised by the number of letters, emails and phone calls that we have received. We have clearly just been through a horrendous period for parents, and I hope that they will not have to face that for another year.
Order. I was going to call the shadow Minister, but I have been corrected by the Clerk. The Opposition spokesperson cannot make a speech in a half-hour debate.
What I might do, if you are tolerant, Ms McDonagh, is take a few interventions from the shadow Minister so he can make a few points.
Will my right hon. Friend give way?
What a surprise!
I thank my right hon. Friend for giving way. I attended his constituency fundraiser in 2010, and I am reminded of the event because—
Order. This is my error, and I apologise, but I understand that you cannot make a speech.
Can I just rewind? I had spoken with the Opposition spokesman, and we were under the impression that he could speak. I would have allowed him to intervene before I sat down. Could I say that I had not sat down, Ms McDonagh?
I would like to do anything I can to facilitate the right hon. Gentleman, but the guidance I have been handed states that during a half-hour debate, neither speeches nor interventions from Opposition Front Benchers are permitted, as is the rule in the House. I apologise.
Can I speak from the Back Benches?
I hope my hon. Friend will be able to intervene in the debate from the Back Benches.
I am grateful to my right hon. Friend for my quick shuffle to the Back Benches. The previous occupant of the shadow Minister’s seat was my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds). I remember attending his constituency event in 2010 at St Anselm’s, with the former Member for Stalybridge and Hyde, who was the guest speaker. I point out to my right hon. Friend the Member for Birkenhead (Frank Field), in his current state of exile, that St Anselm was exiled twice by William II and Henry I, so I suspect that whatever happens in his political career in the weeks, months and years ahead, he will be a champion for people in poverty.
The debate is really about eight years of austerity and Government policy. Universal credit is failing and driving people into debt, hunger and even destitution. Over 4 million children are growing up in poverty and a million people are forced to go to food banks. The Government should be hanging their heads in shame that families cannot afford to buy school uniforms for their children. A number of hon. Members have pointed out that we have a system in which children are sent home from school because their parents cannot afford to meet the dress codes.
I think my right hon. Friend the Member for Birkenhead will agree that we need to know what the Minister is doing to ensure that children do not lose time in school because their parents cannot afford to meet unrealistic school uniform demands. When will the Minister ensure that the Government pledge to make school uniform guidance legally binding, and what are the Minister and the Government doing to address the ever-increasing challenge faced by parents to pay for the basics to enable their children to attend and participate in school? As my right hon. Friend rightly said, people are putting off buying food because they have to buy uniforms.
Finally, will the Minister pledge to end, once and for all, the perverse situation in which poverty acts as a barrier to children attending school because of uniforms?
It is a pleasure to serve under your chairmanship, Ms McDonagh, and to hear the hon. Member for Wythenshawe and Sale East (Mike Kane) speaking from the Back Benches, which is where all the best people in the Labour party sit. It is also a real pleasure to hear the right hon. Member for Birkenhead (Frank Field) lead this important debate on the cost of school uniforms. I pay tribute to him for his work with the all-party parliamentary group on hunger, and for his local work with Feeding Birkenhead, which has benefited thousands of children with meals and activities during the school holidays, as well as school breakfasts during term time.
The Department strongly encourages schools to have a uniform as it can play an important role in contributing to the ethos of a school and setting an appropriate tone. It is common for a school to have a dress code, and the overwhelming majority of schools require pupils to wear a uniform. For pupils, uniforms can remove competition to keep up with the latest fashion trends. For teachers, uniform can support discipline and motivation among pupils as part of a wider behaviour policy. For parents, uniform means they do not need to worry about what their children are wearing or the costs associated with buying the latest fashions or brands. A school uniform can also help foster equality among pupils and support the development of a whole school ethos.
One of the primary purposes of a uniform is to remove differences between pupils. With a standard uniform in place, it is harder to discern a pupil’s background; instead, what is important is their character and personality. In these ways, uniforms can play an important part in helping pupils feel safe at school. While decisions about school uniform are made by headteachers and governors—it is right that they continue to make these decisions—we always encourage schools to have uniform policies for those reasons.
In 2015, the Department commissioned a survey on the cost of school uniform, which provides the most recent information the Department holds on the matter. It indicated that the average cost of most items, except the school bag, decreased between 2007 and 2015, once adjusted for inflation. Moreover, most parents were pleased with the overall cost and quality of their child’s uniform. Over two-thirds of parents were happy with the cost of uniform and PE kit.
As was expressed in the debate, it is important that we are not complacent. While school uniform can have a hugely positive impact on a school in terms of providing cohesion and community, it may present—as we have heard—a financial burden on some, particularly lower-income families. In the same survey on the cost of school uniform, nearly one-fifth of parents reported that they had suffered financial hardship as a result of purchasing their child’s school uniform. The cost of uniform should not act as a barrier to obtaining a good school place. We want all children to be able to attend a school of their parents’ choice wherever possible.
Will the Minister give way?
I will not because of the time; I am sorry.
No school uniform should be so expensive as to leave pupils or their families feeling unable to apply to or attend a school. One hon. Member raised the issue of the admissions code, which explicitly sets out that,
“Admission authorities must ensure that…policies around school uniform or school trips do not discourage parents from applying for a place for their child.”
It is for the governing body of a school to decide whether there should be a school uniform policy, and if so, what it should be. It is also for the governing body to decide how the uniform should be sourced. However, governing bodies should give cost considerations the highest priority when making decisions about their school’s uniform.
The Department publishes best practice guidance on school uniform, the latest version of which was published in September 2013. That guidance makes it clear that when schools set their policy on school uniform, they should
“consider the cost, the available supply sources and year round availability of the proposed uniform to ensure it is providing best value for money for parents”,
and on the important issue of games or PE kits, that schools should
“ensure that the PE uniform is practical, comfortable and appropriate to the activity involved, and that consideration is given to the cost of compulsory PE clothing”.
That is non-statutory guidance for schools.
The right hon. Member for Birkenhead is right to draw attention to the issue of school uniforms and VAT. EU law allows the UK to have a zero rate of VAT on clothing and footwear designed for young children which is not suitable for older people. Therefore, clothing designed for children under 14 years old has no VAT on it. Over time, as children grow, their clothing becomes indistinguishable from that of adults. HM Revenue and Customs needs to operate size limits for the VAT relief to comply with EU law. The limits are based on the average size of 13-year-old children, using data provided by the British Standards Institution. It is inevitable that some children within the intended age range—such as the child cited by the right hon. Gentleman—will require larger articles of clothing or footwear that do not qualify for the relief. The Government are unable, under EU law, to extend the relief to encompass children beyond the average size. That is one of the reasons that our guidance is so firm in saying that schools should ensure their school uniform is affordable. I know the right hon. Gentleman has strong views on the EU and he may well get his way on this issue in due course.
Our existing best practice guidance emphasises the need for uniforms to be affordable. In fact, we advise school governing bodies to give the highest priority to cost considerations when making decisions about their school uniform. Most schools already ensure that their uniforms are affordable. However, for the minority of schools that may not, the Government have announced their plan to legislate to put the school uniform guidance on a statutory footing to send a clear signal that we expect schools to ensure uniform costs are reasonable.
The hon. Member for Ogmore (Chris Elmore) raised the issue of financial help and school funding grants. In England, some local authorities provide discretionary grants to help with buying school uniforms. Local authorities that offer such grants set their own criteria for eligibility, and schools may offer clothing schemes, such as second-hand uniforms at reduced prices. Schools may also choose to use their pupil premium funding to offer subsidies or grants for school uniforms.
The hon. Member for York Central (Rachael Maskell) raised the issue of recycling, of games kits in particular. I remember that I wore a second-hand rugby kit in some of the years at my school, and that was significantly cheaper than buying the kit brand new—I was not a particularly good rugby player, so it would not have been money well spent.
To conclude, I am grateful to the right hon. Member for Birkenhead for raising this issue and to other right hon. and hon. Members for contributing to the debate. Important issues have been raised. I hope that he is content to some extent that the Government echo his concern and content about the steps that we have taken to underline the importance of the cost of school uniform in helping the most disadvantaged members of society to access to a good school place and a good education. We want to ensure that the cost of uniform does not act as a barrier to getting a good education and a good school place.
I apologise to Members for my mistakes in chairing the sitting. The faults were entirely mine.
Motion lapsed (Standing Order No. 10(6)).
I beg to move,
That this House has considered tackling modern-day slavery.
It is a pleasure to serve under your chairmanship, Ms McDonagh. Before I progress with my short speech, I need to place on the record my thanks to my hon. Friend the Member for Gedling (Vernon Coaker), who cannot be present this evening because he is away at the Parliamentary Assembly of the Council of Europe. His chairmanship of the all-party parliamentary group on human trafficking and modern slavery does so much to ensure that this issue is always at the top of the political agenda.
I also briefly place on the record my thanks to the Co-operative party for pursuing the matter so vociferously. The Co-operative party has ensured that modern slavery is now taken exceptionally seriously both inside this place and outside. As a result of its vociferous campaigning, 30 local authorities have signed up voluntarily to a modern slavery charter that takes them above and beyond the requirements of the Modern Slavery Act 2015, which I shall talk about later. Clearly, a concerted political effort can ensure that we get safety for people fleeing horrible circumstances.
I apologise for intervening on the hon. Gentleman so early on, but I wanted to put something on the record as well: the great contribution made in the other place by Alastair Redfern, the Bishop of Derby, as we took the Bill through both Houses to become the Act. Without his dogged determination, we would probably not be sat in this Chamber today having this debate. He has actually just retired as Bishop of Derby, at the end of August. I am sure that putting that on the record will be well received by him and the people who worked with him.
It is true that where we are today is the result of a collective effort and political will across not only this House but Parliament as a whole. That is demonstrated not only by the number of Members present today but by how the matter has been pursued through APPGs, private Members’ legislation and amendments to various other Bills.
Before my hon. Friend moves on, may I add another name to the list of the illustrious? Home for Good, a Christian charity, has been working so hard to raise the profile of the real dangers of certain institutions that look as though they are orphanages but are actually involved in the trade. Separation of children from parents—even from one parent—is a dangerous activity. Will he look at the Home for Good report and study it carefully? He will find it very helpful?
I thank the hon. Gentleman—
Indeed, he is my friend, but he is now only the second most famous person from Huddersfield following the debut of the new Dr Who. I do not know whether he has a sonic screwdriver, but we can sort one out for him.
My hon. Friend is right. A number of organisations and charities sent me briefing notes, and what I found interesting as all that information came into my office was the sheer volume of work being done quietly and diligently to ensure that this issue of our young people and others being abused and exploited is tackled. If we look at the work and try to quantify it, we can see that in addition to the efforts of Government and Parliament, civil society is once again demonstrating that it is a force for good.
This is a timely debate. Has my hon. Friend’s all-party group looked at the legislation that was passed some years ago after the tragedy in Morecombe bay and the problems with gangmasters? Has he any comments on that? I am surprised that we still experience modern-day exploitation— for want of a better term—in all age groups.
My hon. Friend must be somewhat prescient, because he has read ahead in my speech before I have managed to get to that point. I shall touch on it later.
I welcome the announcement by the Government of the review of the Modern Slavery Act, which will be ably chaired by my right hon. Friend the Member for Birkenhead (Frank Field) and the right hon. Member for Basingstoke (Mrs Miller), as well as the noble Lady Butler-Sloss. That is a triumvirate of expertise if ever there were one. I am grateful to my right hon. Friend for being present this afternoon.
I want to talk about the processes in the Modern Slavery Act. It was a step forward in properly attacking and dealing with some of the horrible situations people find themselves in, but it also contained important preventive measures that helped to reduce modern slavery in all forms, whether sexual exploitation, domestic servitude, forced labour or criminal exploitation.
For me, one of the most important parts of the Act is section 54, which requires large companies with a turnover of £36 million or more to place on record transparency in their supply chains. Such modern slavery statements are a welcome process to deal with these problems but, if we are honest and up front, the implementation is simply not working properly. At a meeting of the Public Accounts Committee, on which I sit, the Home Office confirmed that it does not compile a list of companies that may be required to make a declaration, does not have a list of those that have done so and, importantly, does not maintain the database. Any further analysis of the information in the declarations is made by non-governmental organisations.
On that point, will my hon. Friend join me in congratulating TISCreport, which was developed and is based in Bristol? It has looked at the 18,000 companies with revenue of more than £36 million, and it is the only organisation that maintains a database of the companies that comply with section 54. The database is now searchable via a zoomable map. Will he encourage the Minister to engage with TISCreport and to allow it to help the Home Office in its endeavours?
My hon. Friend makes an excellent point. NGOs are doing some excellent work but, fundamentally, I believe that such work should be done by the Home Office and by Government—because we are talking about something set out in statute—rather than relying on the benevolence of third-party organisations.
Despite the work of the organisation in my hon. Friend’s constituency, and even though the matter has been progressed, I know that the Minister is aware of concerns about how section 54 is being implemented. Back in April I asked a question in the Chamber of a Department for International Development Minister, who confirmed that a hub was being set up. Will the Minister present today confirm what progress has been made on that hub?
What is really worrying, however, is that an investigation by The Guardian demonstrated that of the companies that had made a modern slavery statement, more than two thirds had failed to refer specifically to the risk of modern slavery. They had made a declaration, but it did not comply with the requirements of the Act. More worryingly, only 19% of all agricultural businesses that should be making a statement have done so, and that is an area in which exploitation could be rife.
Unfortunately, because everything is being done by third-party NGOs, the ability to compel necessary information simply does not exist. Until the Government introduce something on a formal statutory basis, more and more organisations will seek to put aside their responsibilities. The Co-operative Group, which I shall talk about later, has estimated that it is cheaper and easier for organisations simply to ignore the requirements than it is for them to produce the statements and submit them. There is no validation and so no penalty for failing to make a declaration.
The section 54 requirement also applies only to commercial organisations. The public sector, however, is a huge spender of money—billions and billions of pounds are spent in procurement—yet no public authority is required to make declarations to demonstrate their actions to reduce modern slavery. Were we to extend section 54 to cover public bodies and authorities, that might not stop certain aspects of modern slavery happening, but we would be able to have oversight of where the billions of pounds in public procurement are ultimately being spent, and Members could look for the impact on modern slavery.
Does the hon. Gentleman agree that smaller businesses ought to be included in the overall remit of the Act? After all, they include nail bars and people working on tips. If we had a system whereby when a licence was granted by local authorities, businesses had to tick a box on their compliance with modern-day slavery rules, that would be a real step forward.
The hon. Lady is absolutely right. The current scope of section 54 is well meaning, and in some ways if it was implemented correctly it would have a huge impact on large organisations. But if we are being honest and up front, most of the places where modern slavery is perpetrated in the UK are small businesses that are not properly regulated. It is tied employment, with people living in a room above a shop and being told that their rent and board is all paid for as part of their salary but, “By the way, you can’t ever leave us.” Local authorities having a remit would be a way of tackling that. However, we must be clear that if we are to give local authorities new responsibilities, new funding must come with that, because simply asking local authorities to do more with their depleted amounts of money simply will not do.
Does my hon. Friend accept that modern slavery sometimes happens at an individual level? I have a case where someone was brought to this country for work, to look after someone’s care needs. Yet when the care was no longer needed, they got rid of them and refused to pay the money they owed, and that person is now completely rootless and needs support in this country. Does he see that as a particular problem?
My hon. Friend is absolutely right; I will touch on individual cases later on, where there should be greater support and strength for victims of modern slavery.
I thank my hon. Friend for making the important point about the contribution of local authorities. Local authorities are under incredible financial pressure, as he rightly outlined, but 40 local authorities have still signed up to the charter, one of which is my council, Liverpool City Council. In the spirit of the cross-party attendance at this debate, does he agree that it is vital that councils, no matter their political make-up, debate and adopt that charter as quickly as possible?
I could not agree more with my hon. Friend. It is sad that the council that I used to lead, which is now not run by our political party, decided not to adopt the charter because it is worried about being too political. I am not sure how we can be too unpolitical in tackling modern slavery, but unfortunately there are still some organisations and local authorities that see the issue as partisan. If only they looked at Parliament, where partisan issues have been put aside and everyone looks at this issue collectively to find ways of dealing with it across both Houses and across parties, they could learn some valuable lessons from us. My hon. Friend is right that where local authorities are going above and beyond they are making a real difference to individuals whose existence would otherwise be one of daily toil and exploitation. The more we can do to tackle that, locally or nationally, the better.
I congratulate my hon. Friend on securing the debate. Does he agree that for victims of modern-day slavery, rebuilding their lives is a challenge in itself? I pay tribute to the Co-operative Group and other businesses that are offering paid work placements for victims of modern-day slavery.
My hon. Friend is right; the Bright Future project, which the Co-op Group runs, is a demonstration of the tangible activities that ethically minded organisations can carry out to give people fleeing modern slavery a real opportunity.
I give way to my right hon. friend the Member for Spellar—
They will name it after you one day, I suppose.
My hon. Friend mentioned the role of local authorities in providing a lead. The role of my own council, Sandwell, has been recognised with a public award, precisely for working with other agencies to tackle this menace. Councils and public bodies also have to be receptive to information; many people who live next to the places involved and sometimes go in and work in them provide information. The authorities—whether the police, the Home Office or the local authorities—have powers, but they need to be receptive to the information and use the powers they have, even though they need more.
As always, my right hon. Friend is absolutely spot on. I would add that local authorities have struggled with their existing requirements. If we are to give them more things to do, and I think we can, that has to come with the required funding. This is too important to do half a job badly; I would rather we did all the job properly. Once again, Sandwell Council in the west midlands demonstrates how that can be done. Having heard my right hon. Friend’s intervention, I am sure that other councils will look to Sandwell as a model to follow in future.
I will move on to one of the things that the Government could do to actively address all the points being raised. Baroness Young’s Modern Slavery (Transparent Supply Chains) Bill would extend the section 54 clauses to cover almost everything that has been discussed. The Bill would allow for local authorities, public bodies and smaller organisations, including commercial organisations, to be covered by the requirement to make declarations. The more information we have, the easier it will be to tackle this scourge. I ask the Government to do slightly more. They can no longer rely on non-governmental organisations and charities to enforce the will of Parliament as expressed through the Modern Slavery Act. There has to be direct Government responsibility for the collection and analysis of the data that they have asked to be produced.
I ask the Minister to update the House on the process for appointing the new Independent Anti-slavery Commissioner. That role has been empty since May. According to the Home Office documentation, a meeting should take place this week to shortlist candidates. I wonder whether we are still on track for that. Given the comments of Kevin Hyland about his independence as he left that post, I ask the Minister to reassure us that those comments have been taken on board and that the new Independent Anti-slavery Commissioner, whoever that may be, will have the powers, responsibilities and independence they need to do the work that we all know and agree is needed.
To move on from the processes, behind every statistic, case and referral there is an individual whose life has been turned upside down and torn apart because of modern slavery. The Walk Free Foundation estimates that there are 136,000 victims of modern slavery in the UK alone. To put that into context, that figure is equivalent to the population of West Bromwich, Gloucester or Worcester being enslaved in the UK. We should all we worried about that, because unless we tackle this root and branch, we cannot hold ourselves up as a compassionate society.
There is also an international element to the issue: £14 billion of goods are imported into the UK. We can all be pretty much guaranteed that some of those products will be made by slaves or people in servitude. Everyone here and watching at home—I am sure there are millions of them—can be almost certain that something in their home, wardrobe or car will have been made by a slave. Statistically, it is likely that at some point, every single one of us will have an item of clothing made by a slave, if we do not already. We must take that very seriously, because our obligations do not rest domestically; we should set the standard around the world. As our post-Brexit trade negotiations take place, we should ensure that an ethical trade policy that tackles modern slavery here and overseas forms part of our trade policy. If we can use our purchasing power to make the world a better place, we have a duty to do so.
The National Crime Agency statistics from the national referral mechanism suggest that roughly 1,600 referrals are made each quarter. In the first quarter of this year and the second quarter of last year combined, just over 3,200 referrals were made. Although the victims predominantly came from the United Kingdom, they spanned 87 different countries. In the UK, people of 87 nationalities made a referral to the national referral mechanism. What is good about the Modern Slavery Act is that the perpetrators are being prosecuted. Only last week, Zakaria Mohammed was prosecuted under the Act for drug dealing using children and county lines. Although the act of drug dealing itself should be punished—I do not think anyone would object to that—the fact that the use of exploited children in a servitude role was prosecuted sends a message that we are taking this seriously.
My hon. Friend has put his finger on the fact that some very wicked people organise this trade, and they are clever. People up and down the country—this is true even in the case of my pet subject of orphanages that are not really orphanages—are gulling ordinary, good people in this country into donating money for things that will be used for an evil purpose.
My hon. Friend is absolutely right. The people who perpetrate these crimes do not do so in a cack-handed way. They are organised individuals who exploit the most vulnerable people in our society purely out of greed. The more we do to prosecute and make examples of them, the more we will do to demonstrate that we take the issue seriously and to put people off.
Another recent case is that of Josephine Iyamu, who sex-trafficked workers from Nigeria to Germany. Because she was a UK national, we prosecuted her in this country under the Modern Slavery Act. Again, as internationalists—as a country that looks out to the world—our responsibilities do not rest at our doorstep. We have a responsibility for people around the world. In Leeds, the Cisar family were caught trafficking people for work and exploitation. Thirty-seven people were found in an enslaved situation, working on building sites for £5 a day. Some of the families had to spend their evenings begging for food because they simply were not able to provide food for their children. One of those 37 people was a one-year-old. If we are serious about tackling this issue, we should start with situations like that.
Another problem, which I am sure the Minister will be able to help us with, is what happens once someone has been identified as a victim of modern slavery. The national referral mechanism is non-statutory. Someone who gets a positive conclusive grounds decision has no legal status. They are simply someone we have almost taken pity on—we support them out of benevolence, not because there is a requirement in law for us to do so.
The Government promised last October to increase the duration of support for people who receive a positive conclusive grounds decision from 14 days to 45 days. I understand that that is still in the process of being worked up—it is not actually being implemented. Again, if the Government wished to demonstrate that they take that promise seriously, they could easily announce that they will bring it forward as soon as possible.
As I have told my hon. Friend, I will have to leave the debate to talk about sanctions in a moment. When we—Members of Parliament and Members of the House of Lords—scoped the original Modern Slavery Bill, the most stunning and terrible evidence we took was from people who had been enslaved. The idea that people get over such bondage easily was knocked sideways by all that. We were in tears listening to the evidence of people who had been broken by modern slavery, but the Government have only just begun to think about that issue.
We can see from that thoughtful intervention why my right hon. Friend is absolutely the right person to co-chair the review of the Modern Slavery Act. As I said, every statistic is a person whose life has been turned upside down. At the moment, an individual who is found to have been through modern slavery gets 14 days’ support. I do not know about anyone else in the Chamber, but that does not seem sufficient to me. In fact, 45 days really is not enough. The Government made that commitment last October and they should implement it now, but I ask that they do so as an interim step. As my right hon. Friend the Chair of the Work and Pensions Committee says, that would be a step forward, but it would not be enough to establish a pathway for recovery.
There is something the Government could do today to give some semblance of an impression that they want to do something about this issue. They could announce that they will support Lord McColl’s Modern Slavery (Victim Support) Bill, which has been through the House of Lords and has its support. If they guaranteed Government support for that Bill so that it could proceed in Government time sooner rather than later, I am sure that it would get cross-party support and be one of the fastest pieces of legislation to pass the House of Commons.
That Bill would extend support to 12 months—it would give people who have been through horrendous situations a year’s support. Someone who comes out of modern slavery and needs help should receive it because the state and the people want to give it to them, not because of benevolence and charity. Charity is a cold thing—it is self-selecting. The state should be there to provide help and support. I am sure the Minister will be able to indicate one way or the other whether the Government have any interest in supporting Lord McColl’s Bill. I am sure Opposition Members would be happy to vote with the Government if they did support it.
As my hon. Friend the Member for Oldham West and Royton (Jim McMahon) pointed out, there are organisations doing work in this area. I am going to talk again about the Co-op Group’s Bright Future partnership. That organisation has brought together charities, providers and first responders to give people who have been through modern slavery a way into paid employment—a route back to dignity without waiting for charity. By 2020, more than 300 victims of modern slavery will have been given their lives back through that project. We should commend the Co-op Group for leading the way with that work. I know many other companies are looking at the Co-op Group’s work. All I can say to them is, “Go and ask, and help. They will help you become part of this life-changing partnership.”
We need to prevent people from falling back into slavery. The 45-day period does not give those who are entitled to be in the UK enough time to apply for the required benefits, and it does not give those who are not entitled to be in the UK time to apply for leave to remain. It simply sets them up to fail on day 46. As a society, we simply must not allow that.
I am conscious of the time, so I will wrap up with some very quick points. I am aware that the Minister has a file of information to inform her reply, but I ask her to focus on six very simple areas.
Just the six?
Just the six, yes. I have written them down, so it is very easy. Will the Government consider expanding section 54 to cover public bodies and smaller corporates? That would be a good step. Will the Minister update us on the Government’s role in creating a database to properly enforce and actively police modern slavery declarations? Will she update us on where the Government are with the Independent Anti-slavery Commissioner post and guarantee that person’s independence? Will she, as an interim measure, implement the 45-day support that her Government promised in October 2017? Most importantly, if she confirmed that the Government were willing to support Lord McColl’s Modern Slavery (Victim Support) Bill, we could all leave this place very happy people.
Order. As you are aware, there are many Members here and there is not much time left. I will call first those who informed the Chair that they wanted to speak, and you will have just over two minutes each. I call Fiona Bruce.
I will focus chiefly on the support that is available to victims of trafficking to help prevent them from being left homeless, destitute and at risk of being re-trafficked. I support the proposal that the Government should adopt the Modern Slavery (Victim Support) Bill.
Mention was made of the proposal to extend the move-on period from 14 days to 45 days. At the moment, that period is inadequate. It does not give people time to establish stable building blocks for their future. It is not long enough for non-UK nationals to apply for and be granted discretionary leave to remain, which gives victims access to housing benefit and other services. Extending that period to 12 months and offering victims accommodation and financial and other support, according to their needs, would enable victims to establish much more secure futures.
I know that the Government are concerned that that might prevent the removal of foreign criminals, but the Bill makes an exception for sexual or violent offenders who pose a genuine, present and serious risk to members of the public. The Government may also be concerned about cost, but the number of eligible victims each year would be very low. In 2016, just 1,133 people were confirmed as victims of trafficking with a positive conclusive grounds decision, so that proposal is unlikely to have a great impact on immigration.
Another concern is that people may self-identify as enslaved, but it is accepted that the opposite is ordinarily the case. Victims are often reluctant to come forward, for fear of retribution by their traffickers or fear of the authorities, or due to a perceived lack of long-term protection, which the Bill would address. In addition, victims cannot refer themselves to the NRM—that can be done only by a designated first responder organisation.
Finally, the proposal that the Government should offer six-month drop-in support, although positive, is inadequate. That period needs to be longer so that people can establish their futures.
It is a pleasure to serve under your chairship, Ms McDonagh. I congratulate my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) on securing this important debate. I am pleased to follow the hon. Member for Congleton (Fiona Bruce).
It is only right that those who have experienced the appalling practice of modern slavery are provided with the support, tools and skills they need to get on in life. That is why I will focus my brief comments on Northern College in Barnsley and its “Free Thinking” programme, which is the first course of its kind. Earlier this year, it supported 14 survivors on a 10-week course, helping them to adapt to their freedom with tutoring in subjects such as English, maths and IT, and helping to restore qualities such as self-confidence and trust in humanity.
It was a privilege to visit the course and moving and inspiring to meet the survivors and hear their stories. Their own words speak of its success. One said:
“I’ve got more confidence… I can notice myself getting better and better every week that I come here.”
“I feel that I have really achieved something and that when I leave Northern College, I will feel able to apply for more…education. I am trying to move on from my past. This is a big step.”
Others have spoken of its impact on their families. There is an on-site crèche that allows parents to take part in the course, which has a positive impact on the children too.
Northern College has pioneered the course, but not without facing obstacles. Some survivors may meet the requirements for funding but struggle with complex rules. Others have no access to transport. The Home Office’s immigration bail regulations had been prohibitive for many survivors but, following my question in the House earlier this year, I am pleased that the guidance has been changed. I thank the Secretary of State for meeting me.
The “Free Thinking” course provides a blueprint for how we can make progress in addressing the terrible injustice of modern slavery here in the UK. I will end with the words of another survivor on the impact of the course:
“Sometimes I get down, but I’m very lucky to still be here. If I wasn’t here, my story would just be in the past tense.”
Centuries after Wilberforce abolished the slave trade, it is a disgrace that around the world today some 27 million people are in modern slavery. I have had three big instances of it in my constituency on Traveller sites. In the first, 24 people were released from slavery. Some of them had been there for a decade or more, and 19 of them were British citizens. It is horrendous.
The NHS in particular can do a lot more—it is not as good as it should be at spotting victims of modern slavery. The all-party parliamentary group on human trafficking and modern slavery met the parents of a young, English learning-disabled man who was taken to a Welsh hospital to have his leg reset after he had fallen off a horse while being held captive. He was taken back again, and no one thought to ask any questions about why he was brought in with a group of Irish people who were not speaking with the same accent as him.
Good work is going on in some Welsh academic institutions to ensure that training on modern slavery becomes compulsory in undergraduate and postgraduate settings and for all healthcare staff. It should have the same priority as child protection training within the NHS. That would make a huge difference, because the “Provider Responses Treatment and Care for Trafficked People” report by King’s College London showed that one in five victims of modern slavery comes into contact with healthcare professionals.
Last month, the Australian House of Representatives passed a modern slavery Bill that recognised orphanage trafficking, which has been defined as
“the active recruitment of children from families and communities into residential care institutions in overseas countries for the purposes of foreign funding and voluntourism.”
The hon. Member for Huddersfield (Mr Sheerman) is right to raise this point. We need to be world-leading and to take on what the Australians have demonstrated.
Thank you for calling me in this important debate, Ms McDonagh. I congratulate my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) on his brilliant presentation. This debate is timely, with Anti-slavery Day coming up on the 18th of this month.
The tragedy of slavery is that it is a condition of human making, driven by greed and a pernicious desire to profit from excessively cheap labour, happening in plain sight. Sadly, my constituency has not been immune. In 2015, we had our first—I hope it is our last—conviction for modern-day slavery. Hungarian workers were promised good jobs and somewhere to stay, working in bed manufacturing, but on arrival they were shoved into dilapidated houses, some with up to 42 men living in two-bedroom properties, forced to work 10 to 16 hours a day, five to seven days a week, sometimes for as little as £10 a day, making beds for John Lewis and Next. It is a vile, disgusting crime, preying on workers desperate to forge a better life for themselves and their families. Thankfully, after excellent investigation work by local police, the owner was rightly convicted and sent to prison.
I am proud that the parent company of my local biscuit manufacturer, Fox’s Biscuits—I worked there in my teens—2 Sisters, has signed up to the Co-op’s Bright Future anti-slavery campaign. That scheme has worked with more than 30 victims of modern-day slavery who are now in employment and able to rebuild their lives.
Of course, we all have a part to play. As consumers, we have a duty to prevent exploitation by realising that if something looks like a ridiculous bargain, somewhere around the world someone has been exploited. We must step up and be accountable, empower those vulnerable to slavery, promote access to decent work and support trade unions. I also encourage anyone watching who feels they have seen or heard something to use the modern-day slavery helpline if needs be. The most vulnerable are relying on us.
I take a particular interest in this topic because the police lead of the modern slavery taskforce is based in Exmouth in Devon, paid for from the police transformation fund. I commend the work it is doing, which I have been to see, to try to gather data and best practice and to share that. All credit to the Government for setting it up.
I have a couple of broader points. Modern-day slavery is very different from the old days of individuals in chains. It is less visible and tends to be psychology first—break the spirit and then the body. However, while everyone would say that slavery is a bad thing, people do not believe that it is happening in this country. There is a big challenge in getting the Great British public to accept that it is here; they cannot keep saying that it is not. Perhaps we need a Jamie Oliver to champion this cause.
The public have no idea what to look for. We have police guidance about looking for drawn curtains, but frankly if I were to knock on the door of every house in my constituency with drawn curtains, that would be quite a number. We need to do better. The reporting mechanisms do not include how charities and others, who are often more likely to come into contact with such individuals, can have a voice. That is an area to look at.
To get this right, we need clarity on what the Modern Slavery Act covers, because some economic crimes are better dealt with under employment and tax legislation, and other things are better dealt with under domestic legislation.
Businesses must recognise that there is a brand issue. Philips has been phenomenal in what it has done to unearth modern-day slavery issues. There are many programmes to help, but only the willing come forward, so more must be done to ensure that that changes.
We must move towards a victim-focused and less crime-focused approach, with not just the police and immigration authorities but others getting involved. Good job so far, Government, but there is more work to be done.
I thank my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) for securing this important debate and for introducing another six tests to remember. I support every single one of them.
I will make a very short speech—not least because I have only two minutes—about the unintended priority that this became as a consequence of being the new MP for Bristol North West. I grew up and have lived in my constituency for most of my life, but I never knew that modern slavery was taking place on my doorstep; it was not until I was elected that I came face to face with it, both through constituents in my surgeries and as a result of raids in Bristol thanks to the excellent work of Avon and Somerset police. I now understand about Bristol’s excellent history with Unseen, which provides the national modern slavery helpline, which was established and is based in Bristol.
TISCreport, which I have already mentioned, is looking at supply chains’ compliance with the Modern Slavery Act. I should add that even though I agree with my hon. Friend the Member for Stoke-on-Trent Central that the Home Office should have a statutory responsibility to ensure that data is used properly, that does not mean that it cannot work with non-governmental bodies to ensure it is done in the best possible way.
In my final minute, let me say that this is not just a domestic issue but an international one. We in the United Kingdom have something to be proud of in our work at home as well as abroad. I had the pleasure of being in Nairobi for 36 hours with the Commonwealth Parliamentary Association during the summer recess, where I saw at first hand the impact that British money is having on the ground in Kenya not only in aid but in security. British police officers were working with Kenyan police officers to massively increase the enforcement potential in investigation on the ground, although interestingly there was a lack of resourcing for victim support—something that was pledged to change as a consequence of the CPA organising meetings between non-governmental organisations and Kenyan politicians.
My one question for the Minister—I am sorry to be the one to introduce the Brexit word—is whether the projects on the ground in Kenya and other countries that are co-funded by the European Union and the United Kingdom will continue to be funded in a no-deal scenario.
I thank my hon. Friend for securing this debate. I am extremely grateful to take part in it.
I was present in the 2015 Parliament, and I can attest to the Modern Slavery Act being a great leap forward, but it was an Act with a hole at the centre. I understand why Ministers at that time made the judgment they did, but achieving the Government’s ambition will be impossible unless we tackle the demand driving sex trafficking in our country, a form of modern slavery that almost exclusively targets women. As the hon. Member for South West Bedfordshire (Andrew Selous) and I can attest, in Bedfordshire alone 53% of modern-day slavery cases over the past four years have been about sexual exploitation. The majority of women who are put through the national referral mechanism are trafficked into this country for sex.
I chair the all-party parliamentary group on prostitution and the global sex trade. In our most recent report we demonstrated just how prolifically and how often women, mostly from eastern Europe, are trafficked around the UK, in a network of properties, in a revolving door of sexual exploitation organised by gangs to evade police detection. We talked about that in a previous debate. In that context, it is really difficult to understand why the review does not specifically target that point—perhaps the Minister can say something about that.
We know what we need to do: we need to support victims properly; criminal sanctions for soliciting on the street should be removed, to support women subject to street-based sexual exploitation in seeking help and exiting it; and demand needs to be tackled by making paying for sex a criminal offence in England and Wales. We should also target businesses that are profiting from the trade. Many countries around Europe have taken that approach, and we have seen the benefit. I hope that the Government will reflect on that as the review goes forward.
I would like to endorse pretty much everything that everyone has said, but particularly the comments made by my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell). I will not repeat anything he said, but I will make three quick points.
First, we need to be aware that investigating modern slavery is enormously resource-intensive for police forces. We have heard reference to the entirely appropriate use of resources in relation to the disgusting county lines phenomenon, which sadly effects my city of Oxford, as well as many other places. We had a large trial associated with modern slavery in Oxford, Operation Rague, but the processes needed to build up the right evidence for trials involve intensive and expensive use of police resources. We need to acknowledge that, particularly in the context of such significant cuts to policing. In that regard, we also need sustainable funding for innovations such as the independent trauma advisory service, commissioned by Thames Valley police and operating in Oxford and Reading. It is working well but needs to put on a sustainable footing.
Second, we need to spread examples of good practice more widely. Sadly, my city had to learn about some of the problems the hard way. After Operation Bullfinch we learned quickly that agencies had not worked together in the way that they should have done to protect vulnerable people. That has led to the hotel watch scheme in Oxford and extensive training for city council officers. Other places should not have to go through that in order to learn from the experience.
Lastly, we need to acknowledge that private sector reporting is good for the companies that engage in it. The Business and Human Rights Resource Centre has shown that investors want this information and companies such as Marks & Spencer have shown that reporting is good for them and their customer base—people want to know about it. We need to make sure that the public sector is complying too, for example in its uniform suppliers.
Order. We have managed to get all the Back Benchers in. I have put a squeeze on the Front Benchers’ contributions, so I would be grateful if they were all mindful of that.
I congratulate the hon. Member for Stoke-on-Trent Central (Gareth Snell) for securing the debate. It is a timely opportunity to start contributing to the welcome review that the Government have announced. I congratulate all hon. Members for covering so much ground in so little time—I will try to do a little bit of justice to the debate.
I pay tribute to the work of the all-party parliamentary group. It is not just the chairs who have incredible expertise and commitment. At the few meetings that I have attended all the members have contributed fantastically, as has been illustrated by hon. Members’ speeches. It is also good to see that the Minister and officials are engaging. I think everyone is genuinely committed to doing their best to try and tackle this horrendous issue. Hon. Members have, quite rightly, paid tribute to the huge range of individuals and institutions that are doing tremendous work on this issue. We are dealing with horrible offences, as the hon. Member for Batley and Spen (Tracy Brabin) eloquently and powerfully set out.
The question we have tried to cover is how we can improve some of our response. The first issue raised was support for victims. There have been calls to put support on a statutory footing, as has happened in equivalent legislation in Northern Ireland and Scotland. The Government here may now want to do that. We have also talked about extending of the period for which support is in place to 45 days. After consultation with victims and NGOs in Scotland, the Government there have extended the period from 45 days to 90 days. We have to be evidence-led, and it may well be in due course that that is shown to be insufficient—the Government here may want to look at that as well.
That brings us on to the immigration rules. I used to be an immigration solicitor. I have to say, I find it incredibly difficult to understand what the status of victims is after they have been through the national referral mechanism. There is definitely a need for clarity and simplicity. I agree with the recommendation of the Work and Pensions Committee of an automatic period of leave, which could be for up to a year.
A number of hon. Members raised issues about training and the resourcing of frontline staff who will encounter victims of modern slavery. We heard about the police, and we have had reports from Her Majesty’s inspectorate of constabulary as well as the Haughey review. There is a lot of work to on around sharing best practice from forces that do a very good job, such as Greater Manchester police. Some forces are doing it well, but can we expand that work? Other hon. Members mentioned local authorities and the health service as well.
Finally, there are a couple of issues that I will just mention in passing. We need to look again at the stage at which victims of modern slavery are entitled to legal aid, because they have big decisions to make before they have access to important legal advice. Finally, one or two hon. Members touched on Brexit. We could have a whole separate debate on the implications of Brexit for ethical trade, justice and home affairs co-operation and all sorts of other things, but I will leave it to the two other Front Benchers to expand on some of those points.
I will be really brief. I apologise to my staff, who spent hours writing my speech. I would rather the Minister actually responded to some of the issues.
I congratulate everyone who has spoken today. All I would say to the Minister is that we have heard the passion and concerns throughout the debate from right across the House, and the numerous briefings that we have all received are testament to the gravity of this dreadful situation. I urge the Minister to reflect on today’s debate, consider the depth of feelings and the emotions, listen to the concerns, make the appropriate safety net, and offer support for those who are not a commodity to be bought, sold and traded, but are human beings. We owe them the respect and dignity of ensuring that we provide for them.
It is a pleasure to serve under your chairship, Ms McDonagh. Perhaps this is the new model for how we should do business in this House—we have had incisive and effective speeches in two minutes.
I congratulate the hon. Member for Stoke-on-Trent Central (Gareth Snell). I thank him and all the members of the all-party parliamentary group who are here today, as well as those who are not with us but are dedicated in their wish to help us all tackle this terrible crime. I also pay tribute to the Bishop of Derby, who retired in the summer, as mentioned by my hon. Friend the Member for Erewash (Maggie Throup), and thank him very much for all the work that he has done on this important cause, not just in recent years but when the Bill was taken through the House. I am told that there is an application for a Backbench Business Committee debate on this subject. The Committee has not yet confirmed that there will be a debate, but I suspect after today that there will be. I do not want to prejudge the Committee, but I think the House has shown how important it views this issue as being.
I hope the hon. Member for Stoke-on-Trent Central and other colleagues will forgive me if I do not manage to answer every point in the time I have, because I want to leave time at the end for him to sum up. If I have not responded to some points, I will of course write to him and place a copy in the Library.
We have heard today the cross-party understanding in the House of the horrors presented by modern slavery. This terrible crime can be committed in various ways, yet every time we are told of another case of slavery I am surprised by the range of offences and the ability of human beings to be evil to one another. We saw the case this week of the gentleman who was found in Cumbria. It is beyond my comprehension, and everyone else’s, I am sure, how that person could have been treated in that way.
The Government are really proud of our introducing the Modern Slavery Act 2015, with the consent of Parliament. We are determined to ensure that that legislation remains world-leading in the face of the evolving threat, which is why we have commissioned an independent review of the Act to examine what is working well and what more can be done to improve its implementation. I am extremely grateful to my right hon. Friend the Member for Basingstoke (Mrs Miller), the right hon. Member for Birkenhead (Frank Field) and Baroness Butler-Sloss for leading that work.
On to the support that we give victims, I hope hon. Members will forgive me for taking this opportunity to announce that the independent child trafficking advocate service will be extended to children in the west midlands next week, on Anti-slavery Day. These advocates provide invaluable specialist support to child victims of modern slavery, and new regional co-ordinators will help local areas to identify and support UK victims. That will be followed by a further roll-out in the east midlands in January and in the London borough of Croydon in April, meaning that advocates will be available in one third of all local authorities in England and Wales.
Next week, I will launch the UK’s day of action for the AMINA project, which aims to safeguard children from being trafficked across European borders. The project, in partnership with End Child Prostitution and Trafficking UK and Missing Children Europe, is a joint initiative between law enforcement, civil society and Government, and brings together agencies from across six countries to keep safe children on the move.
We continue to make significant progress in reforming the national referral mechanism, about which colleagues have expressed concerns today and in the past. The reforms will make a tangible difference to the experience of victims. We are already working with six local authorities to test ways to improve the pathways from central support into local communities, increasing victims’ resilience to future exploitation.
Victims get a minimum of 45 days of assistance before a conclusive grounds decision. The extended move-on period after a conclusive grounds decision—from 14 days to 45 days—will begin in early 2019. By April 2019, the new expert caseworking unit will manage all NRM cases, with independent multi-agency assurance panels reviewing its negative conclusive grounds decisions, and a new digital referral and caseworking system will underpin the improved decision-making process to make it easier for those who work on the frontline.
I welcome the fact that child advocates are coming to some areas of the country, but I find it curious that the Government seem to roll out a range of public services in only some areas of the country. We should evaluate the roll-out and, if it is worth doing, we should do it everywhere.
My hon. Friend knows the Government’s commitment to this issue. The new advocates will focus on UK victims because, as we have tested the ground with these schemes, we have discovered that the needs of children trafficked into the UK—from Vietnam, for example—are different from those of children trafficked within the UK and who are already UK citizens. The pilots in those three areas are aimed at seeing whether we can improve the system for children who are not from the United Kingdom while also helping children who are. That is particularly relevant with the development of county lines and children being used within those gangs, which has been referred to today.
Finally on the NRM, the new victim care contract will come into effect in April 2020. It will include additional support, such as places of safety in advance of entering the NRM for those removed directly from situations of exploitation by law enforcement, as well as drop-in centres for victims for up to six months after they have left the NRM, because we understand that people need time to make the important decisions on how they want to be treated.
The hon. Member for Stoke-on-Trent Central rightly raised transparency in supply chains, on which we have world-leading legislation. I recently chaired a meeting of the business against slavery forum, which draws together chief executives of some of the world’s largest employers and organisations. We discussed what they are doing, what more can be done across business and how the Government can help with that. The forum includes organisations such as the Co-op, HSBC, Sky, Unilever, Vodafone, WPP, Barclays, BT, Associated British Foods and others, and there is real enthusiasm and energy in that group to help the UK tackle modern slavery.
However, too many businesses still fail to meet their basic legal obligation to publish transparency statements, or have shown that they are not taking serious action to tackle modern slavery. The Home Office will therefore over the next month write directly to the chief executives of 18,000 businesses considered to be in scope of the obligation. Those that persist in flouting their obligations can expect to face tougher consequences. The Government are also committed to tackling modern slavery in our own procurement. We are developing tools and guidance for contracting authorities in the public sector to help buyers mitigate against risks of modern slavery and to take action where modern slavery is identified.
Law enforcement is a vital part of this picture. We want to successfully investigate and prosecute those who ensnare human beings in their gangs or slavery networks. We have invested £8.5 million to transform the police response through the modern slavery police transformation unit. That unit has established the intelligence base to target perpetrators and has developed bespoke training for frontline and senior detectives.
We are seeing encouraging results, with more than 950 live investigations currently under way, which, to put it into context, is up from 188 in 2016. There have been some very good convictions recently, as has been referred to, including last week the first conviction under modern slavery legislation of a county lines exploitation gang involving children. We want the message to be loud and clear: if a criminal gang leader exploits children in that way, they are guilty of grooming and should suffer the social stigma that that conveys.
Will the Minister consider extending the transformation funding to the Exmouth unit, which does such excellent work but which I suspect will not have finished doing what is needed by the end of its current grant?
I will write to my hon. Friend on that. She will appreciate that the workings of the police transformation fund certainly cannot be explained in just two minutes.
I will move on to the international picture. The Prime Minister launched the global call to action to end modern slavery at last year’s UN General Assembly, with more than 80 countries now endorsing that pledge. It is an extraordinary, worldwide commitment that shows that those countries are determined to join us in tackling this terrible crime. We are supporting our international efforts with more than £200 million of UK aid, and we work closely with the countries from which the highest number of victims are trafficked to the UK. Later this week I will meet the Albanian Minister for human trafficking to build on our co-operation and to agree how we can continue to work together to tackle this abhorrent crime.
To answers the questions asked of me, first, Mr Hyland always struck me as being very independent as our Independent Anti-slavery Commissioner; I am always amused when it is suggested that he was not. Our recruitment of his successor is ongoing, and we are obviously keen to get the right person for the job as quickly as possible.
I am conscious of time, so if the hon. Member for Stoke-on-Trent Central will forgive me, I will write to him on the other points. I thank him for securing this important debate, and I very much hope that we will have the chance to debate this issue again soon in another Chamber.
Gareth Snell has about 30 seconds to wind up the debate.
I am good at winding up, Ms McDonagh. I thank the Minister for announcing that she will write to those 18,000 people. That is a good development, so far as I am concerned. I will write to her to try to pin her down slightly more on the early 2019 date; as we know, this Government think that autumn goes up to Christmas eve.
The appetite is there and the need is clear. The only thing holding us back is our political will. By our collective efforts, we can make a real difference in tackling modern slavery, particularly during this month.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).