House of Commons
Tuesday 30 April 2019
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
Business, Energy and Industrial Strategy
The Secretary of State was asked—
First, I would like to update the House: unfortunately, my right hon. Friend the Minister for Energy and Clean Growth will be unable to join us this morning due to a family illness.
Our young people provide an invaluable contribution to the UK economy—they are more than twice as likely to be entrepreneurs as their peers in France and Germany—and we are supporting them. The start-up loans programme has provided over £60 million in loans to 18 to 24-year-olds since 2012. To further realise young entrepreneurs’ potential, I have asked the Prince’s Trust to lead a review to identify the barriers that they face.
In 2017-18, recent graduates from the University of East Anglia set up 247 start-ups employing 1,015 people. Will my hon. Friend reassure me that the Government will continue to fund these schemes, as they mean so much to young people and help to create a vibrant economy?
I thank my hon. Friend for that question. Through our industrial strategy, we recognise the valuable contribution from the creation of spin-outs and start-ups by businesses from university. That is why we have committed to increasing higher education innovation funding from £160 million to £250 million per year by 2020-21. This will help to increase universities’ capacity to engage in commercialisation and work with business.
Is the Minister aware that recent research from Sheffield University and King’s College London shows that young entrepreneurs face a very bleak future? In particular, the impact of leaving the EU on many of the very constituents who voted leave is a drop of between 17% and 20% in GDP. That is ruinous for so many of our industrial towns. What is she going to do about it?
The hon. Gentleman makes a valid point, but it is true that young people in the UK are twice as likely to be entrepreneurs as those in France and Germany. Our percentages for young entrepreneurs are significantly higher. We are committed to our industrial strategy. I have asked the Prince’s Trust to undertake the review so that we understand specifically what the barriers are for young people and come up with a package to be able to help them.
I congratulate the Minister on her inspired decision to appoint the Prince’s Trust, which is a wonderful organisation that does magnificent work. Will it concentrate on 18 to 30-year-olds, and when is she expecting it to report?
I am grateful to my hon. Friend for allowing me to highlight some of the details of the youth entrepreneurship review. It has started and the board will be announced shortly. It will be looking at 18 to 30-year-olds, and we are hoping that it will report in the autumn. He is absolutely correct: the Prince’s Trust does amazing work with young people from all types of background. In fact, there is already a programme with the Prince’s Trust and Innovate UK that provides mentoring to young people and makes available loans of up to £5,000.
The Scottish Government’s 2018-19 Budget means that 90% of firms in Scotland pay lower rates than they would if they were based elsewhere in the UK. Given that 55% of individuals will pay less tax than they would in the rest of the UK, what lessons do the Government plan to take in terms of supporting Scotland’s young entrepreneurs and those elsewhere in the UK?
The hon. Gentleman highlights specific differences within Scotland, but we are interested in making sure that young people are able to follow their dreams and aspirations whichever part of the country they happen to be in. We are announcing the young entrepreneurs’ review so that we can look at all the different barriers, including access to finance—something that the Government and I, as the small business Minister, take very seriously—and make sure that we create the right environment for our small businesses to start up, thrive and grow.
Small businesses are the backbone of our economy, employing over 16 million people, and they make a collective contribution of over £2 trillion. We have provided nearly £5.9 billion of finance to over 82,000 small businesses across the UK. We have also just announced an additional £200 million for innovation for British business.
What discussions has the Minister had with landlords running small businesses about the proposed abolition of section 21 notices? We all want to help renters, but we need to take care that we do not pass new laws that might actually make it harder for vulnerable people to get rented accommodation.
I thank my right hon. Friend for her question. We want both to encourage good landlords to stay in the sector and to make sure that proposals do not impact on supply. The Ministry of Housing, Communities and Local Government will be consulting landlords and looking at similar changes in Scotland. However, I reassure her that we recognise that small landlords, or incidental landlords, may have different requirements and they will therefore be very much part of the consultation.
Will the Minister join me in paying tribute to Snap-on UK Holdings in King’s Lynn in my constituency? It now employs 141 people and has recently won two Queen’s awards for enterprise and international trade. It is currently exporting to France, Poland, Italy and Spain, and it is trying to open up markets in Asia and Africa. What can she do to encourage other businesses in the country to follow Snap-on’s example and boost their exports, boost our economy and create jobs?
I thank my hon. Friend for highlighting the excellent work of Snap-on UK Holdings, which has won a Queen’s award for enterprise. Businesses in north-west Norfolk have benefited from 60 start-up loans, totalling nearly £500,000. They also have the growing business fund, which provides grants of up to £500,000 per business, where there is an opportunity to innovate and grow and create jobs.
Small businesses often rely on each other for mutual support; that is certainly the case in my constituency. Will the Minister please explain to her colleagues in the Department for Work and Pensions how detrimental it would be for small businesses and the town centre economy if they relocate 250 jobs out of Merthyr Tydfil town centre as part of their push to centralise jobs and services?
The hon. Gentleman raises an important point about our high streets. Obviously, the Government play an important part in that respect in making decisions that affect our regions. I would like to reassure him about what we are doing for high streets and the retail sector. With the Retail Sector Council, we are looking at business costs and elements around skills and employment on the high street. We remain committed to making sure that our high streets remain the heart of our communities. I will make sure that I do everything in my capacity as Minister to achieve that.
Can the Minister outline any initiatives that are being considered to offset high street rates to encourage businesses to not only trade online but have a presence in local high streets? Some of my constituents have done that, and they have been quite successful.
The hon. Gentleman makes an important point with regard to traditional retail and online sales. I have spoken with the likes of Amazon and eBay, and one thing I have been extremely surprised at is that they have worked with small businesses that have started online but then invested in bricks-and-mortar retail outlets. We need to work to make sure we have a mixed economy, and I have outlined the work we are doing with the Retail Sector Council, particularly looking at business rates and other issues.
I congratulate the Minister on the work she does for small businesses. She will know that one of the major challenges small businesses face is not just with late payments but with getting prompt payments and reasonable terms from bigger businesses. Will she ensure that the Government do all they can to end the scourge of late payment? Will she also ensure that the prompt payment code has some teeth so that it actually does the job it is supposed to?
I thank my hon. Friend for highlighting prompt payment. It is a particular focus within the Department to tackle late payments, which can be very damaging to small businesses. This week, the Chartered Institute of Credit Management has announced that there are 17 businesses that I have removed or suspended from the prompt payment code to make sure that we highlight where bad practice is occurring. We want to bring business with us. We do know that late payments can have a major impact on small businesses, and I therefore stand committed to ensuring that we do all we can as a Government to end this poor practice.
This morning I met Matt Dowling of the Freelancer Club, who adumbrated to me some of the terrible situations that freelancers have faced when trying to be paid, often being coaxed into working for nothing for things like experience. Will the Minister meet me and Mr Dowling to discuss how we might crack down on that?
Absolutely. I reiterate that this Government do not support the culture of poor payments and late payments. The hon. Gentleman is absolutely right to raise the concerns of those in a particular sector who might face trouble getting paid for legitimate work. I would be very happy to meet him and that organisation.
UK-EU Trading Relationship: Industrial Strategy
As the hon. Gentleman will know, there are huge opportunities for advanced manufacturers, especially in his region, and the sector benefits from a minimum of frictions in trade, so it is very important that we conclude a deal with the European Union.
I thank the Secretary of State for that reply and commend him for his approach. Boosting productivity is the declared objective of the industrial strategy, but it is plummeting at the moment due to Brexit uncertainty. Does he agree that it is absolutely essential that we get an early Brexit deal that delivers both a customs union and frictionless market access to the EU, because otherwise it is doomed to failure?
I am a bit more optimistic than the hon. Gentleman in that respect, not least because of the announcement just yesterday from the Advanced Propulsion Centre, which he knows very well, about the opportunity of nearly £5 billion for manufacturers, including in the west midlands, to participate in the growing market for electric vehicle batteries. It is therefore crucial that we drive productivity forward. He will also know of the work that Jürgen Maier is leading, as part of the Made Smarter Review, to capitalise on the opportunities. However, as I have always been clear with the House, we can best advantage those manufacturers if they are able to continue to trade freely and without frictions with the European Union.
Can the Secretary of State confirm that the Government have held discussions with a range of businesses, including those with complex customs requirements and those that export and trade mainly with the European Union, in formulating all their plans?
I and my colleagues meet very regularly—every day—with businesses in all sectors and in all parts of the country. I think that there is a strong feeling in the business community that we need to bring to a resolution the question of our future relationship with the European Union. The longer this situation goes on, the more attractive investment decisions are put on hold, and they could be creating jobs now.
The most recent quarterly economic survey from the North East England chamber of commerce shows a reported mark-down in sales and exports from the north-east. It states:
“We frequently hear from members that uncertainty over Brexit is delaying investment and hiring decisions for their businesses and their customers.”
What specific north-east-focused steps are the Government taking to ensure that the north-east business community and local jobs will not be affected by that, given that the Government’s own analysis shows that any Brexit outcome will affect the north-east the hardest?
One specific north-east-focused step is to invite the hon. Lady to vote for the deal that has been put before the House.
The steel industry is, rightly, a key part of the industrial strategy. In that context, what early discussions has the Secretary of State had on the steel charter and the key asks contained within it?
The discussions that we have had are intended to ensure that the steel sector, which is of fundamental importance to this country, can benefit from some of the manufacturing opportunities that we have talked about. As we expand our production of vehicles, as I hope we will do, there will be a strong requirement for steel, and through the proposed strategy we will ensure that that is supplied with British steel.
The Secretary of State’s industrial strategy states that manufacturing is crucial to the economy and promises to support businesses to access international markets and drive up exports. However, according to Make UK, stockpiling in the UK is now the highest of any G7 nation ever, as manufacturers try to protect themselves from Brexit uncertainty. Chambers of commerce across the country report falls in cash flow because money tied up in stock is not available to drive exports or pay wages. Cash flow is the lifeblood of manufacturing and the cause of up to 90% of business failures. Whatever the eventual outcome of the Government’s Brexit shambles, British manufacturers must be in business to meet its challenges, so will he now commit to providing financial support?
The hon. Lady quotes Make UK. The chief executive of Make UK, with whom I meet almost every week, has said:
“Make UK has consistently supported the Government’s withdrawal agreement as it removes the risk of no deal and delivers a sensible transition period which is vital for the needs of manufacturers.”
I think the hon. Lady and I have a joint view on the importance of manufacturing, not least in the north-east. I hope that she will have the flexibility and pragmatism to come together—I am talking to her colleague the shadow Secretary of State—and agree a way forward in line with what Make UK recommends.
Solar Households: Smart Export Guarantee
The smart export guarantee will pave the way to a smarter, more flexible energy system and ensure small-scale low-carbon generators are paid for the electricity they export to the grid. Yesterday, we published a consultation on the SEG draft licence conditions. We intend to start the legislative process for the smart export guarantee before the summer recess. There are already encouraging signals from the market and suppliers are beginning to voluntarily offer smart export tariffs.
I think a lot of people in the sector will feel that the delay is not acceptable. Does the Minister agree that the Government must mandate a fair minimum floor price to prevent suppliers from taking advantage of solar households and other small-scale solar generators? The energy price cap is there to ensure suppliers sell power at a fair price. We need a similar mechanism to ensure they purchase at a fair price, too.
That will be part of the consultation. We will set out our final proposals for the guarantee as soon as possible—as I said, before the summer recess. In the meantime, the right signals are already emerging. Energy suppliers are voluntarily bringing forward smart export tariffs.
As we have heard, rather than publish a smart export guarantee that actually works, the Tories plan to further stifle the industry by hiking VAT on solar. Is it not time that the Minister’s Government stopped the Tory war on renewables and started taking climate change seriously by following the leadership of Scotland’s First Minister and declaring a climate emergency?
The hon. Gentleman fails to mention the success story that is solar photovoltaic. Over the past eight years since May 2010, under the coalition Government and this Government, 99% of capacity has been deployed. That is 49% of the total investment in the EU. We have installed more than twice as much solar capacity as any other European country—more than Germany, France and Australia combined. That is something he should welcome rather than talk down.
The Minister has his head in the sand over climate change. Last week, the Business, Energy and Industrial Strategy Committee concluded that the UK could not credibly adopt a net zero emissions target without greater investment in new technologies. If the Tories will not act, when will they devolve the powers to Scotland, so the Scottish Government can show them how to do it?
On the net zero target, we will obviously wait on the Committee on Climate Change report, which will be published on Thursday 2 May. I am sure the hon. Gentleman welcomes the Government’s success story on solar capacity and renewables. In comparison with the early 1990s, emissions have come down by 40% while the economy grew by 72%. There is more to do—there will always be more to do—but we are on the right track and doing the right thing. Solar capacity has reached 30 GW, compared to an estimate of 10 GW to 12 GW. We continue to ensure we exceed our targets.
The Government are committed to building a globally competitive and sustainable packaging industry through research and innovation. As we announced in the UK’s first bioeconomy strategy at the end of last year, we are providing up to £60 million to transform the plastics economy through the industrial strategy challenge fund, so that we can establish the UK as the world’s leading innovator in smart, sustainable packaging.
The Government’s response to plastic use has been woeful, with a 4% increase in plastic use just last year. There is now more plastic in our oceans than fish. In the light of this environmental calamity, will the Government make a new commitment to ensure that only organic-based packaging material is in place, with no more plastics by 2025?
The UK has committed to being a global leader on this topic. We have already taken more than 15 billion plastic carrier bags out of the economy, we are consulting on a deposit return scheme and we have introduced proposals for a world-leading new tax on plastic packaging that does not meet minimum thresholds. There is always more that we can do, but there is an awful lot that we have already done.
Does the Minister recognise the contribution of the UK packaging manufacturing industry, which has annual sales of £12 billion, employs 85,000 people and makes up 3% of the UK manufacturing base, in working closely to increase the percentage of recycled material by using innovative new technologies and materials?
I thank my hon. Friend for that question. The UK plastics industry is vital to our economy, employing more than 170,000 people. This new challenge for the sector allows it to create new jobs as it embraces our challenging targets and ambitions in this area.
Most major supermarkets are signatories to that pact, and we have certainly seen some go further than others. A lot of lessons can be learned. It is a mixed picture at the moment, so I am certainly keen to keep this area under review. I particularly praise Morrisons, which has come out with a range of things on this, but there are many other supermarkets available that are working hard on this topic. We all have to work together on this—consumers, business and the Government.
Business: Start and Growth
To encourage the next generation of innovative entrepreneurs, our modern industrial strategy announced the biggest increase in public research and development funding on record—an extra £7 billion by 2021-22. We have also launched an independent review of the barriers facing young entrepreneurs, and we have published a review of the barriers facing female entrepreneurs.
I very much welcome that answer, and I very much welcome the Minister on his debut appearance at the Dispatch Box. I would also very much like to welcome him to Windsor, where residents of the royal borough have the lowest council tax in the country and residents of Bracknell Forest have low council tax but also high-quality services. That is why so many talented people come to Windsor to live and work. Will the Minister join me in recognising the good work of the Thames Valley Berkshire local enterprise partnership and the two key local authorities in making the Windsor constituency a great place to live, work and, above all, to start and run a business?
I agree with my hon. Friend and welcome his support for the good work of the Thames Valley Berkshire LEP and his local councils. My officials will work with his LEP and its local authority partners to produce a local industrial strategy for Berkshire that will boost productivity and support business start-ups. That is in addition to the £142 million local growth fund investment that we have already made in the county.
Similarly, in my constituency, young entrepreneurs trying to set up businesses, particularly in the digital sector, face a real shortage in the availability of electricity through the district grid—an issue identified by my local LEP. Will the Minister agree to meet me and the LEP to see what can be done to improve the situation?
We are working closely with LEPs on this issue, but I will be more than happy to meet the hon. Gentleman.
To be the best place to grow and start a business means having consistent rules and regulations. My brilliant local Medway Licensed Taxi Drivers Association has raised a real concern about Uber operating in Medway without having the same rules and regulations as association members. Will the Minister meet me and that brilliant association to look at those rules and regulations, to ensure that they are fair? I declare an interest: I have relatives in that trade.
My hon. Friend is a huge champion of his constituency, and particularly its small businesses. That meeting would probably be more appropriate with the Minister for small business, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), and I am sure that she will be happy to take such a meeting.
Does the Minister agree that after our eventual departure from the EU the growth of more small businesses and the expansion of existing small businesses, freed from bureaucracy, will be central to the economy of the entire United Kingdom, including Northern Ireland?
Small businesses are the backbone of our economy. I was proud to be a small businessman myself, employing eight people, in my life before politics. We are ranked in the top 10 globally as a place to do business, and this Government will continue to do everything they can to support small business.
Fracking: Methane Leakages
The UK has many years of experience regulating the onshore oil and gas industry, and measures are in place to minimise methane emissions. The Environment Agency issues and robustly enforces legally binding environmental permits regulating methane emissions. Under these permits, operators must have an agreed gas management plan to detect leaks and make repairs over the lifetime of site operations. They must also monitor emissions before and during shale gas operations.
The Minister will know that NASA and satellite data show that 5% of the methane from fracking is leaked through fugitive emissions and that methane is 85 times worse than carbon dioxide for global warming, which makes fracking worse than coal for climate change. Will he meet me to discuss my fracking Bill, instead of listening to Jim Ratcliffe, the richest man in Britain, from Ineos, who is hellbent on Brexit to avoid the environmental controls on fracking currently imposed by the European Union?
I would be happy to meet the hon. Gentleman and I would emphasise his comment about feeding in space data research. It highlights the importance of the UK space industry in looking at environmental issues. The Government also have a grant funding and environmental monitoring programme led by the British Geological Survey in respect of shale gas sites. All the information for that is publicly available. I also note that the MacKay-Stone 2013 report concluded that the carbon footprint of UK shale gas would be much less than that of coal and comparable to that of imported liquefied natural gas.
There is no fracking in Scotland, there has been no fracking in Scotland and, under the SNP, there will be no fracking in Scotland. If we going to be serious about the climate emergency, there should not be fracking anywhere in the United Kingdom, so will the UK finally follow Scotland’s lead and rule out fracking on these islands?
Unfortunately, residents and households in Scotland still need to use gas, given that 85% of UK households use gas for heating, and it is right that we look at opportunities to meet our energy demand. Some 47% of gas was imported in 2017, but if we do not take action, this could rise to 72%. We want to increase our opportunities for generating electricity through renewables. In quarter 3 of 2018, just 2.5% of electricity was generated by coal, compared with 40% in 2010, so we are going in the right direction, but we cannot forget that people will be using gas in Scotland.
Science Sector: International Collaboration
As announced in the spring statement, I have invited Professor Sir Adrian Smith to provide independent advice on potential future funding schemes in the context of the UK’s future ambitions for European and international collaboration on science and innovation. I also look forward to welcoming delegations from over 50 countries to the EUREKA global innovation summit in Manchester this May.
Our world-class scientists collaborate across the world, with the EU and beyond, and that collaboration is vital for further research and innovation in this country. Horizon 2020 is a ready-made platform for that collaboration. Will my hon. Friend commit to joining the Horizon 2020 programme as we leave the EU?
The Government have committed to guaranteeing all existing Horizon 2020 projects before Brexit. That was issued in August 2016 and demonstrated the Government’s commitment early on to protecting our scientific partnerships. We then had the underwrite extension in July 2018 which said that even once we had left the European Union—for two years up until December 2020—we would commit to funding those projects for the lifetime of the projects. We are now moving into negotiations on Horizon Europe, which is the successor scheme to Horizon 2020. I took part in the EU Competitiveness Council in February—I hope also to attend on 28 May—and it is our ambition to associate into Horizon Europe. On investment, my hon. Friend will be well aware that through our world-class universities we put in £4 billion and got back £5.7 billion in investment.
Even at the height of the cold war, there was a surprising level of collaboration between Russian and UK nuclear physicists. Will the Minister assure me that there will be similar collaboration when it comes to the skills that we have in the UK—particularly at Dounreay, in my constituency—in nuclear decommissioning, which is an industry that we could export and which could make a lot of money for the UK?
I entirely agree, and I pay tribute to the UK nuclear decommissioning sector. As science Minister, I have seen the innovation that is being developed. I recently announced £93 million for a robotics for hazardous environments programme involving about seven universities across the UK, which are looking into how we can use robotics more effectively to help nuclear decommissioning. I am delighted that that is now being transferred to Fukushima in Japan. The Government are ensuring that scientific collaboration is international. We will publish an international research and innovation strategy shortly, and I shall welcome any opportunities, involving any countries, to continue that work.
Supermarket Sector: Employment Contract Terms and Conditions
I regularly meet representatives of the supermarket sector, both individually and through the Retail Sector Council, to discuss a range of issues. One issue that the council has identified as a priority is employment. The Government have committed themselves to upgrading workers’ rights and protecting the most vulnerable workers in all sectors through the good work plan. That represents the biggest upgrade of workers’ rights for over 20 years.
I apologise for arriving late, Mr Speaker. I am delighted to have the opportunity to ask the Minister to support Mrs A, who has worked for Asda for 30 years. Her take-home pay, and that of 3,000 other members of staff, will be cut because of changes in the pay structure masquerading as an hourly increase. Paid breaks will be reduced, the night shift will be changed, and bonuses will be slashed. Will the Minister join me in supporting Mrs A and ensuring that she keeps what she is earning now?
The hon. Lady was not late for her own question. Her principal responsibility is to be in her place to ask her question, and we are delighted to see her. She does not need to be too apologetic; in fact, she does not need to be apologetic at all.
The hon. Lady is absolutely right to raise those questions. She is a strong campaigner for workers in her constituency, and we have met on a number of occasions to discuss some of the issues involved. Obviously we want Asda employees to receive the remuneration to which they are entitled. It is true that a consultation is taking place on changes that may be introduced towards the end of the year, but, in general, terms and conditions are subject to negotiation between the employer and the employee. While it is always open to either party to enter into negotiations on the terms of contracts, if employees are subject to changes in terms to which they have not agreed, they can take legal action.
The Minister is right to champion workers’ rights, because ours is the party of the workers. However, there are still too many examples of employers not paying the national living wage. What further steps will the Government take to ensure that the national living wage is enforced and workers receive a fair day’s pay for a fair day’s work?
I thank my hon. Friend for raising that issue. He is right: we are the party of the workers, which is why we introduced the good work plan, the biggest reform of workers’ rights for 20 years. We are committed to enforcing the national minimum wage and ensuring that people receive the remuneration that they deserve. Her Majesty’s Revenue and Customs has identified £24.4 million of arrears that affected more than 200,000 workers last year, which was an increase on the previous year. We have almost doubled the budget for enforcement since 2015, and we remain committed to ensuring that people receive the national minimum wage when they are entitled to it.
Climate Change: Discussions with DEFRA
Tackling climate change is a cross-government priority. Just last week my right hon. Friend the Minister for Energy and Clean Growth made an oral statement outlining the Government’s climate change priorities. Ministers in the Departments for Business, Energy and Industrial Strategy and for Environment, Food and Rural Affairs meet regularly to discuss matters including waste management, agriculture, forestry, resource efficiency and the environment Bill. We will host the upcoming Inter-Ministerial Group on Clean Growth to discuss the report from the Committee on Climate Change and the UK’s offer to host the United Nations Conference of the Parties in 2020.
After the Government’s refusal to declare a climate emergency, may I ask the Minister what he has personally taken away from the visit of 16-year-old Greta Thunberg and her most powerful advocacy on the need for urgent action?
I think we will be having a thorough debate on this issue of climate change emergency in the Opposition day debate tomorrow. When it comes to my personal role as the Minister with responsibility for science, innovation and research, I entirely agree that we need to be making more investment in climate change technology in order to reach our target of 2.4% of GDP on research and development. We have already announced our missions in relation to clean growth. I absolutely believe we should be listening to the experts—that includes the scientists and learning from climate science, wherever that may be—to make sure we can reduce our emissions.
Since the Rio summit in 1992, the UK has actually decarbonised more than any other G7 economy, while growing our economy the most at the same time. However, we need to do more, which is why I am looking forward to the Committee on Climate Change report on Thursday. If it does indeed recommend a net zero target, will the Minister commit to ensuring that that is something the Government will very seriously consider bringing into law at the first opportunity?
My hon. Friend is absolutely right to highlight the achievements that have been made in recent years, but it is important that we redouble our efforts. The Committee on Climate Change report, which will be published on Thursday, was commissioned by the Government, and the Government will be taking actions on the back of its recommendations. It is important that we look to continue our actions, but it is also important that we do so with our international partners. We have the UN summit taking place in September and future COPs, including the one we would like to host in 2020.
I would not call listening to local communities and reflecting on the need to create sustainable communities locally “ideological opposition”. We need to work with everybody—all citizens. There has been talk of citizens’ committees, so why not ensure that local communities are able to reflect on the benefits of renewable energy in their communities, and begin such dialogues with them, rather than call them ideological opponents of renewables? I do not think that is very fair on those communities.
I would like to send the thoughts of Opposition Members to the Minister for Energy and Clean Growth. I welcome this Minister to his place and look forward to our exchanges over the Dispatch Box.
In 2016, the UK’s carbon emissions fell at 6% a year, and in 2017, emissions fell at 3% a year, but in 2018, the figure was 2%—just a 2% fall—so at a time when action should be ramping up to tackle the climate emergency, can the Minister explain why the UK’s progress is slowing down?
I do not recognise that. The fact is that we have met our first and second carbon budgets over the 2008-12 and 2013-17 periods. We have managed to reach those targets. Turnover for clean business was up 7% in 2017, contributing £44.5 billion to the economy. When it comes to ensuring that we look at our clean growth strategy, we have set out quite clearly opportunities to halve the energy use of new buildings by 2030 and to establish the world’s first net zero carbon industrial cluster by 2040. By comparison with our European neighbours, we are racing ahead—we are leaders in this field—and we want to make sure that we can continue to do so.
With respect, the Minister is alluding to the UK’s emissions cuts since 2010, when the UK still benefited from policies put in place by the previous Labour Government—policies that the Conservatives have now scrapped. Secondly, it is irrelevant, quite frankly, to climate physics whether the UK is doing slightly better or worse than other countries that are also failing to take the necessary action.
I ask this in good faith and in all seriousness: does the Minister accept that the UK’s stalling progress is related to banning—in effect—onshore wind, reducing almost all support for solar power, scrapping the zero-carbon homes standard and selling off the Green Investment Bank? Will he be honest about the challenge, and work with Labour and right across this House on turning this around, so that we can truly tackle climate change and properly seize the economic opportunities within the green economy?
It is important to recognise that 56% of electricity power generation is now based around a low-carbon economy generation and that 33% of that is from renewables, up from 7% in 2010. Coal represents 2.5% of our electricity generation, and last weekend the UK went 90 hours without any coal electricity generation for the first time since the industrial revolution. As we are now involved in the fourth industrial revolution, we want to ensure that we continue to power through and that we can adopt more renewables for the future.
Renewable Energy Sources
Last year, renewable generation provided a third of our electricity and, as I have stated, over the Easter weekend we went 90 hours without any coal generation. Both were new records. Our next contracts for difference allocation round will open next month. We are driving down the cost of clean technologies and investing £2.5 billion in low-carbon innovation.
Far from leading the way, the UK has plummeted to the bottom of SolarPower Europe’s league table of 20 world markets in solar, and we are one of the few EU countries not providing any support at all to solar power. Not only has solar had all support removed prematurely but it is being hit by wave after wave of fresh damage, making it harder to meet our climate targets. Will the Secretary of State or the Minister meet me to discuss the damaging net effect of the Government’s policies on solar and on the transition to clean energy?
I am sure that the Minister for Energy and Climate Change will be happy to meet the hon. Lady, but as I have stated, photovoltaic is a UK success story. We have seen 830,000 installations, and I have mentioned the smart export guarantee tariff that is being designed. We want to ensure that this will be able to generate profit for those companies, and that we continue to be able to lead Europe on this.
Eliminating net carbon emissions by 2050 is both ambitious and achievable. Does my hon. Friend agree that the progress made over the past decade demonstrates that, where there is the political will, it is possible to reduce emissions while supporting economic prosperity?
Absolutely. We need to deliver ambitious reductions in emissions, considering our long-term targets in the light of the latest science. That is why we have asked the Committee on Climate Change for advice on our long-term targets, including that net zero target. The committee’s advice will be published this Thursday, and we will consider it carefully.
Of course we have a record to be proud of when it comes to renewable energy, but we should always continue to be as ambitious as we have been. How significant has the UK’s contribution been to ensuring that Scotland meets its renewable targets?
The Government are firmly committed to the renewables industry, and Scotland has benefited proportionately more than the rest of the United Kingdom under existing policies. It will continue to benefit from future investment. Fifteen Scottish projects have been awarded contracts for difference with a total capacity of 2.57 GW, and the Government and numerous other public sector organisations have provided £15 million to fund the European Marine Energy Centre in Orkney, which is one of the world’s leading wave and tidal demonstration centres.
The truth of the matter right now is that, far from expanding the source of renewables, the Government have narrowed the use of renewable energy in recent years. Of course we should strongly support the development of offshore wind, but the Minister must acknowledge that marine and tidal power has been almost strangled at birth by the Government’s indifference and even active hostility, and that onshore wind and solar PV have been severely hampered by adverse Government decisions on support and planning. On lack of support, will the Minister answer a specific question? Why is he sanctioning a VAT rate rise to 20% on solar power while at the same time maintaining a rate of just 5% on coal and fuel oil?
The industry has invested more than £92 billion in clean energy since 2010. As I have stated, renewables now generate 33% of our electricity, and 52.8% comes from low-carbon sources. As for the VAT issue, we are working with organisations and companies to ensure that we can get the best possible deal when it comes to renewables. I am sure that my right hon. Friend the Minister of State for Energy and Clean Growth will be happy to discuss the matter with the hon. Member for Southampton, Test (Dr Whitehead) in further detail, but we are committed to ensuring that we have a wide range of renewables, including marine energy and offshore and onshore wind, to make sure that we can continue to drive up our renewable capacity.
The hon. Member for Southampton, Test (Dr Whitehead) also reflected on that, and it is vital that renewables remain an important part of our energy generation mix. Our clean growth and industrial strategies set out how we will build progress in all such areas, but I am sure that the Minister of State for Energy and Clean Growth will be happy to meet my hon. Friend the Member for Eddisbury (Antoinette Sandbach) to discuss the issue.
Businesses in Taunton Deane
The Heart of the South West local enterprise partnership, which covers both Somerset and Devon, is receiving £239 million through the local growth fund to drive regional economic development. That includes an investment of over £24 million in projects in Taunton Deane, such as the redevelopment of Taunton station and improvements to junction 25, which is one of the largest investments that we have made in the south-west through the local growth fund to date.
I welcome the Minister to his new role. Will he join me in congratulating all those involved in the development of the new headquarters for the UK Hydrographic Office, the opening of which I attended in Taunton last week? Will he also join me in supporting the endeavour to use its expertise in marine data to open a marine geospatial innovation centre at Firepool in Taunton to open up opportunities in the blue economy?
I will of course join my hon. Friend in congratulating those involved in the opening of the new UK Hydrographic Office headquarters in her constituency. It is a world-class natural asset. The UKHO is working with local partners to scope the feasibility of developing a marine geospatial innovation centre in Taunton, and it plays a key role in the south-west’s local industrial strategy.
Workers’ Rights: Trade Union Discussions
Informed by my regular discussions with trade unions, we have extended worker rights, and both Houses agreed last month to close the Swedish derogation loophole to protect agency workers. On 1 April, we celebrated with union representatives the 20th anniversary of the national minimum wage. The day was marked by the rise in the national living wage, which has delivered the fastest pay rise for the lowest paid in at least 20 years, benefiting nearly 1.8 million workers.
The Scottish Trades Union Congress general secretary, Grahame Smith, has said that the Scottish Government’s
“Fair Work Action Plan demonstrates a commitment to using the powers the Government has at its disposal to deliver Fair Work, which is good for workers and good for business.”
Will the Secretary of State do his bit by introducing a real living wage? If not, will he devolve the policy so that the Scottish Government can?
What the hon. Gentleman did not mention is that this Government introduced the national living wage, and we have just increased it to its highest-ever level, benefiting millions of people around the country. I would have thought that he would welcome that.
There are many warm words from the Government on workers’ rights, but to say that the Conservatives are the party of workers is a joke, because their actions in government tell a different story. Strong economies are almost always underpinned by strong trade union rights. Germany, Sweden, Norway and Denmark all have extensive sectoral collective-bargaining coverage, which has been used to reduce income inequality and drive up wages. The hostility towards trade unions and the dismissal of collective bargaining here is not just bad for workers but bad for the economy, creating a vicious cycle of lower wages, reducing tax revenues and lowering spending. The obsession with undermining union rights is self-defeating. What is the Secretary of State doing to break the cycle?
If you want to be the party of workers, you need to be the party that creates work. There are 1.5 million more people employed in work as a result of this Government’s policies, and of course we want to make sure they are in good jobs. The effort of our industrial strategy is to drive up productivity, which is necessary if pay rates are to increase over time. The hon. Lady should acknowledge the reforms, brought in partly as a result of the Matthew Taylor report, that have closed the Swedish derogation, which her party failed to close over 13 years in office.
Nearly 30 years ago Margaret Thatcher made a speech at the UN General Assembly in which she described
“what may be early signs of man-induced climatic change.”
Ever since then, the UK has continued to lead the world on this issue. The UK, yet again, broke its coal-free power generation record, which now amounts to more than three and a half days without any electricity being generated from coal, over the weekend—the longest period since the industrial revolution in which coal has not been burned for power in this country.
Later this week we have another seminal moment in which the independent Committee on Climate Change will report back, at the Government’s request, on how we can set a date to achieve net-zero emissions—once again, this country is leading the world on climate change.
I am sure the House will wish to join me in paying tribute to the management, the workforce and the emergency services who dealt so effectively with the explosion at the steelworks in my constituency on Friday. We wish the two men who received minor injuries all the best.
The predecessor of the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Pendle (Andrew Stephenson) promised the last meeting of the all-party parliamentary group on steel and metal-related industries that he would host a meeting of steel sector stakeholders, supply chains and steel MPs to discuss the failure to develop a steel sector deal. Will the Minister now commit to honouring that commitment and to meeting us as soon as possible?
First, I join the hon. Gentleman in paying tribute to the workers at Port Talbot and to the emergency services, which responded with characteristic bravery and dispatch to deal with that very worrying incident. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle (Andrew Stephenson), and I spoke to the company and the trade unions the next morning, and we are all relieved that the situation was not worse. Of course, we send our sympathies to the workers affected.
As the hon. Member for Aberavon (Stephen Kinnock) knows from an earlier answer, we are clear on the importance of the steel sector for the future of manufacturing generally, and I take a personal interest. These are early days for the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Pendle, but I know he shares my enthusiasm, and perhaps we can both come to that meeting.
My hon. Friend, who chairs the Select Committee on Justice, makes an excellent point on one of our principal sources of export earnings. More than that, the pre-eminence of law in the UK brings firms from jurisdictions around the world to do business here. We are determined that we should maintain our good relations across the continent and that we should keep up to date in our practices. He will know that, through the industrial strategy, we are investing in the regulators’ pioneer fund to make sure that legal services take their place at the cutting edge of innovation.
On 4 April, the Office for Product Safety and Standards published its investigation into Whirlpool and the ongoing issue of its product safety. The report was lambasted by consumer organisations, including Which?, as weak. Just days later it was revealed in the media that Whirlpool allegedly paid one consumer to stay silent after she was forced to flee with two young children as a blaze engulfed her home after her dryer had been modified. Can the Minister tell us whether the OPSS was aware of those allegations and, if not, whether it will now reopen its investigation in light of the accusations?
I thank the hon. Lady for raising this issue, and I commit to making sure that I speak to the OPSS about the allegations she has highlighted and what further information we can ascertain. She is right, in that I laid a written ministerial statement before the House on 4 April. I have to let the House know that the OPSS has written to Whirlpool asking it to take action, and it has 28 days to reply to that. I stand ready, as the Minister, to make sure that consumer safety and protection is at the heart of what we are doing and that we take further action where necessary.
I recognise the situation my hon. Friend describes; in his rural constituency, this is a big problem. In the spring statement, we announced that the future homes standard would ensure that all new buildings, including those in rural areas, are equipped with low-carbon sources of heat and power by 2025. We also recognise the importance of households that are off the gas grid and have them in mind as we deal with the energy companies in terms of their tariffs.
It is a sad reflection that the job creation that has taken place in Scotland lags behind that in the rest of the UK. I fancy that one reason for that is that Scotland has acquired a reputation for being the highest tax part of the UK. So I hope the hon. Gentleman would reflect on these causes and advise his colleagues in Holyrood to take a different course.
I am aware of the advice from the committee, which we will consider carefully. My hon. Friend will know that the energy company obligation has been reformed to concentrate on fuel poverty, but we are grateful for the committee’s advice and we will respond shortly.
Across the country, it is crucial that we invest in infrastructure. If we want to compete with other nations across the world, we need to make sure that our businesses and our people can count on fast connections, and that includes between our great cities.
Now that I am not bound by the ministerial code, or indeed collective responsibility, I feel that I can speak my mind about sector deals. I think they are absolutely brilliant, and I ask my right hon. Friend the Secretary of State to point out some of the achievements made on delivering the commitments made between the Government and industry.
I cannot say that I had noticed that the hon. Gentleman was previously all that closely bound.
That was my experience, too, Mr Speaker. Goodness knows what my hon. Friend will be like now that he is on the Back Benches. May I pay tribute to the fantastic work he did in securing so many of the sector deals? He got to know very well the needs of particular industries and sectors. Let me pay tribute to the creative industries sector deal, for example, which this very weekend launched a new immersive technology version of “Peaky Blinders”. I do not know whether he is a fan of that series. If he is—
What is it?
“Peaky Blinders” is an award-winning programme, which my hon. Friend will be able to experience in virtual reality as a result of the sector deal done with our creative industries, particularly the gaming industry.
The hon. Lady will know that the investment that is being made through the industrial strategy in testbed facilities and data centres for connected and autonomous vehicles is geared towards making Britain the go-to place in the world for the development, deployment and manufacture of such vehicles. As the hon. Lady takes an interest in the sector, I would be delighted to invite her to see and meet some of the companies involved in what is a great set of possibilities for this country.
Shared parental leave is a good option for new parents, but the Secretary of State will know that take-up remains low. Will he consider introducing a stand-alone period of parental leave just for partners, to help families to balance work and childcare?
I thank my hon. Friend for raising this issue. She is a keen champion of rights for parents. I agree that fathers and partners have a key role to play in caring for their children. The shared parental leave and pay scheme gives parents more choice and flexibility and challenges the assumption that the mother will always be the primary carer. Last year, the Government ran a £1.5 million campaign to promote shared parental leave and to increase its take-up, and we are preparing a further campaign for later in the year. I assure my hon. Friend that we always keep these things under review. I am keen to meet her in the near future to discuss her particular concerns.
I look forward to working with the UK steel sector and have already had several engagements. Steel overcapacity remains a significant global issue that requires international solutions, but here in the UK we have already done a range of things, including identifying more than £3.8 billion a year of UK domestic requirement for steel.
Order. We are running out of time—indeed, we have run out of time—but I know that the hon. Member for Truro and Falmouth (Sarah Newton), who is a practitioner of caring and sharing, will want to be pithy to accommodate colleagues.
Thank you, Mr Speaker.
Yesterday, the Princess Royal helped to mark a significant milestone in the exploration of deep geothermal energy in Cornwall, as the deepest and hottest hole on the UK mainland has been successfully drilled. Will my right hon. Friend the Secretary of State meet me to discuss what more the Government can do to support this potentially scalable new source of renewable energy?
I congratulate my hon. Friend’s constituents on the work they have done on geothermal energy, which is an exciting form of renewable energy. I am going to Cornwall on 24 May, so I will see whether I can meet my hon. Friend. I know that the University of Exeter is involved in the project, and I would be keen to pursue the matter further.
The hon. Gentleman should celebrate the fact that, when it comes to renewable energy, we are the leading nation in the world for the deployment of offshore wind. We are creating jobs right throughout the country, and many constituencies have people in good jobs because of the leadership in renewable energy that we have displayed. We will go further in the years ahead.
Solar plus battery storage will soon be commercially viable without any subsidy. Is now the right time to plan for a huge deployment of solar on every public building, school, hospital and prison?
My hon. Friend makes an excellent point. If there is the possibility of more renewable energy than was previously contemplated and we can store it, we will solve our energy needs for the future, thereby helping business and consumers. I shall take up my hon. Friend’s suggestion.
My constituent was made redundant from Carillion last April after 11 years’ service as a cleaner. She has been passed from pillar to post, from PwC to the insolvency services. Will the Minister please look into this case as a matter of urgency?
I would welcome it if the hon. Lady passed me the details of her constituent, so that I can follow up that matter.
In North Devon, we are proudly playing our role in clean energy generation with two major wind farms. Does the Minister agree that, to ensure our security of supply and to get the best climate change outcomes, we need a mix of clean energy generation?
Absolutely. It is important that we put that mix in place. We have already heard from my hon. Friend the Member for Truro and Falmouth (Sarah Newton) about looking at other forms of renewables. There is also carbon capture and storage. We need to ensure that we look at new technologies to be able to deliver a low-carbon future.
The enterprise finance guarantee scheme and its continued use by RBS is still causing controversy. Even this week, we have seen discussions from the hon. Member for Thirsk and Malton (Kevin Hollinrake) around the use of debt. Will the Minister, or the Department, discuss with the Treasury how this scheme and its legacy are now operating?
I thank the right hon. Gentleman for raising that matter at BEIS questions today. I will happily take on that challenge.
Small businesses in Cleethorpes are suffering because of yet another two high street bank closures. Individuals and businesses need both the counter services and expert financial advice from banks. Indeed, banks are important to the vitality and viability of our high streets. Will Ministers assist local authorities in establishing financial hubs, where financial institutions can come together and provide that service?
My hon. Friend is absolutely right to raise concerns about banks pulling out of our high streets. Those concerns have also been raised by many other MPs across the country. High street banks do offer a valuable service for consumers, and that is why I am grateful to the Post Office for renegotiating the banking framework, which will offer better payments to postmasters providing banking services in those high streets. However, he is quite right: we do need to work closely with local authorities at a regional level to make sure that the services being offered on the high street are those that people wish to see.
Will the Minister confirm that the Secretary of State for Scotland put in writing his objection to onshore wind finding a route to market in Scotland? Why will the Government not release that correspondence in the interests of transparency?
I am not aware of the inquiry that the hon. Gentleman mentioned. I will follow it up with the Scottish Secretary.
Ah, where is young Graham? I was going to call the fella.
My hon. Friend the Member for Cleethorpes (Martin Vickers) anticipated my question.
Well, that is a novel phenomenon—a Member who takes the attitude that someone else has asked the question and therefore says that he will desist. That is a most admirable trait, if an uncommon one.
The Business, Energy and Industrial Strategy Committee and the Competition and Markets Authority have both published reports calling for change in the UK audit industry. Will the Secretary of State undertake at the Dispatch Box that the power of the big four audit firms in the UK will not stop this agenda for change?
I will give that commitment. I am very pleased that the Competition and Markets Authority has launched that report and made some interim recommendations. We will be looking at them during the weeks ahead. My hon. Friend is absolutely right to say that this is a sector that is fundamental to the confidence that we have in businesses right across the country.
Everybody wants to do their bit by recycling, but it is absolutely infuriating when we get to the supermarket and all the fruit and veg is wrapped in plastic. Then there is the exciting moment when we get home to the kitchen and see that there is a little sign, which looks like the packaging is recyclable, but then we read the words, “Not yet recyclable”. What on earth do they mean by that? Are we meant to keep it all until, suddenly, somebody announces that it is now recyclable? Are we meant to put it in the attic or store it in a cupboard? What are we meant to do? Surely, we should ban those words. The packaging is not recyclable and it should not be available.
I entirely sympathise with the hon. Gentleman’s frustration on this point. I hope that he also noticed when it came to the London Marathon this weekend—congratulations to all hon. Members from all parts of the House who took part in that marathon—that the water was in bottles not made of plastic, but of compostable seaweed. As a Science Minister, I can say that a key issue is looking at what we can do to develop alternative forms of plastic, but we have to work with local authorities and supermarkets to make that happen.
I know—from chairing the all-party parliamentary group for small and micro-business, and from talking with west Oxfordshire businesses—that one of the major challenges that small organisations face is finding sufficient people of the right skills to grow their businesses. What are Ministers doing to provide a national strategy to ensure that our young people have the skills they need for the future?
I congratulate my hon. Friend on his work as chair of the all-party parliamentary group; he is extremely passionate about this subject and does a lot to champion small businesses in his constituency. We have outlined a £1.3 billion investment into UK talent and skills to attract the best. We are also keen to work with businesses—particularly small ones—to ensure that we are delivering on our apprenticeship targets. We have seen some fantastic results when young people have been brought into organisations and been given the training and workplace experience to grow and thrive. I very much hope to champion such schemes as we go forward.
The other week, I was shocked to meet a constituent who had worked in care for nine months solidly without being given a single day off, while on a zero-hours contract. Such workers, who are vulnerable, need protection for their rights at work. Will the Secretary of State look at bringing in group claims for industrial tribunals and representative cases so that workers do not have to stick their head above the parapet?
I was pleased to meet the hon. Lady yesterday to discuss this matter. I share her concerns about the case that she mentioned and take her suggestion very seriously. As I have committed to her, we will take this forward together.
Overseas Students: English Language Tests
(Urgent Question): To ask the Secretary of State for the Home Department if he will make a statement on his review of the cases of overseas students falsely accused of cheating in Test of English for International Communication English language tests.
Test centres operated on behalf of the Educational Testing Service were the subject of a BBC “Panorama” programme in February 2014 that aired footage of the systematic cheating in English language tests at a number of its UK test centres. Further investigation demonstrated just how widespread this was, and the scale is shown by the fact that 25 people involved in organising and facilitating language test fraud have received criminal convictions. They have been sentenced to a total of over 70 years’ imprisonment, and further criminal investigations are ongoing.
There was also a strong link to wider abuse of the student visa route. A National Audit Office report in 2012 made it clear that abuse of that route was rife and estimated that in 2009—its first year of operation—up to 50,000 people used the tier 4 student route to work, not study. Most students who were linked to this fraud were sponsored by private colleges, many of which the Home Office had significant concerns about before the BBC investigation. Indeed, 400 colleges that had sponsored students linked to the ETS had already had their licences revoked before 2014.
Over the course of 2014, the ETS systematically analysed all tests taken in the UK dating back to 2011—more than 58,000 tests. Analysis of the test results identified 33,725 invalid results and 22,694 questionable results. Those with questionable results were given the chance to re-sit a test or attend an interview before any action was taken. People who used invalid ETS certificates to obtain immigration leave have had action taken against them.
The courts have consistently found that the evidence for invalid cases created a reasonable suspicion of fraud and was enough for the Home Office to act upon. It is then up to individuals to refute this, either through appeals or judicial reviews. Despite this, concerns have been expressed about whether innocent people could have been caught up in this. The Home Secretary has listened to the apprehensions of some Members, including the right hon. Member for East Ham (Stephen Timms), and has asked officials for further advice. The National Audit Office is also currently in the process of concluding an investigation into the handling of these issues, and this is expected to be published next month. Obviously, the Home Secretary has taken a close interest in the issue and will be reviewing the conclusions of the National Audit Office, and he will make a statement to the House once he has had time to consider the matter in full.
I thank the Minister for her answer, and I am pleased to see the Home Secretary in his place. I congratulate him on achieving one year in his role today. On his first day in the post, I asked him to take a careful look at this issue, and he said that he would. On 1 April this year, I asked him for an update. He said:
“We had a further meeting to make some final decisions just last week, and I will be in touch with him shortly.”—[Official Report, 1 April 2019; Vol. 657, c. 799.]
But in the month since, nothing has been announced. Many students face desperate hardship and need urgently to know the decision, because their future depends on it.
As the Minister said, the Home Office cancelled the visas of those who ETS claimed, from its analysis, had definitely cheated. The claim by ETS that almost 97% of those who sat their test had cheated seems completely implausible, but we will let that pass. Colleges had to expel those who had their visas cancelled. By the end of 2016, there had been more than 35,870 refusal, curtailment and removal decisions in ETS cases and more than 4,600 removals and departures. One estimate is that at least 2,000 of those denied visas are still in the UK.
In-country appeals were not allowed, but some have got cases to court. A growing number have convinced the courts that they did not cheat. One showed that he never actually took a TOEIC test, and yet he had his visa cancelled because it was alleged that he had cheated in one. It has proved extraordinarily hard for students to obtain from ETS the recordings said to be of them taking the test. One computer expert told the Appeal Court that ETS’s evidence is worthless. The Appeal Court has criticised the Home Office’s evidence and said in 2017 that it was unlawful to force students to leave the country in order to appeal. Many of those affected speak excellent English so had no motive at all to pay someone else to take the test for them.
Thrown off their courses and denied any refund of their fees, the students cannot study or work. Some invested their families’ life savings to obtain a British degree. The savings have gone. They have no qualification and no income. They depend on kindly friends but say they could not endure the shame of going home with nothing, having apparently been convicted of cheating in the UK. Understandably, mental health problems are rife. Does the Minister agree that those who lost their visas on TOEIC grounds but remain in the UK should have the opportunity to sit a new test and, if they pass, obtain a visa in order to complete their studies and clear their names?
I thank the right hon. Gentleman for his question. I will return at the outset to the comments I made about the National Audit Office report, which is expected to be published next month. The Home Office has been working closely with the NAO to provide information and evidence, and it is right that the Home Secretary has the opportunity to reflect on the report, consider its findings and come back to the House with a statement.
The right hon. Gentleman spoke about the court cases that have happened. Under the appeals framework, which is set by Parliament, and the Immigration Act 2014, there are no in-country appeals in the student route, through which these visas were issued, but the Home Office is taking a pragmatic approach. It is important to reflect that we are talking about fraud perpetrated back in 2014, and many people who have ongoing ETS litigation will potentially now have the right to bring a human rights claim. If they are refused under the human rights route, they will then generally have an in-country right of appeal.
There were an enormous number of cases where fraud was found, and matching showed that a number of individuals had taken repeat tests on behalf of thousands of people. There was a criminal trial at the start of this month, which saw a further five convictions. While I appreciate the strongly held beliefs of the right hon. Gentleman, it is important that we reflect that this was fraud on an industrial scale, and we should react responsibly.
I declare an interest, as chair of the all-party parliamentary BBC group, because it was the BBC’s “Panorama” exposé that showed shocking examples of people reading out answers to those sitting the exams. As the Minister said, people have been convicted of fraud. While I have every sympathy with the individual cases, can the Minister ensure that we take very seriously the fact that our international standing as a centre for students will be harmed if we do not root out those who do wrong?
My hon. Friend will be reassured to learn that 400 colleges that had sponsored students linked to ETS already had their licences revoked before the BBC “Panorama” programme. I am conscious that the student route was linked to widescale abuse, and my right hon. Friend the Prime Minister acted swiftly when she was Home Secretary to remove the licences of a number of bogus colleges. As I said, it is important that we work with the NAO, reflect on its findings and find a way to move forward and assist those who might have been wrongly affected.
The Government’s treatment of innocent students has been unacceptable. Driven by the hostile environment and net migration target, about 34,000 students’ visas have been cancelled. Can the Minister tell us how many of those cases are ongoing? Are any of these students currently in immigration detention? What steps is she taking to identify and compensate students who were wrongfully removed?
The TOEIC visa scandal has been rumbling for years. The Government have lost case after case in the courts. My right hon. Friend the Member for East Ham (Stephen Timms) has been raising the issue in Parliament for over a year, and students have been protesting outside Parliament. The Home Secretary told Parliament a year ago that he would look carefully at the issue, but no concrete action has been taken. Does the Minister appreciate the urgency of this issue? Thousands of students are living in limbo, unable to work or study while they attempt to clear their names.
The Windrush scandal exposed a culture of disbelief in the Home Office, motivated by removal targets rather than careful consideration of cases. We were promised a culture change, yet the Home Office is again being investigated by the National Audit Office for its cruel and ineffective handling of immigration cases. Does the Minister accept that the years of suffering these students have endured is a result of the coalition Government’s decision to remove legal aid and appeal rights?
We need a swift resolution to all outstanding TOEIC visa cases. The students have asked to be allowed to re-sit the English language tests, and that is a sensible suggestion. The UK’s reputation as a welcoming place for international students is suffering tremendously. International students are vital to our universities. They enhance the experience of UK students and further our soft power abroad, not to mention subsidising the fees of home students, but reports over the weekend suggested that EU students will be required to pay international fees, which the Minister could not confirm or deny yesterday. We now have the TOEIC visa scandal. What will be next?
The hon. Gentleman has chosen to focus on a very small number of students who may have had incorrect results. What we know, and what the evidence shows, is that our response back in 2014 was driven by systematic fraud that was perpetrated in colleges and has seen significant criminal convictions and sentences of 70 years. We are working with the NAO and through the courts. As I said, the Home Office has taken a pragmatic approach to the judicial reviews and appeals coming through the courts, recognising that many of these individuals have been in the country for a significant period. Of course, the ability to speak English in 2019 does not necessarily mean that an individual did not cheat in 2014 or could speak English to the required level then.
I would like to comment more on what we are doing for international students. The UK has a proud track record of attracting an increasing number of students to this country. I am sure that the hon. Gentleman will welcome the commitment in the White Paper to continue to have no cap on the number of foreign students coming here and to make a more generous offer for post-study work arrangements for students who choose to come here. It is important that we support our world-class institutions and celebrate the fact that we have five British universities in the top 20 universities globally, and that we saw over the course of the past year a 10% increase in the number of tier 4 visas being applied for.
I was pleased recently to go on a visit to China with the all-party China group, and we met many students there. The dream of many of those students was to come to the UK to go to university. It is therefore absolutely right that we tackle any fraud, and I am pleased by and thank the Minister for the way that she is dealing with this. We have to give clear signals that our world-leading education remains world-leading and that we have an open door for international students to come here to take advantage of that supreme education.
My hon. Friend is absolutely right to point out the brilliance of UK universities. I would like to point to the increasing numbers of Chinese and Indian students at the university in my constituency, Southampton, which has done a brilliant job of attracting students from overseas, as indeed have many other institutions countrywide. We do ourselves a disservice if we turn a blind eye to abuse and fraud within the student route. My right hon. Friend the Prime Minister, when she was Home Secretary, took strong action in 2014 to close down bogus colleges, and she was absolutely right to do so.
First, I give my sincere congratulations to the right hon. Member for East Ham (Stephen Timms) not only on securing this urgent question but on the manner in which he has relentlessly pursued this issue, which is finally getting the attention it has long deserved. For far, far too many people, this episode represents an absolute travesty of justice. When the Home Office discovered that ETS had completely failed to prevent widespread cheating—indeed, that some ETS staff were actively involved in facilitating it—it should have sacked the company and sought compensation from it. Instead, unbelievably, the Home Office asked ETS to mark its own dodgy homework and re-check the tests. How can that possibly be justified? The Minister referred to evidence, but in fact we are talking about the totally opaque say-so of ETS, on which basis the Home Office decided that thousands of students were guilty, and their lives were subsequently ruined. There is an abundance of evidence that a large number were totally innocent. They deserve an apology, and much more than that. Will she, at the very least, reverse the draconian repeal of in-country appeal rights that deprived many of justice? Will she agree to all that cross-party MPs have been demanding, including, as the right hon. Gentleman said, new tests and restored visas for those who pass, because that is the bare minimum that needs to be done to right this wrong?
The hon. Gentleman will of course be aware of the expert report by Professor Peter French that concluded that false matches were likely to be very small—in the region of 1%—and more likely to give people the benefit of the doubt than to falsely flag people as having cheated. The courts have always said, even when finding against the Home Office on individual facts of a case, that the evidence was sufficient to make accusations of fraud. Of course he will recall from our exchanges during the passage through Committee of the Immigration Bill that this company was suspended from the immigration rules in July of that year and that the Home Office did take legal action against ETS in a case that was settled last year.
The National Audit Office said that up to 50,000 apparent students came to the UK to work, not study, under the Labour Government back in 2009-10, so obviously action needed to be taken to stamp out abuse. I appreciate the Minister’s tone in being willing to listen to the current concerns. Can she assure me that the UK will continue to be open to genuine international students and that we will not put a cap on the numbers who can come here? [Interruption.]
As my right hon. Friend the Home Secretary just said from a sedentary position, “More open”. Those words are included in the immigration White Paper that was published in December last year. We indicated that there would be no cap on international students and that we wished to make the post-study work regime more generous. However, it is important to reflect that this was about systematic fraud being perpetrated. We took action to stop it then. We must continue to be robust in making sure that we have high standards and requirements for English language testing—that is very important. I absolutely agree that we must celebrate the success of our universities and continue to work hard to attract international students.
I welcome the NAO investigation into this issue. I sense from the Minister’s tone that, while she obviously cannot anticipate the NAO’s report, she is expecting it to raise questions about decision making in individual cases. In that light, may I ask whether she and the Home Office are now looking much more widely at some of the issues that have been persistently raised about the inaccuracy of Home Office decision making in very important immigration cases? What is being done to address some of the cultural problems that have been raised time and again about these decisions, which have such a huge impact on people’s lives and have to be got right?
It would be wrong to prejudge the NAO report, but I would like to reassure the right hon. Lady that Home Office officials have worked closely with the NAO, providing it with information and evidence where requested. As she will know, we are conducting a number of reviews in the Home Office, including, following Windrush, the Wendy Williams lessons learned review, and the forward-looking Borders, Immigration and Citizenship Services review. Every day in the job as Immigration Minister, one sees individual cases of people who are impacted by our policies and our rules. It is important that we reflect very closely on that and make sure that we have a review of our BICS system that provides the human face of the Home Office that both the Home Secretary and I are very keen to ensure is seen.
International students coming to this country are a vital source of our soft power because they are friendlily disposed to the United Kingdom after they have studied here and returned home. However, it is clearly important that those people can speak English before they arrive. What message is my right hon. Friend taking to the British Council and other institutions that work abroad to encourage young people to learn English before they come to this country so that they can satisfy the tests and fulfil their destiny?
It is really important that this is a matter not simply for the Home Office but for the Foreign Office and for Government Departments across the whole piece. We want to encourage foreign students to come here to study at our world-class institutions because we know that when they return home after a period of study they take fond memories with them and have a relationship with the UK that lasts throughout the rest of their lives. It is therefore important that we continue to work to promote our great universities. As part of that, there are a number of campaigns, including the GREAT campaign, which does fantastic work promoting the benefits of study in the UK. It is important that that should be a joint piece of work with the Home Office, the Foreign Office and the Department for Business, Energy and Industrial Strategy to make sure that we continue to promote the UK as a brilliant place to study.
I echo the very decent sentiments that have been expressed by Members in all parts of the House regarding our horror for the innocent students who are caught up in this trap. I have been here for two years and I am not an expert in home affairs, but there does seem to be a bit of a case history with the Home Office. We have had misfortunes and carelessness, and now we have this. Is now not the time for the Government to seriously consider taking responsibility for immigration, and all we are talking about today, and putting it into a separate Government Department where Ministers can concentrate solely on that?
It is important to reflect that this was a fraud perpetrated in 2014. It is not new. The Government responded then to a systematic fraud, took action and we have seen criminal convictions as a result. However, the hon. Gentleman has made an interesting suggestion about the future of the immigration directorate within the Home Office. Unfortunately, the Home Secretary left moments before he made that point, but I am certain that it will not be lost on him.
What happened to some members of the Windrush generation, through no fault of their own, was simply inexcusable, but at the root of these cases is a fraud that was conducted on a quite industrial scale. Is it not hugely insulting to members of the Windrush generation to try to draw a parallel between the two cases?
I certainly would not draw a parallel. This was criminal behaviour and there have been significant sentences imposed on those who were perpetrating the fraud. Indeed, there are ongoing criminal investigations whereby we may yet see more convictions. It is important that we take stock of this and that we reflect on the NAO report when it is published and made available to us. As I have said, the Home Secretary will come to the House and make a full statement when we have the NAO findings. He continues, and indeed I continue, to review this situation and work out what is the best way forward.
There is no doubt that we are concerned not about those who have committed crimes but about the innocent people who have been caught up in this. If the Government were so confident in ETS, they would not have stopped using ETS. In that context, what financial settlement was reached between the Home Office and ETS after its licence was revoked?
As I mentioned earlier, the licence was revoked in July 2014, and the Home Office moved swiftly to revoke that licence. Action was taken against ETS but, because of the commercial sensitivities, I am afraid I cannot divulge details. However, I will ascertain from Home Office lawyers whether I can write to the hon. Lady and let her have that information.
No one doubts that there was criminal behaviour and cheating, but it has been weeks since we were promised a decision by Ministers, months since we met the Home Secretary to outline concerns about people who had been wrongly implicated, and years during which these students have had their lives left in complete limbo, with them suffering mental ill health, financial hardship, family breakdown and a whole range of other detrimental consequences as a result of being accused of cheating—wrongly—by the British state. When will the Government finally get their act together? The longer this rolls on, and the longer people are caught up in expensive judicial action or lengthy, bureaucratic immigration appeals, the longer that is wasting their time, wasting their lives and wasting taxpayers’ money. Enough is enough.
I gently remind the hon. Gentleman that those who were found to have a questionable result following the ETS investigations were given the opportunity to take a second test to establish their ability to speak English, so they could have taken that option. He was quite aggressive in his questioning, but I must reiterate that I think it is right, and the Home Secretary thinks it is right, to wait for the outcome of the NAO report, which we expect next month.
Nobody is claiming that everybody is innocent. The Minister has quoted legal cases, and those who are guilty deserve everything that they get. However, the Home Office has also lost judgments in the courts. ETS evidence is quoted by the Minister, but that evidence has been challenged and undermined, and now we have a National Audit Office inquiry. Will the Minister confirm that she believes and accepts that there are some innocent students caught up in this mess?
It is important to note that there have been a number of legal cases where students have challenged the decision through judicial review and subsequent immigration appeals. Some of those cases have been upheld by the courts, but not in all instances was that because those people were not thought to have cheated in the test; it was actually because they had been in the UK for such a long time that they had an established article 8 human rights claim to be here, and the Home Office is taking a pragmatic approach to those cases. However, I am very conscious that we have legislation that requires there to be no in-country right of appeal under the student route, and these people were here under the student route. It is right that we wait for the NAO findings, that we reflect on those and that we find a way forward.
One of my constituents, who had been in the UK since 2005, was detained in Dungavel for 10 days because the Home Office claimed she had overstayed and had used deception in her TOEIC test. Neither of those things was true. The first tier tribunal found in her favour; the Home Office appealed, and the appeal was thrown out. It appealed to the upper tier tribunal, but the appeal was then withdrawn. My constituent has been fighting the Home Office for five years. Will the Minister apologise to her and let her and her three-year-old daughter get on with their lives?
Unfortunately, the hon. Lady has not provided any information, and I cannot comment on an individual case on the Floor of the House, but if she cares to write to me about the case, I will look at it.
I congratulate my right hon. Friend the Member for East Ham (Stephen Timms) on raising this issue and pursuing it so strongly. People’s lives have been put in limbo. Since 2014, my constituent Mr Muhammad Arsalan has not been able to work, study or get access to the NHS. That is not because he has been found guilty based on any evidence, but because he has been found guilty by association. If people have cheated, they should face the full force of the law. However, my constituent has not been able to appeal, because he is in country. Yes, he can now challenge on human rights grounds, but that takes time and money. Will the Minister therefore look at the suggestion from my right hon. Friend that, dependent on the outcome of the current investigation, she consider the idea of these people being allowed to sit another test to prove that they are competent in English?
As I have said, we are going to wait for the findings of the NAO. However, it is important to confirm that the Home Office is looking at a range of options as to how we can find a way forward from this situation. The Home Secretary has been pleased to meet a number of Members on this subject. It is a recurring subject of parliamentary questions and Westminster Hall debates. We are looking at it closely, and I hope we will find a way forward when we have had a chance to reflect on the NAO findings.
The Minister rightly talks about the importance of international students, but she will know that our market share fell from 12% in 2010 to 8% in 2016. We are falling behind competitor countries because of reputational damage, and that reputational damage has been added to by people being treated wrongly in this case. Will the Minister therefore tell the House what she will do to restore our reputation and to address some of the concerns about policy issues that have led international students to choose other countries over Britain?
It is important to reflect that overall numbers are up—indeed, they are up 10% in higher education institutions in the last year alone. Of course we want to make sure that the UK can still provide a good and attractive offer to students. I commend to the hon. Gentleman the White Paper published in December, which sets out some of the ways we plan to make that possible.
Yesterday, we had an urgent question about tuition fees for EU nationals post Brexit. Can the Minister confirm whether EU nationals will be required to sit the TOEIC test post Brexit?
I thank the hon. Lady for that question. At the current time, there have not been any policy decisions that I am aware of with regard to the English language test. However, it is important—and we have said very clearly in our White Paper—that we will have a single, global system for immigration, where people from all countries will be treated equally.
I am grateful to the right hon. Member for East Ham (Stephen Timms) for securing this question, and I welcome the NAO’s investigation into this issue. I have no doubt that there was systematic cheating, but I seriously doubt the scale—the ETS figures show that only 3.5% of the people who sat the test did not cheat, which seems incredible. What assessment has been made of the number of people whose visas were revoked who are still in the UK, and what would the cost be of allowing them to sit a new English test?
I made the point earlier that evidence of ability to speak English now does not provide evidence of ability to speak English back in 2014. What the courts have consistently found is that the evidence we had in 2014 was sufficient to make accusations of fraud. This was wide scale, and we saw enormous numbers of proxy tests being taken on behalf of individuals for a wide variety of reasons. The Government acted swiftly to clamp down on bogus colleges and to revoke the licence of ETS. However, it is important that we reflect on the situation of those who remain in this country and, as I have said, the Home Office has taken a pragmatic approach when looking at the article 8 claims of individuals who have been caught up in the TOEIC issue.
Social Media and Health
I would like to update the House on yesterday's social media summit and the progress we have made on tackling online harms to health. We called this summit to bring together the principal social media companies, including Facebook, Instagram, Twitter, Pinterest, Google and others, as well as the Samaritans and the eating disorder charity Beat. It was the second such meeting I have held, along with the Education Secretary and the Minister for suicide prevention, on how we can protect people—particularly children—from online content that promotes eating disorders and self-harm and suicide, as well as on how we address the growing problem of anti-vaccination misinformation.
Social media companies have a duty of care to people on their sites. Just because they are global, it does not mean that they can be irresponsible. We have been resolute that we will act to keep the internet safe, especially for children, and I am grateful to the companies for their engagement.
We have all seen and heard about tragic cases of vulnerable children turning to self-harm and even taking their own lives after accessing graphic images online that promote and even encourage suicide and self-harm. In the same way, we know that online content on eating disorders can be extremely harmful to vulnerable children and young adults. I have met the parents of children, brought up in loving homes, who had no idea of the dangers that their child was being exposed to on their smart phone or tablet while they were supposed to be safe at home. We all know of parents whose children have been affected, and for all of us this is very close to home.
We must do everything we can to keep our children safe online, so I am pleased to inform the House that, as a result of yesterday’s summit, the leading global social media companies have agreed to work with experts from the Samaritans to speed up the identification and removal of suicide and self-harm content, and to create greater protections online. They will not only financially support the Samaritans to do the work; crucially, suicide-prevention experts from the Samaritans will determine what content is harmful and dangerous, and the social media platforms committed to either removing it or preventing others from seeing it, and to helping vulnerable people get the positive support they need.
The mainstream media already have well-established codes of practice and training for removing material that promotes suicide and self-harm. In my experience, the British media act with great responsibility on the matter, and it is time that social media companies did the same. This partnership marks, for the first time globally, a collective commitment to act, to build knowledge through research and insights, and to implement real changes that ultimately will save lives.
The social media companies also gave us an update on the actions they have already taken. Following the first summit in February, Instagram now has a policy globally of removing all graphic self-harm imagery, and other sites have also taken action, but there is much more to do and more content to remove. Importantly, the commitments that the companies made at yesterday’s summit are what the Samaritans asked for, and they are a positive step forward. The progress that we have made so far shows that we can effect positive change, but I know that the House feels strongly that just because these companies are global does not mean that we as a House cannot determine society’s rules and expectations. On this we are prepared to act too.
My right hon. Friend the Home Secretary and my right hon. and learned Friend the Secretary of State for Digital, Culture, Media and Sport recently published the Online Harms White Paper, which sets out the proposed regulatory framework for addressing online harms. It sets out a new statutory duty of care to require companies to take more responsibility for the safety of their users and tackle harm caused by content or activity on their services. Compliance with this duty of care will be overseen and enforced by an independent regulator, which will be responsible for producing codes of practice that will explain what companies need to do to fulfil their duty, and the robust action they need to take to remove illegal or harmful content. The White Paper also proposes the sharing of information, research and best practice to improve the understanding of harmful content across the industry.
The summit also allowed us to discuss how we can work together to tackle another online danger: the spread of anti-vaccination misinformation. Since Edward Jenner’s discovery, vaccination has saved hundreds of millions of lives around the world. Few innovations have reduced human misery so much. After clean water, vaccination has prevented more deaths and disease than anything else in human history. The science is settled: vaccination saved lives. It protects not only our children but other vulnerable people who cannot do anything about it themselves. Failure to vaccinate puts their lives at risk. The rise of social media now makes it easier to spread lies about vaccination, so there is a special responsibility on social media companies to act.
Coverage for the measles, mumps and rubella vaccine in England decreased for the fourth year in a row last year, to 91%. There was a steep rise in confirmed measles cases last year, from 259 to 966. We forget that measles is a horrible disease. We have one of the most comprehensive vaccination programmes in Europe. The well-documented problems in America and on the continent are worse than here, but we are determined to get ahead of the problem, because failure to vaccinate has real and devastating consequences. Our action to promote vaccines is not limited to removing anti-vaccination misinformation online; we are promoting the objective facts about the importance of vaccination and increasing funding to primary care to improve access, and our prevention Green Paper will set out further actions.
Social media can be a great force for good and can help us promote positive messages, but it is the responsibility of us all to ensure that this new technology, with all its great potential and power, is moulded to the benefit of society. We will not duck this challenge. I commend this statement to the House.
I am grateful to the Secretary of State for advance sight of his statement. These social media platforms must be made to take responsibility for the harm caused by the dangerous fake news they host, because they are helping to fuel a public health crisis. He talks about the actions that platforms such as Instagram have taken since February, but I have just searched on Instagram and found images and videos of graphic self-harm; there are 8 million posts with the hashtag #suicide—from a quick glance, many are distressing—226,000 posts with the hashtag #killmyself, and 249,000 posts with the hashtag #selfinjury. I found similar pro-anorexia posts and the normalisation of eating disorders. I am sorry to have to share those examples with the House, but I think that we have to understand the scale of the challenge we face. As the father of two beautiful daughters, aged seven and five, I would be devastated if they saw such posts as they grow up.
Dangerous content should be blocked and taken down. I look forward to the Samaritans’ recommendations, so can the Secretary of State update us on the timescale? He talked about the Online Harms White Paper, but we need action immediately, so can he tell us when the proposed legislation will come before the House? When will the new regulator and duty of care be enforced? Can he guarantee that there will be criminal sentences for executives for serious breaches? In what circumstances would the maximum fine of 4% of global turnover be applied? If, God forbid, something similar to what happened to Molly Russell—I am sure that the whole House will want to praise her father for his brave campaigning—should happen to another child, what action would be taken against the social media companies?
I have also been able to find dangerous anti-vaccination propaganda on platforms such as Facebook, at a time when measles outbreaks are on the increase across Europe and the United States and in parts of the United Kingdom. Unvaccinated children are being turned away from schools in parts of Italy and banned from public areas in parts of New York. I would hate to see that happen here. UNICEF has warned that more than half a million children have missed their measles vaccination, which means the UK now has the third-worst ranking of all high-income countries. As the Secretary of State said, take-up of the MMR vaccine has now declined for the fourth year in a row, making coverage for the vaccine the lowest it has been since 2011-12.
I know that the Secretary of State said on the radio last week that he was considering banning unvaccinated children from schools in England, but we urgently need a clear vaccination action plan from the Government. This cannot be about penalising families. Yes, we need intervention with social media platforms when the legislation is in place, but while we wait for the legislation will he consider instructing Public Health England to launch an online social media campaign, on the platforms that are currently sharing anti-vaccination propaganda, to challenge those dangerous myths?
Will the Secretary of State also accept that our falling vaccination rates are not just about online activity? Public health services have been cut by £800 million. Our health visitors have been cut by 8% in recent years, and our school nurses by 24%. General practice has faced a funding squeeze, and GP numbers are down by 1,000 since 2015. At the same time, 2018-19 marks the first year that we have seen a reversal in the percentage of children receiving vital health check-ups on time since the measurement of these figures began: 14.5% of children are not receiving a six to eight-week review on time; 24% are not receiving a 12-month review on time; and the number of mothers over 28 weeks pregnant receiving their first face-to-face antenatal contact with a health visitor has fallen for the second year in a row. Will he therefore commit today to reversing public health cuts and restoring health visitor numbers, and will he invest in general practice so that we can meet the 95% national vaccination coverage rate, as recommended by the World Health Organisation? When does he expect us to meet that 95% rate?
Children are 20% of our population but 100% of our future. We must always put their health and wellbeing first. Yes, there has been some progress, but we need further action from the Government today.
I pay tribute to the hon. Gentleman, who has provided leadership on this agenda from his position as shadow Secretary of State. I am glad, listening to his response, that we agree very broadly on the direction we need to take. The agreement across the House is valuable in demonstrating to social media companies the clear consensus on the need for them to act, and to every parent in the land the importance of vaccination. That cross-party support is very, very valuable.
I join the hon. Gentleman in paying tribute to Ian Russell, the father of Molly Russell, whom the Under-Secretary of State for Health and Social Care, my hon. Friend the Member for Thurrock (Jackie Doyle-Price), the Minister for suicide prevention, met this morning. He has been brave and eloquent in bringing these issues to light. I pay tribute to him and thank him for how he has spoken about what needs to be done. I know he is as determined as we are to ensure that action translates into saving more lives.
We agreed, after the meeting yesterday, to reconvene in two months’ time, by which time I expect further action from the social media companies. As I said in my statement, we have already seen some progress. I am glad that some of the global algorithms and global terms and conditions have been changed as a result of action taken by the UK Government. It is very important that we keep the pace up. In two months’ time, we expect to see further action from the social media companies and progress by the Samaritans on being able to define more clearly the boundary between harmful and non-harmful content. In each area of removing harms online, the challenge is to create the right boundary in the appropriate place. It is the challenge when tackling terrorist and child abuse material online, so that social media companies do not have to define what is and is not socially acceptable, but we as society do. I am delighted that the Samaritans will formally play that role on material relating to suicide prevention and self-harm, and that Beat will do so on material relating to eating disorders.
The hon. Gentleman asked about the Online Harms White Paper. We are currently in the middle of a 12-week consultation. I hope he and everybody listening to this who has an interest will respond to it. We are clear that we will have a regulator, but we also genuinely want to consult widely. This is not really an issue of party politics, but of getting it right so that society decides on how we should govern the internet, rather than the big internet companies making those decisions for themselves. I have to say that the tone from the social media companies has changed in recent months and years, but they still need to do an awful lot. I look forward to working with him and others across the House to ensure we can deliver on this agenda.
I welcome the Secretary of State’s work on this issue. Will he comment on stand-alone posts, tweets or messages which on their own do not seem that intimidating or threatening, but which have a cumulative effect that is nothing short of bullying, harassment and intimidation that can cause mental health problems for many of our young people? Will he ask social media companies to not just look at single posts, but the cumulative effect of people trying to intimidate others?
Yes, my hon. Friend is absolutely right. In fact, the cumulative effect of posts on mental health, in particular eating disorders, came up in the discussion yesterday. We have to look at what the social media companies call the density of content—I think my hon. Friend put it rather better as the cumulative impact of lots of different posts. Social media companies’ algorithms are powerful enough to understand that and pick up on it. We need rules in place so that action can be taken when it is spotted by those algorithms.
I too welcome the statement, the two summits that have already been held and, in particular, the announcement of funding to Samaritans. However, the scale of the task is absolutely huge. The scale of the donation to Samaritans is actually quite small both by comparison with that and with the profits the companies make. They are expected to make profits of £50 billion just this year. It is important to talk about preventing the promotion of eating disorders, self-harm and suicide, and I welcome that approach.
As chair of the all-party group on vaccinations for all, I particularly welcome, in World Immunisation Week, the Secretary of State talking about anti-vaccination. As the shadow Secretary of State said, the drop in uptake is caused not just by online, but by complacency. People have forgotten that measles is a killer. It used to kill 2.5 million people a year across the world. We have seen an outbreak in Europe, where 82,000 cases have led to over 70 deaths. It is important that we tackle misinformation. It is also important that we make it easy for busy mothers to get their children vaccinated by having health visitors and district nurses who try to help. It is partly that that has allowed Scotland to keep the rate above 95%, but we, like everywhere else, are still seeing that rate drip down and fall by 0.5% or 1%.
On the Online Harms White Paper, I welcome the talk about a regulator. I hope it will actually be a regulator and that there will not be voluntary or self-regulation. I would like to know when it is actually going to happen. Like many other pieces of proposed legislation, it is still in the long grass and the situation is urgent.
The regulation of online harms will indeed be statutory. As I said, we are in the middle of a consultation on how, rather than whether, to put that in place. I am sure the hon. Lady will want to feed back, although I know her SNP colleagues in the Scottish Government in Edinburgh have been kept abreast of developments.
The hon. Lady raises complacency and financial resources. I will address both points. She is absolutely right that part of the problem is a complacency about some killer diseases, partly because we have hardly known them in this country for generations. As I said in my statement, measles is a horrible disease and a killer; it is deeply unpleasant. So, too, is rubella. Rubella might be hardly noticed by a pregnant woman. There might be a rash for three or four days which comes and goes, but the impact on the baby is permanent and very, very serious. On measles, rubella and other diseases, we have to be absolutely clear with the public about the consequences not only for their children but, even worse, for vulnerable children and adults who, maybe because they are immunosuppressed or very young, cannot have the vaccination. Their lives are directly threatened by a parent who chooses not to vaccinate. We need to be very clear and stark about that.
The hon. Lady mentions that the social media companies have contributed to Samaritans. That was Samaritan’s ask for this stage of putting together the organisation and experts it needs to provide clarity on the boundary of what is and is not acceptable in this space. I would, of course, be perfectly prepared to go and ask for more if more is needed. What is more, we are bringing forward a digital services tax. Historically, the global tax system has not worked well in taxing such companies fairly, because of the nature of how they make their money. We have worked for years to try to get a global consensus on how to tax them. We are now clear that we will bring forward the tax next year in the UK, regardless of whether we can get global consensus.
I applaud the Secretary of State for taking this initiative, and I certainly endorse the comments about the good of vaccination. However, I hope that the warm words of the social media company that he recounted are matched by actions, because I am afraid that that is not the experience of the Home Affairs Committee, which again saw a woeful performance from the Facebook, Twitter and YouTube representatives who appeared before us last week.
Is the Secretary of State aware that it is not only a question of taking down or not allowing content on which those companies are not doing their job properly, but of the algorithms that they used actively promoting more extreme versions of what people may be searching for, whether that is material on the extreme right wing, terrorism, radicalisation or self-harm? Is he convinced that those companies will actually put their considerable money where he thinks their mouths are and make sure that serious interventions are made to stop this stuff being promoted to some of our most vulnerable citizens?
My hon. Friend is a man after my own heart on this. Am I convinced? I am convinced that social media companies have committed to it, and it is our job to keep them to those commitments. That is why I have pushed for a long time for a statutory regulator in this space, and I am delighted that the Government are bringing one forward.
For years, we in the House asked social media companies to do something, and there was an argument that, because they are global, we cannot really impact how their algorithms work. That is just rubbish. We are the legislator for this country—we set the rules, and we have a big role in setting the norms and expectations of what happens here. Just because a platform is global does not mean that it can be outside the rule of law of this country, so we will legislate in this space, and there will be a regulator that will be able precisely to keep track of those commitments and make sure that they are followed up. Having said that, the last two meetings have been positive, and we have seen changes as a result. What we have not yet seen is all this content being removed, so there is clearly a long way to go.
I welcome the work that the Secretary of State is doing. However, following the question of the hon. Member for East Worthing and Shoreham (Tim Loughton), a fellow member of the Home Affairs Committee, surely it is time to do much more on these algorithms, which push people into more and more extreme behaviour? I heard from a mum whose daughter had suffered from an eating disorder who was still being targeted with dieting videos on Instagram. That material was not too extreme to remove, but it certainly should not have been targeted at her daughter. The mum could get nothing done about it.
Our Select Committee staff set up a new YouTube account and were searching for news or politics, but they were increasingly targeted by extreme far-right material promoted by YouTube. Those algorithms push people to extremes—for profit. Surely it is time for much greater transparency and accountability on the entire business model and the way that it promotes all sorts of problems?
The short answer is yes. My responsibilities as Health Secretary are to do with the impact on health, especially mental health, and eating disorders and self-harm are part of that. A separate but connected matter are anti-vaccination messages, which are a type of misinformation, or in some cases disinformation—actively false pushed information.
The social media companies say that they are removing this material from being promoted. For instance, graphic self-harm imagery will be taken down from Instagram. Our challenge is to make sure that that is done properly, because ultimately only if social media companies change their algorithms can we make this happen. That is why the new regulator is so important.
I welcome the Secretary of State’s initiative in this area and what he has told the House today. Through my work on the Digital, Culture, Media and Sport Committee, I have been utterly horrified looking at online content relating to bulimia and eating disorders, and to what I describe as extreme online misogyny. That relates to the algorithms that Members have mentioned. Does the Secretary of State agree that we need to see inside those companies’ black boxes? Unlike areas such as taxation, in which companies go to the easiest regime, if we set the bar high on online content, they have to comply and put their house in order.
I pay tribute to the work that the Digital, Culture, Media and Sport Committee has done in this area, both when I was Culture Secretary and since. Its work and the approach it has taken are groundbreaking, and that has played a part in the change in attitudes that we have seen from the social companies, which at least now accept that it is their responsibility, as well as the principle that they have a duty of care to people on their sites.
As my hon. Friend says, there is clearly an awful lot to do to get to where we need to be. If we step back from this whole question, the technology that has brought about social media companies is still relatively new; it is only 15 or 20 years old. Around the world, the way in which society has responded to it has not yet matured. The good social media companies now get the fact that they have such an impact on society that a regulatory framework is necessary, and in fact have welcomed the White Paper that we introduced as an approach that could be replicated around the world. My hon. Friend is quite right that, once one country or jurisdiction gets this right, it will be taken as a model elsewhere, so that, ultimately, the power of this amazing new way in which we communicate—by God, Mr Speaker, in this House we all use it—can be for the good, and we can mitigate all the downsides that come with it.
I, too, welcome the Secretary of State’s statement, but for too long internet companies have been too slow to protect children from the risks of suicide and other harms such as online hate and the threat of far-right and religious extremists and terrorists. He will be aware that, internationally, companies such as Facebook have fallen very short and were accused by the United Nations of playing a “determining role” in the genocide in Burma. This is a massive problem, and it is right that Britain should lead the way. Is he speaking to his counterparts in other Departments? Will he make sure that the legislation actually ensures that companies are responsible for content, as well as ensuring that there are strong, large fines if they continue to fail?
We have proposed fines as called for by the hon. Lady, and of course this is a cross-Government effort. My responsibilities are the health impacts, but technology has an impact right across the board, including on the quality of debate in our democracy, which is a Cabinet Office issue, and with regard to terrorism content, which is a Home Office issue. The Department for Digital, Culture, Media and Sport leads across the board and the Prime Minister herself has led global debates on this. The hon. Lady is quite right to point out that there is a broad range of impacts, and we work together to tackle them.
The shadow Secretary of State referred to the proliferation of pro-anorexia content online. Is the Secretary of State aware that tech giant, Amazon, sells books under the category of “pro-ana”, which purports to show anorexia as a healthy lifestyle? Does he share my revulsion that those books are available online, and will he call on Amazon to take this content down immediately? Will he look at whether tech giants such as Amazon can be brought into the remit of the Online Harms White Paper?
I will absolutely look at the matter raised by my hon. Friend, as it is alarming and distressing to hear about it. Amazon sells physical goods for the most part and surely has a duty of care to those who buy them, in the same way that a shop has a responsibility for what it sells. My hon. Friend makes an important point, which I will follow up. I will write to her with more details.
I, too, welcome the statement by the Secretary of State, not least because I survived measles as a very small child and my family talked for a long time about how worrying and scary it was. On the other issue, as well as taking action against the social media companies, the long-term NHS plan talks about an increase in proportionate spending on child and adult mental health services. What will he do about that? What will the proportion be? I ask because it is crucial to fighting this problem.
The hon. Lady is absolutely right that there will be an increased spend on mental health services across England—a £2.3 billion increase. It is the fastest-growing area of spend in the long-term plan. We are investing £33.9 billion in the NHS in cash terms, and the fastest proportionate rise in spend is in mental health services. That is an important part of this, although there is an awful lot that the social media companies can do to reduce the demands on those services by reducing the negative impact on mental health. The whole House can agree that the hon. Lady being alive and here, having survived measles, is another reason why it is important to get this right. It would have been the House’s loss had the measles won.
The drop in vaccination rates is not only an annual problem but a cumulative problem, as more and more young people in society are not immunised against these childhood diseases. Can I urge my right hon. Friend not only to undertake a social media campaign to encourage parents and children to take up the vaccinations, but to target the messages so that people know where they can go to get them, how they can do it and the importance medically of doing so?
My hon. Friend is exactly right; in fact, that work is under way. I should have mentioned in response to the shadow Secretary of State that Public Health England has a targeted programme of positive information. We can use data and social media better to target messages at those who need them in exactly the way that he proposes. That work is in hand.
I welcome the Secretary of State’s statement and the consultation. I am grateful to my right hon. Friend the Secretary of State for Health and the suicide prevention Minister for taking part in the launch of my all-party parliamentary group report on new filters and the impact of social media on young people’s mental health. I am also grateful to the Secretary of State for agreeing to have a meeting with me next week to discuss the content of the report. One thing that is not in the consultation and which has not been mentioned today is the idea of a social media-health alliance bringing together social media companies and other groups—not just groups such as the Samaritans but young people’s groups and social work groups—that can formulate, collate and undertake more research into the impact of social media on young people. Would he consider this idea and even take a lead in forming it, as his Department does with gambling and other compulsive disorders?
I will certainly consider it and I look forward to talking to the hon. Gentleman about the idea more next week. Dialogue in this area is critical, but we should not only have dialogue; we also need concrete legislative action, but I am grateful for what he has said about the work that has been done. I am glad that he is also working in this area, and I look forward to discussing it with him more.
Three million of the four million videos taken down by YouTube in the last six months were identified and removed by artificial intelligence. What greater role does the Secretary of State see for technological development in helping to reduce online harm and keep people safe online?
Artificial intelligence clearly has a role in identifying material that needs to be removed in the same way that it is now being used to remove terrorist content. We are talking to companies that may be able to do this, but we also need to identify what material should be taken down and what should be left up. Defining that boundary is critical to training artificial intelligence to do its job, hence the importance of the decision to ask the Samaritans to do the work of identifying the boundary so that we can train artificial intelligence to identify what needs to be taken down.
I call Alison Thewliss.
Thank you, Mr Speaker. My tactic of wearing a dress so big I can hide a colleague behind it is working.
Will the Secretary of State look at the harm that celebrity endorsements on social media can do to young people? The Empowered Woman project in Scotland highlighted how Marnie Simpson of “Geordie Shore” had been plugging Thermosyn diet pills, which are marketed as “skinny caffeine”. When I asked the Secretary of State for Digital, Culture, Media and Sport about that, he said that the UK Government were looking at
“user-generated content, not necessarily commercial activities”—[Official Report, 8 April 2019; Vol. 658, c. 73.]
Celebrity endorsement veers into the commercial area, however, and has a very significant effect on young people in terms of body image and eating disorders.
My colleague the suicide prevention Minister is looking at this area, particularly endorsements of cosmetics, and I am sure she would be very happy to talk to the hon. Lady.
My generation growing up might have feared bullying in the playground, but largely home was a refuge and place of safety. The problem for the current generation is that they can find themselves being bullied 24/7 because of social media. It is little wonder that when I contacted Twitter after seeing some rather libellous material it told me that in its view it was not abusive, even though it was against the law in this country. Does the Secretary of State agree that until social media companies understand that they have to operate under the norms and laws of this country, and not just abide by Californian norms, they will never reform?
My hon. Friend puts it exactly right. That is what the duty of care is all about. The argument—we hear it less and less, to be honest—that these are international companies and so will abide by somebody else’s laws, thanks very much, is wrong and out of date, as the Online Harms White Paper makes clear. We must establish a proper enforcement mechanism to ensure that it is the rules that this House sets—occasionally amended by the other place—that define the law of the land and that we do not have a wild west. This action to protect people’s health is just one part of the response needed to make the internet safe, especially for children.
Thank you for calling me so early, Mr Speaker. [Interruption.] It couldn’t be any worse.
My son contracted measles one month before he was due to receive his MMR vaccine because of a dip in numbers being vaccinated, so I very much welcome the Secretary of State’s statement about tackling anti-vaccination posts on social media. Last year, the Select Committee on Science and Technology carried out an inquiry into the impact of social media on young people’s health, and one of the statistics presented to us was quite disturbing: 50% of young people between the ages of 11 and 16 had seen pornographic images, and many of them had stumbled across them. When I spoke to my 11-year-old daughter, she confirmed that she had seen images that upset her but had been too scared to speak to me about it. What is the Secretary of State doing to alert parents to the dangers of social media and to give them guidance on how to speak to their children and identify when they might have seen things online that have upset them?
Mr Speaker, that question was so good it is only a pity it was not asked earlier in our exchanges.
I want to address two important points. First, the hon. Lady’s son is a case in point of how, if parents do not vaccinate, they endanger not only their own children but other people’s. It is because of a failure to vaccinate that these diseases still exist, and it is children who are too young to be vaccinated who are at risk. She has made the case more powerfully than anybody for the importance of vaccinating and keeping vaccination rates up, and I am grateful to her for sharing that personal experience. On the second point, she is quite right that we all have a responsibility to act, and act we will.
It is a privilege to have the last word.
The whole House is concerned about the effect that the internet can have on young people’s mental health, and I welcome the action that the Secretary of State is taking. Is there truth and accuracy in the reports that Wikipedia did not attend yesterday’s summit? If so, does he share my disappointment, and does he feel that Wikipedia must take this issue seriously and engage with it?
Unfortunately, those reports are true. I share my hon. Friend’s disappointment that Wikipedia did not attend either of the two summits, despite having been invited. At yesterday’s summit, we agreed that we would get in touch with Wikipedia in robust terms, because it is not acceptable for it to shirk its social responsibilities either.
If I may say so, I think that the statement and the responses to it have shown that there is unanimity in the House. Every speaker has mentioned the need to tackle anti-vaccination misinformation and the social media organisations’ responsibility and duty of care in relation to the health—mental and otherwise—of people on their platforms. The House speaks with one voice, and the social media companies, and the internet companies that have not yet engaged should listen.
Point of Order
On a point of order, Mr Speaker. In 2017, the Department for Work and Pensions changed the wording of the ESA65B letters to GPs, wrongly informing them that they no longer needed to provide fit notes for ill and disabled patients who had been found to be “fit for work”. On 18 March this year, in response to an oral question from me, the Secretary of State for Work and Pensions said that the letter had been
“cleared by both the British Medical Association and the Royal College of General Practitioners.”—[Official Report, 18 March 2019; Vol. 656, c. 769.]
However, letters published yesterday by the BMA and the RCGP state that they do not have the authority to clear, approve or otherwise sign off DWP policies.
The “Ministerial Code” clearly states:
“It is of paramount importance that Ministers give accurate and truthful information to Parliament, correcting any inadvertent error at the earliest opportunity.”
I have written to the Secretary of State urging her to come to the House and correct the record. I seek your advice and guidance, Mr Speaker, on how to ensure that that is done promptly.
I am grateful to the hon. Lady for her point of order, and for her courtesy in giving me notice of her intention to raise it.
I have received no indication from the Secretary of State for Work and Pensions of an intention to come to the House to say anything about this matter. It is, of course, incumbent on each and every Member to take responsibility for words spoken in the Chamber—that is to say, for their accuracy. In the event that the Secretary of State feels that it is necessary to correct the record, I expect that will happen. Meanwhile, because I cannot be the arbiter of whether such a correction is required, all I can say is that the hon. Lady has made her point with force and alacrity, and it will have been heard by those on the Treasury Bench.
Climate Change (Net Zero UK Carbon Account)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to require that the net UK carbon account by the year 2050 is zero.
This Bill would create a legal obligation, the first in any G20 country, for the UK to reach net zero carbon emissions by 2050. Let me be clear: the Bill is radical, and necessarily and unapologetically so. The circumstances of climate change are so serious that nothing less will do. Importantly, however, its central target is achievable.
Climate change is not some future, theoretical possibility; it is a present, practical reality. The five warmest years in recorded history have been since 2010. Here in the UK, Easter Monday was the hottest on record. In January, Australia experienced its warmest month ever, causing power outages after fuses overheated. Glaciers are retreating almost everywhere in the world, from the Alps to the Himalayas. The Ross ice shelf in Antarctica, which covers an area about the size of France, is melting 10 times faster than expected, according to Cambridge University scientists. Last year, wildfires broke out as far north as the Arctic circle. Some Members have seen changes with their own eyes. During a debate earlier this year, the hon. Member for Manchester, Withington (Jeff Smith) spoke powerfully of going back to the great barrier reef after 25 years to find magnificent corals bleached and dead.
We can choose to dismiss these events as a coincidence, ignoring the fact that they have taken place alongside soaring levels of greenhouse gases. We can choose the comforting observation that the Earth’s climate has shifted in the past, ignoring the fact that those shifts have tended to happen slowly, over hundreds of thousands of years. Alternatively, we can listen to the overwhelming majority of climate science—to all intents and purposes, a scientific consensus. The conclusions are clear: evidence of humankind’s influence on the climate is compelling and established beyond all reasonable doubt. We therefore need to act.
Although the Bill seeks a new radicalism in the way in which this issue is tackled, it is only right to recognise that it would not be proceeding from a standing start. The United Kingdom has a strong record of global leadership in this regard. That includes the moment when a British Prime Minister and trained scientist, Margaret Thatcher, went to the United Nations and, unequivocally, made a link between human behaviour and environmental harm. She said:
“It is mankind and his activities which are changing the environment of our planet in damaging and dangerous ways.”
She did not retreat behind the convenient excuse that the UK is responsible for only a small fraction of world emissions—about 1%. That would be weak and evasive, and it is not the British way; nor, in fairness, was it the British way under a Labour Government. In 2008, the then Government introduced the Bill that became the world-leading Climate Change Act, which enshrined in law a commitment to reduce carbon emissions by 80% from 1990 levels. That Bill was passed by a huge cross-party majority, with only a handful of objections.
Indeed, since 1990, we have cut our emissions by a full 42% while our economy has grown by two thirds, which means that, on a per capita basis, we have reduced emissions faster while also growing our economy more than any other G7 nation. That is not my verdict, but the verdict of PricewaterhouseCoopers. Last year, a record amount of UK power was generated from renewable sources, with more than 30% coming from renewables and more than 50% from low carbon sources overall. As the sun shone over the Easter weekend, the UK went for 90 hours and 45 minutes without generating any electricity from coal, smashing the previous record of 76 hours. Meanwhile, our country is making huge strides in protecting biodiversity through, for instance, marine conservation zones.
However, despite that strong track record, we know that we have to do so much more if we are to keep control of our climate. Although our current trajectory sets us on course for an 80% reduction in our emissions from 1990 levels by 2050, the science is now clear: if we continue to pump even that remaining 20% of greenhouse gases into the atmosphere, it is very likely that climate change will accelerate, and with it global temperatures. Indeed, if we stay on the same path, our children can expect to grow up in a world of surging sea levels, more insecure food supplies, degraded wildlife and destroyed coral reefs. We also risk the deeply alarming prospect of hitting climate tipping points—such as the melting of arctic permafrost and the subsequent release of huge stores of frozen greenhouse gases—which could cause us to lose control of our climate for good.
All this presents a heightened risk of conflict over scarce resources. My right hon. Friend the Member for West Dorset (Sir Oliver Letwin) has made the point that one of the biggest future risks to international security is the climate fence around Bangladesh and the possibility of rising waters forcing tens of millions of people up towards the border with Kolkata.
So why 2050? To answer that question, we must recall the Paris climate accord, under which Governments across the world committed themselves to keeping global warming
“well below 2 degrees Celsius above pre-industrial levels”,
and making efforts to limit it to 1.5°. However, the special report from the Intergovernmental Panel on Climate Change, published in October 2018, states that if there is to be a realistic chance of meeting the 1.5° target, global carbon dioxide emissions will need to reach net zero by about 2050, with net zero for all greenhouse gases reached in future years. The report warns that there are only a dozen years in which to take action. It also states that the impact of 2° warming versus 1.5° is profound. At 2°, more than twice as much wildlife faces a major shrinkage in range. At 2°, sea levels will be 10 cm higher. At 2°, the number of people exposed to water stress would be 50% higher than it would be if we kept to 1.5°.
If we are to apply the brakes on what could easily become the runaway train of climate change, we have to reduce emissions drastically, and do so as soon as feasibly possible. Our young people realise that, as I know from speaking to them in Cheltenham and beyond. Only last week, I met Balcarras students who have set up Sustain, a Young Enterprise team promoting environmental education. Their energy and sense of mission is inspiring and uplifting.
Although this Bill was conceived before the Extinction Rebellion protests, those demonstrations were a timely reminder of the growing democratic drumbeat across the generations for the new radicalism about which I have spoken. That has been reflected in this place, too. My hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) compiled a letter calling for net zero, which was signed by 191 right hon. and hon. Members.
Importantly, this Bill would create a framework for a project of national economic renewal that is credible and realistic, and one that can generate opportunities for future generations. Unrealistic targets create false hope. The Energy Transitions Commission is a coalition of business, finance and civil society leaders, chaired by the former financial regulator Lord Adair Turner, and its members are drawn from across the spectrum of energy-producing and using industries. In its impressive report, entitled “Mission Possible”, it indicates that it “strongly believes” that the objective of limiting global warming—ideally to 1.5°, and at the very least below 2°, by 2050—is achievable in developed economies, so it can be done, and I look forward to reading the conclusions from the Committee on Climate Change report on Thursday.
There is growing enthusiasm from business, too. Tesco and Unilever back the move to net zero. The National Farmers Union is advocating net zero for agriculture by 2040. Vattenfall and ArcelorMittal are building facilities to make emissions-free steel. In cement—a notoriously energy-hungry sector—experts believe that improved building design can reduce total demand by 34%. Hydrogen could potentially be used as a heat source in steel and chemicals production.
British ingenuity from Brunel to Dorothy Hodgkin has placed the UK at the cutting edge of technological advances in science and engineering. We have the talent and the vision, and we need the political will. There are those who say that not all the technology is there yet, and up to a point that is true, but it does not mean we should not start the project.
It is time for what some have referred to as “cathedral thinking”. When Sir Christopher Wren started St Paul’s, he did not have a definitive design for every last aspect, and the dome ended up being radically revised as improved building technology made a more ambitious design possible. We need to start the project, and then row in behind the target with an ambitious programme of policies on issues ranging from house building standards to transport, agriculture and planting more broad-leaved trees. In due course, the rest of the world will need this technology. Ours can be the country to develop it, perfect it and sell it. This shows the real power of net zero—not just a project of moral necessity, but one of economic renewal, too.
Of course, we cannot do this alone—that is why the UK is bidding to host the vital UN climate change conference in 2020, so that we can leverage our climate leadership—nor will this be easy, but there is the great prize of a healthy planet, teeming with life and echoing to the sounds of rich and vibrant biodiversity; the prize of a society united in a common purpose of preserving our environment and holding back climate change; and the prize of an economy at the cutting edge of scientific and manufacturing technology. Let us go for net zero.
I think it is important that an alternative point of view should be expressed in this short debate, and that is what I intend to do.
I was one of the Members of this House who voted against the 2008 Climate Change Bill on Third Reading, and I have no regrets whatsoever about having done so. Indeed, the line that those of us who voted against that Bill took has been endorsed in a very important report, issued last year to coincide with the 10th anniversary of the Climate Change Act 2008, in which it was described by Rupert Darwall as
“History’s most expensive virtue signal”.
That was obviously an expensive virtue signal, but what my hon. Friend the Member for Cheltenham (Alex Chalk) is proposing would be an even more expensive and extravagant virtue signal. [Interruption.] It would be well to remind my hon. Friends—some of them are right honourable—of somebody whom I think they held in high esteem. In 2011, the former Member for Tatton the right hon. George Osborne told the Conservative party conference:
“We’re not going to save the planet by putting our country out of business. So let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.”
At the 2017 election, many of my right hon. and hon. Friends were elected, as I was, on the basis of a Conservative party manifesto that promised there would be an inquiry into energy costs. Soon after the election, that inquiry was set up under the auspices of the Government, and the inquiry—the cost of energy review—was carried out by the distinguished Oxford energy economist Dieter Helm. I find it extraordinary that my hon. Friend made no reference whatsoever in his introductory remarks to the contents of the Helm report, let alone to its conclusions.
Dieter Helm supports, as I do, the objective of cutting greenhouse gas emissions, but his overall verdict is one of the most damning to be found in any official report on any Government policy in any field. He concluded that continuing with current policy would perpetuate the crisis mentality of energy sector crises, which, he says, are likely to worsen. The report states that this is
“challenging the security of supply, undermining the transition to electric transport, and weakening the delivery of the carbon budgets. It will continue the unnecessary high costs of the British energy system, and as a result perpetuate fuel poverty, weaken industrial competitiveness, and undermine public support for decarbonisation.”
It is extraordinary that although the Government commissioned that report, they have in effect never responded to Professor Helm’s conclusions. It is almost as though there is a collective state of denial about all this. That is why I think it important, before we engage in any more expenditure on virtue signalling, to pause for a moment and think about the need to carry out proper cost-benefit analyses before we implement changes in legislation.
Nothing my hon. Friend said in his opening remarks spelled out the specific benefits that will accrue to people in the United Kingdom, as against elsewhere, as a result of this extraordinary act of self-indulgence, whereby we will unilaterally condemn our economy to problems that no other economy is prepared to suffer. He has not set out at all where the benefits will come from, so we have had neither the costs nor the benefits set out. That is exactly one of the problems there was with the climate change legislation in 2008.
I recognise that I may be in a minority in this House in articulating this view, as indeed I was in 2008, when a number of us voted against the primary legislation, but however emotionally charged this issue is, I do not believe we should ignore our responsibility as legislators to look in a hard-headed way at the costs and benefits that will accrue to our country. I am not going to seek to divide the House on this issue today, because—[Interruption.]
Order. It is very discourteous for Members to witter away from a sedentary position when another point of view is being expressed. The hon. Gentleman might not wish to test the will of the House, but if he wished to do so he would be at liberty so to do. He is entitled to make his speech and to be treated with courtesy by everybody, so those who are not behaving with courtesy ought to reconsider their behaviour.
I am grateful to you for that intervention, Mr Speaker. I am sure that none of my colleagues needs to be given lessons in how to conduct themselves in this Chamber, because I know that at heart they are all very polite people, but sometimes their emotions get the better of them. I fear that that is what has been happening today.
The reason that I will not seek to divide the House today is that, as a matter of principle, I believe that anybody who wishes to bring in a private Member’s Bill should be free so to do. They should not expect that Bill to go through on the nod when presented to the House, but I see no reason why we should not allow people to bring in private Members’ Bills, and that is what the motion seeks to do. My hon. Friend the Member for Cheltenham seeks the leave of the House to bring in his Bill, and I certainly do not wish to deny him that right.
While I am speaking, I should like to remind the Government of something. Perhaps this is going to be a Parliament of only one Session, which could go on for two, three, four or five years, but let us remember that during each Session of Parliament, a proportionate number of days should be given over to private Members’ Bills. By extending this Session, seemingly indefinitely, the Government should be under a duty to provide more days on which we can debate the sort of measures that my hon. Friend has brought before the House today. As things stand, his Bill will not be able to be debated in this Session because no other days have been set down for private Members’ business.
Question put and agreed to.
That Alex Chalk, supported by Zac Goldsmith, Rebecca Pow, Mr Simon Clarke, Richard Benyon, Vicky Ford, Kevin Hollinrake, Sarah Newton, Paul Masterton, Jenny Chapman, Helen Goodman and Tonia Antoniazzi present the Bill.
Alex Chalk accordingly presented the Bill.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 384).
National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill
I beg to move, That the Bill be now read a Second time.
This is a small and narrowly drawn, but nonetheless important, Bill. It aims to provide a welcome simplification of the tax treatment of termination awards and sporting testimonials. The corresponding rules determining the income tax treatment of termination awards and sporting testimonials were legislated for in the Finance Acts of 2016 and 2017. At that time, it was made clear that we would return and replicate those rules in national insurance legislation in due course, to ensure that there was not a persistent misalignment. Implementation of the measures in this Bill will replicate those rules in national insurance legislation. By the nature of national insurance, it is required to have a separate piece of legislation from the Finance Bill.
These measures were first announced at Budget 2015. They were then consulted on and published in draft in December 2016. They were subsequently reconfirmed at Budget 2018, so it is reasonable to say that they are expected by those affected and have been subject to much scrutiny. Together, they mean that a 13.8% class 1A employer national insurance charge will be applied to income derived from termination awards and sporting testimonials that are already subject to income tax.
Let me first set out the measure that covers termination awards. Between 2013 and 2014, the Office of Tax Simplification reviewed the tax treatment of employee benefits and expenses. The OTS published an interim report in August 2013 identifying termination awards as one of a number of priority areas. It found that relatively few employers and employees properly understood the regime. There was confusion, and the regime was therefore ripe for reform and simplification.
The OTS specifically identified three areas of misunderstanding on which it recommended we take action. First, certain forms of termination awards are exempt from employee and employer national insurance contributions and the first £30,000 is free from income tax. However, there is a common misconception that the first £30,000 of any termination payment is automatically tax free. Secondly, many employers believe that this exemption applies where in fact it does not, and thirdly, employers are unaware of the different income tax and national insurance treatment of termination payments.
Following the OTS recommendations, the Government announced at Budget 2016 that they would be reforming the tax and national insurance treatment of termination awards. As I said, the reforms to the income tax treatment of termination awards were legislated for in the Finance (No. 2) Act 2017 and took effect from April 2018. The Government confirmed at Budget 2018 that the associated reforms to national insurance legislation would be in place for April 2020. However, the fact that termination awards are currently subject to different income tax and national insurance treatment has created confusion, and that is what we are attempting to deal with today. Moreover, the current misalignment incentivises an admittedly small number of well-advised employers to disguise final payments as compensatory termination awards that benefit from a national insurance charge exemption. These reforms will close that loophole.
The Bill will place a 13.8% class 1A employer national insurance charge on income derived from termination awards on amounts over £30,000. However, I want to assure hon. Members that, when it comes to employee national insurance, these payments will remain entirely exempt. We have chosen to continue to ensure that employees will not face any additional liability as a result of these changes in terms of employee national insurance. This measure will raise around £200 million per annum for the Exchequer, which will make an important contribution to our public services. As this is a Budget measure, this sum has already been reflected by the Office for Budget Responsibility in its projection for the public finances.
Let me turn to the second measure in the Bill, which deals with aligning the employer class 1A national insurance treatment of income from sporting testimonials with the income tax treatment. As many hon. Members will be aware, a sporting testimonial is a one-off event—or series of related events—held on behalf of sportspeople who have played for a certain club for a long time. This often takes the form of an exhibition match involving famous players from the past and present. The testimonial can be used to raise money for the sportsperson before retirement, or sometimes to raise money for charity. The relevant income tax changes were debated and came into force from April 2017. As stated at the time of the Finance Bill—later the Finance Act 2016—the rules governing sporting testimonials are now changing to give clarity to the national insurance treatment as well.
Currently, when a sporting testimonial is non-contractual or non-customary, it can be organised by a third party, rather than the club or employer, to raise money without it being subject to NICs. Where the employer arranges the testimonial, or if it is part of the contract, or if there was an expectation that the sportsperson would be entitled to one, the testimonial is already subject to income tax and NICs.
Is there a sense of how common it is for a testimonial to be contractual? We all know that it is commonplace in cricket and football for players to have testimonials or similar events, so one assumes that most of them are contractual.
My hon. Friend makes a good point, and our analysis is the same. Last year, only around 220 sporting testimonials of any kind took place in the United Kingdom, and a large number will have been contractual. Certainly, the highest-profile ones, such as those of premiership footballers or leading cricketers for significant county clubs, are usually contractual. As I will go on to say, because the measure has a one-off £100,000 threshold during the career of the sportsperson, a large number of those 220 testimonials will fall below the threshold. Less high-profile sportspeople, who will perhaps have lower earnings, are likely to be within the threshold. We are talking about a small number of relevant testimonials and, as hon. Members will see in the Bill’s accompanying documents, the measure will raise a negligible sum. Our motivation is primarily the simplification of the tax system and the avoidance of doubt for sportspeople and those advising them, rather than to increase revenue materially.
The Minister is making a clear point. I want to speak mainly for the cricketers of Somerset County cricket club, and I declare an interest here, because my husband, who is an auctioneer, has helped to raise money at many of their testimonials. A testimonial can make an important contribution to a player’s salary, especially those who have played for a long time. Will the Minister clarify that the legislation will clear up the situation, which does seem somewhat confusing? We do not want players to feel hard done by, but we have to take the right amount of tax and we must be fair. Will he also clarify that the proposals are fair and that players who may earn less will not be jeopardised?
Yes, and I must also declare an interest as a member of Nottinghamshire County cricket club. We have given the matter a great deal of thought. The proposal was raised several years ago, as I said, and we consulted at that time with the sporting bodies, including the England and Wales Cricket Board. It was my right hon. Friend the Member for South West Hertfordshire (Mr Gauke), then the Financial Secretary to the Treasury, who discussed the matter with the cricketing bodies. When the proposal was first brought forward, the threshold was £50,000 but, having spoken with the sporting bodies, we made the decision to increase it to £100,000, making it significantly more generous and allaying some of the concerns that my hon. Friend the Member for Taunton Deane (Rebecca Pow) sets out.
Let us hear from Essex County cricket club.
I just wanted to declare an interest as a member of Essex County cricket club. I thank the Minister for supporting cricket.
That is not a problem as long as we do not forget the great county of Lancashire. [Laughter.]
Very good. I re-emphasise that not only is there a £100,000 threshold, but that this is about fairness. All sportspeople who have a contractual right to a testimonial, which is commonplace, will have been paying income tax and national insurance on the benefit from that for some time, so this measure merely provides a greater degree of certainty and fairness. Of course, some of the clubs organising such testimonials will be smaller, or they may involve testimonial committees, so providing them with the clearest possible advice will be helpful. It will also ensure that there is no doubt in their minds when doing a good thing that is in the interests of players who may be at the end of their careers or may have been injured prematurely.
From April 2020, non-contractual and non-customary testimonials arranged by third parties will now be subject to NICs above a £100,000 threshold. A third-party testimonial committee will be liable to pay the class 1A employer NICs charge on the amount raised above £100,000. These types of testimonials will not be subject to employee NICs to ensure that the sportsperson is not adversely affected. Again, as with the termination awards measure, we have chosen to act in relation to employer national insurance contributions, not employee contributions, so there remains a benefit to individuals in that respect.
I reassure hon. Members that the vast majority of sportspeople will be unaffected by the Bill because they will not exceed the £100,000 threshold. As I have said, Her Majesty’s Revenue and Customs estimates that only around 220 testimonials occur each year, most of which will remain unaffected as they either fall below the £100,000 level or are part of a previous contractual arrangement, which is commonplace in most sports.
Although the measure will bring in negligible revenue—we estimate less than £3 million a year—its value comes in the alignment and simplification of the tax and NICs treatment of sporting testimonials and clarity for those taking part in testimonials or those on sporting testimonial committees. Sporting bodies and other relevant stakeholders are expecting the changes, because our intention to make them has been known since at least 2015. As the changes required an NICs Bill, there has been a short delay, but that is what we are attempting to do today.
In conclusion, it may be a small and narrowly drawn Bill, but it is none the less important and includes two measures that simplify our tax code. Like many right hon. and hon. Members, I would like greater simplification of the tax system, but that journey must begin with single steps, and we are taking one of those today in simplifying the tax code in two significant respects that will have real-world consequences for individuals, who will benefit from a simpler system. The Bill will also raise a significant sum for public services and support our continued efforts to improve the public finances. It brings the national insurance and tax treatment of termination awards and sporting testimonials into closer alignment, and I commend it to the House.
The condensed national insurance Bill before us is a shadow of its former self. I would have liked to be able to say that I was bowled over or knocked for six by the Minister’s speech, but there were more own goals than anything else. It is far from the extensive Bill that was promised by the Chancellor’s predecessor at the 2016 Budget, which included the Conservative’s 2015 manifesto pledge to abolish class 2 national insurance contributions. Instead, that manifesto pledge, like many of the Government’s promises, has quietly been sent to the landfill, barely even being recycled in this five-clause Bill. As for scrutiny, we have not even been able to amend the last three or four Finance Bills, but I am pleased that we will have an evidence session in Committee. I will be grateful for small mercies because we may be able to tease matters out a little more.
The cannibalisation of the national insurance Bill, which has been driven by the Chancellor’s volte-face on a tax cut for 3 million self-employed workers, reflects once again why the Conservative party has long ceased to be the party of the self-employed in particular and business in general. To many observers this will be viewed as another missed opportunity—one of the many opportunities that this Government have missed—to seriously address the relationship between the growing levels of self-employment in the UK and the levels of taxation and national insurance contributions that are paid.
The rushed timetable of this Bill has shown, once again, the Government’s complete lack of respect for parliamentary convention and the procedures of this House. The Opposition were notified only last Wednesday of the Government’s intention to timetable the Bill’s Second Reading, with an updated version of the Bill published last Thursday. The Government do not know one day from the next, although they do try to live from one day to the next. They gave parliamentary colleagues just one sitting day to examine the content of the Bill before today’s debate. The Government might not take their legislative responsibilities seriously, but the Opposition do.
Of course this is nothing new. Members have become accustomed to the Government’s handling, or mishandling, of legislation. The Government are engulfed in chaos and infighting on Brexit, and The Times reported yesterday that their rushed introduction of this hollow, some may say vacant, Bill is a further desperate attempt by the Prime Minister to keep this zombie Parliament in session.
Unwilling to face the electorate and unable to bring her dead-in-the-water Brexit deal back to Parliament for the fourth time, the Prime Minister is attempting to pack parliamentary business in the hope of avoiding an early Queen’s Speech that would no doubt be opposed by the DUP and her own Back Benchers. This is a new embarrassing low for a Government who are all at sea. It is high time that the Prime Minister did the honourable thing and set a date for a general election and her departure. We have a kakistocracy dressed up as a Government.
The Bill is comprised of two key measures: the introduction of a new national insurance contributions charge for employers on the taxable element of termination payments above £30,000, as the Minister set out; and the introduction of a national insurance contributions charge on income from non-contractual sporting testimonials over £100,000.
The new class 1A employer NICs charge will be levied at 13.8%, if I understand it, and its introduction will align the NICs treatment of termination awards and income from non-contractual sporting testimonials. On the face of it, the Minister would have us believe that these changes are technical and benign. However, there is nothing technical about fundamental changes to the treatment of termination payments either for the employer paying them or for workers facing redundancy, who regard this final payment as an evaluation of the work they have done for their employer.
Termination payments, therefore, have both an emotional and a financial significance, and the amount awarded is often determined by painstaking and careful negotiations between managers and trade union representatives. A good employer might offer a generous termination payment to an employee as a sign that, even though they have had to make them redundant, it is not a judgment on the intrinsic worth of staff who are leaving.
However, a likely by-product of the Government’s proposed employer NICs charge is that it will incentivise employers to reduce the level of non-statutory termination payments to employees so that the overall level of non-statutory payments declines. This will diminish the level of termination payments available to workers who lose their job, while increasing the amount that the Government receive in NICs receipts.
The tax information and impact note for this measure goes to great lengths to clarify that this new charge will be limited to employers, and the Minister asserts that the Government have no plans to make further changes to the £30,000 statutory threshold, yet the Government’s own policy note states that this additional cost for employers will be reflected in lower wages.
The Office of Tax Simplification, which the Minister mentioned, noted in 2015 that imposing tax and national insurance contributions on all termination payments is
“likely to have a significant cost impact for some people, particularly those lower paid employees who may…often be the ones receiving smaller termination payments”.
Despite the clear impact that this measure will have on workers and employers alike, the original consultation noted that the Treasury had failed to undertake a distributional analysis of the impact of this new charge. With that in mind, will the Minister confirm whether, a few years on, that remains the case?
Similarly, the Chartered Institute of Taxation has raised concerns that the Bill does not set out how the new class 1A charge will be collected by HMRC, stating that it will instead be left to secondary legislation—more secondary legislation, the Government’s default position. The Treasury says it anticipates that the charges will arise and be paid in “real time,” rather than after the end of the tax year. However, tax experts note that this is a break from normal practice and will prove extremely cumbersome, requiring additional resources at a time when the Government are continuing their disastrous reorganisation of HMRC.
It is always a great pleasure and highlight to hear the hon. Gentleman talking about distributional analysis, but does he agree that, where we have what are effectively exceptional one-off payments that are hard to predict, it can be difficult to undertake such analysis? Sometimes we just have to be honest and accept that a measure is relatively minor. Although the money it raises is significant, we are unlikely to have the sort of data he is asking for.
It might be a minor measure, but the actual impact on individuals is potentially significant. I am interested in the impact it might have on individuals who lose their job, and not necessarily the capacity or otherwise of the Government to make an assessment of that. I focus my attention on those who may not get another job for a considerable period.
I now turn briefly to the second measure in the Bill, which seeks to introduce a similar NICs charge on non-contractual sporting testimonials for employed sportspersons. I look forward to leading the Government’s testimonial sooner rather than later.
Sporting testimonials have become a key part of our nation’s rich sporting history, presenting an opportunity for fans to pay tribute to sportspersons who are coming to the end of their playing career. I come from Liverpool, a city with a fantastic football team, Everton, and another football team, Tranmere Rovers. There is another team whose name I cannot remember; it has slipped my mind.
Under the Government’s proposal, the new class 1A employer NICs charge will apply after the first £100,000 and will make the controller of the sporting testimonial, usually an independent committee, liable to account for the charge where the employer is not organising the testimonial.
Although the Opposition recognise the logic of applying employer NICs to non-contractual sporting testimonials, where the money is going not directly to a sportsperson but, rather, to a testimonial committee, we are concerned that the majority of income from such testimonials comes from fans who make voluntary payments. If this measure is passed, there will be a clear inconsistency in the NICs treatment of voluntary donations or tips at sporting testimonials compared with the treatment of cash tips in the service sector, where the employer is not involved. That is something we will seek to address in Committee.
This condensed national insurance Bill is further evidence of the Government’s perpetual desire to shift the tax burden from the well-off to workers. Rather than tackling tax avoidance and raising taxes to ensure that the wealthy and large corporations pay their fair share, the Government are yet again introducing measures designed to raise additional revenue for the Exchequer from the termination payments of workers.
The introduction of a new employer NICs charge will inevitably lead to employers reducing non-statutory termination pay, leaving workers worse off when they have just faced the trauma of losing their job. To put it simply, this measure is unfair, cynical and disproportionate considering the scarring effect it will have on workers compared with the limited amount of revenue it will raise. We cannot support this, but we will look at it in more detail in Committee.
Before I start discussing the Bill, Mr Deputy Speaker, I hope you will not mind my saying that it is a pleasure to follow the hon. Member for Bootle (Peter Dowd), as always, but it is a particular pleasure to follow the brilliant speech made by my hon. Friend the Member for Cheltenham (Alex Chalk) about climate change and his Bill about the net zero UK carbon account. It was one of the finest speeches I have heard since entering this place. It was an inspiring speech on an incredibly important subject. Having said that, although I intervened on the hon. Gentleman to say that this was a minor matter, that does not mean it is unimportant. I meant that it was minor in terms of the revenue, albeit that its revenue is important and welcome. We should add that it has been baked into the Government’s accounts, so if anyone were to oppose it, they would have to suggest where £200 million a year of revenue was going to come from, as we would be spending this money on public services, from which we will all benefit.
Given the context of politics today, I would understand it if someone sitting in the Public Gallery or watching this debate elsewhere were to look at the title of this debate, “National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill”, and think to themselves, “With all that is going on in the country—with these Union Jack and European Union flags outside, and all the talk about European elections, local elections, Nigel Farage back out on the stump and so on—is this really what we should be debating?” I would say that this Bill is important because, in its own way, it is the future of taxation in this country. Members may think that that is an odd thing to say, but we are going to be seeing a lot more of this type of Bill on taxation: measures that deal with specifics. I would not necessarily say that it deals with avoidance, but it is certainly a tidying-up measure that brings in welcome revenue.
Contrary to what the hon. Gentleman said, the Bill has little noticeable impact. Why do I say that? Ever since the early 1990s—since the 1992 general election and the 1997 one—and for the time being perhaps, the days when one of the main parties would go into a general election promising to change one of the main rates of taxation have gone. When I was elected in 2015, the Government we served in had specific legislation saying that we would not increase the main rate of national insurance. I think it also said we would not raise the main rates of income tax and VAT. There was legislation about the aid budget. We then found out that we would not increase tax on the self-employed and we would not increase the main tax on the employed. In fact, we changed inheritance tax. You soon run out of anywhere left where you can change any substantive tax, which must have been a concern in the Treasury; you are left with those yet to come and the good, old-fashioned national credit card. Our party has tried to avoid using that as much as possible. If Labour were successful at the next election, I am not sure it would be quite so successful on that—I think the card would take something of a hit.
The reason we support these types of measures is not because we welcome tax increases per se. In the context where the Government have pledged not to increase main rates of tax—I am sure Labour would be the same, although perhaps not on corporation tax—and in a political climate of no parliamentary majority, it is difficult to pass those “more radical” tax changes. So we will see more and more of these types of changes. We may call them tidying-up exercises or tax simplification measures—we have had many similar measures called “anti-avoidance”—but the point is that in total they bring in a lot of revenue. We are talking about significant revenue—£200 million a year is significant. If we put that in the context of the police budget, we see that it is a significant sum, so it is important. I will certainly be supporting this measure. I do not know whether the Labour party will, because I was confused by the hon. Gentleman’s speech. Perhaps we will get some clarity later.
One thing we should be wary of is that the specific area of taxation we are changing and increasing here is employers’ national insurance. I declare an interest, as an employer. I am a controlling director of a small business and have been for many years. It is fair to say that there are pluses and minuses with using employers’ NI as a method of obtaining revenue for Her Majesty’s Treasury. On the upside—this is why I have sympathy with this measure—it is saying, “Here are a lot of similar activities and it just so happens that in some of them employers’ NI is not paid. It is in the other ones, so we are harmonising the situation.” That is perfectly fair and reasonable. We have seen this in other contexts, with the classic one being IR35; people, often knowingly and perhaps sometimes unknowingly—it is hard to say—have constructed their tax affairs in such a way that, in effect, they are not having to pay either some employees’ taxes or the costs that there would be for a traditional company paying employees of paying employers’ NI. It is important always to consider the application of employers’ NI because, if it is not applied fairly, it can offer a perverse incentive in the tax system and create strange behaviours.
My right hon. Friend the Chancellor has talked about people who became self-employed and were not genuinely self-employed—I cannot recall the precise phrase he used, but we all know what that means. It means that someone is setting up their tax affairs in such a way as to reduce the amount of taxation they pay, rather than doing so because they are a plumber who, by their very nature, is going to be self-employed.
I was a mortgage broker before I came to this place. My business expanded beyond that, I am pleased to say, but when I started out it was always interesting to receive applications from people who were using personal service companies. This was a real problem, and understandably so. They had the benefit of not paying the tax, but the downside was that it was hard to get a mortgage because they were not technically a permanent employee. The banks and building societies used to take the view that they should therefore have to show three years’ accounts, which was often difficult for a first-time buyer. I encountered this issue many years ago and it is a perennial one. It is an important issue we need to continue to look at, so it is important that we have this measure before us today, examining the application of employers’ NI.
When I served on the Select Committee on Work and Pensions, when I was first elected, we held an interesting evidence session on gig employees—self-employed people or workers, whichever way one describes them, in the gig economy. These are people whose position is ambiguous. The Matthew Taylor report identified these people: they work for one employer and have all the characteristics of an employee, but are technically, because of their tax situation, self-employed. They thus have less security than other workers and cost their employer less. Interestingly, when we held the evidence session, I asked four of the largest such companies, including Hermes and, as I recall it, Amazon, whether they would consider paying into a form of auto-enrolment for the self-employed, were Her Majesty’s Revenue and Customs able to set up auto-enrolment so that it could be applied for by the self-employed, particularly those who work for a single company, and they all said yes. I hope we will see progress on that. The point is that there has to be the fair application of employers’ NI, in order to avoid abuse of the system and, ultimately, those in employment, of whatever form, having less security, less entitlement to benefits and so on.
The point about sporting testimonials is timely. Cricket was mentioned, and I am sure you will be aware, as I am sure you will be there, Mr Deputy Speaker, that at 7 pm the England and Wales Cricket Board will be out in force on the Terrace to celebrate and mark the build-up to this year’s cricket world cup. I am sure you have had many invitations already. Others have declared an interest in that they are cricket supporters. I do not know whether that is an interest, but I am a supporter of Middlesex. I very much enjoy going to watch them and have done for many years, having been born in Edgware, in Middlesex. Those who spoken about this are absolutely right; testimonials are part of the fabric of cricket, football and so on. The key point to make, which has been mentioned but must be stressed, is that testimonials can be used to raise not just money for the Exchequer but considerable sums for charity. I believe Wayne Rooney’s testimonial raised £1.2 million, of which £1 million was donated to charity. In 2006, Alan Shearer raised £1.6 million in his testimonial, with most of it going to charity, as I understand it. Although there is a tax issue involved, we should recognise that these higher grossing testimonials, often involving fantastic sports stars and shown on television, are raising a lot for charity.
These testimonials are very important. A former Liverpool football player, Jamie Carragher, a Bootle lad, also had a testimonial and he put the best part of £1 million into his Jamie Carragher 23 Foundation. That is worth a mention.
I am grateful to the hon. Gentleman for mentioning the other Liverpool team, as it were. They seem to be doing quite well this season. It is a good and important point to make, because it sounds to me as though a relatively small number of sportspeople will have to pay a bit more tax in the coming years as a result of the Bill—there is a small number who do not have testimonials agreed contractually—but it is fair to have fairness.
Let me conclude on fairness. The hon. Member for Bootle and I have had one or two exchanges on Treasury matters over the years. He finished with quite a stirring wind-up, saying that with this Bill we were somehow supporting the rich—that classic old storyline that we were the party of failing to crack down on tax avoidance by the rich and were instead hitting the poorest. Well, what is the threshold in the Bill? It is £100,000.
What about redundancies?
The hon. Gentleman can correct me if I am wrong, but I believe the limit for testimonials is £100,000. [Interruption.] The hon. Gentleman mentions redundancy payments from a sedentary position; he can correct me if I am wrong again, but I do not think the Bill affects redundancy payments. It is about other, voluntary termination payments. On the subject of terminations, Mr Deputy Speaker, you will be delighted to hear that I shall now terminate my speech, but I will support this very good Bill.
Let me start by saying that I agree with almost everything that the Labour shadow Minister said. I will not make any cricket puns because I do not know anything about cricket—I will just stay out of that one—but I will make a point of mentioning that Aberdeen is obviously the greatest football team and should be mentioned first in any discussion of sporting prowess.
First, on the issues raised by the Labour shadow Minister about the Bill process, I share his concerns about the fact that we were told we would be getting the Bill before it had been introduced to this place. That is a real concern. Perhaps the Treasury drew the short straw again, and when the Government announced that they would have a Second Reading of a Bill but panicked because they could not work out which Second Reading it should be, they scrambled around and said to the Treasury, “You guys must have something”, and the poor Treasury Ministers were dragged here to present this Bill.
The serious point is that this is a highly technical Bill and we have had a very short time to look through it. I looked through the explanatory notes, as I am wont to do in these circumstances, but they do not talk about the amount of consultation that was done or the number of people who contributed to that consultation. I am aware that perhaps there are tax information and impact notes that do talk about the amount of consultation that was done, but it would have been useful to have that information in the explanatory notes so that we could be clear about how many individuals and organisations had come to the Treasury and said, “These are the good things and the bad things about the Bill.” That would have put us in a much more informed position, although I am sure we will get into the meat of that discussion in Committee.
On the intention behind the Bill, it was announced some time ago that there would be changes in this policy area and it has taken a while for the Bill to come through. Why has it come through now? If it has been intended for some time, why has it taken so long for the Bill to come before the House? Was it just that the Treasury drew the short straw, as I said, and had to bring a Bill to the House today and just had to find something? It would be useful to know something about the timing for the Bill, why it has come along now and what the logic behind that is.
I have a couple of questions on some of the specific things mentioned in the Bill. In introducing it, the Minister said that if there is a contractual obligation that there will be a testimonial, that will be treated differently, but also talked about cases in which there is an expectation that there will be a testimonial, which to me does not mean the same thing as a contractual obligation. I am not clear what the Treasury means by an expectation of a testimonial. Somebody could score a goal in every single club game they have ever played, but that does not mean they have a contractual testimonial obligation. I would expect, though, that that person would probably get a testimonial for being such a big part of their football club. Is that what is meant by “expectation”? If not, will the Treasury confirm exactly what is meant by that word in the Bill?
On the amounts for testimonials, the explanatory notes say:
“The new Class 1A liability does not affect individuals as it is to be paid by the controller of the sporting testimonial.”
That seems a bit disingenuous to me, because although it does not affect the individual’s liability, it does affect the amount of money they will get. Has the Treasury done any maths on how much less sporting individuals will get from their testimonials because this liability might have to be taken off before the money is handed over to them? It seems to me that, rather than being something quite removed, it will have a direct impact on individuals.
The Chartered Institute of Taxation got in touch with me with queries about some things in the Bill. On the £100,000 limit, the institute said:
“The intention is that the NICs rules will replicate this and only impose Class 1A NICs on the amount chargeable to income tax. We have reviewed the NICs Bill and it charges to Class 1A the amount that is ‘general earnings’. We assume this means the amount above £100,000…but it is not clear. The termination payments legislation refers specifically to the amount chargeable under the Income Tax (Earnings & Pensions) Act 2003. It is surprising that the same approach has not been adopted here.”
Why has the Treasury taken a different approach to the drafting of this legislation to that taken to the drafting of the termination payments legislation that was passed previously?
There is another question, about the definition of who is an employee and who is an employer. There have been various examples in the courts of people being treated as employers when they were actually employees. There is still a bit of obscurity about that when it comes to tax, which creates a lot of difficulty for people.
I absolutely agree with the hon. Gentleman’s point. When in a moment I talk about the termination awards for individuals, I will discuss that specific issue.
On termination awards for employees, the explanatory notes say:
“The new Class 1A liability does not affect individuals as it is paid by the employer.”
The reality is that, again, it does affect individuals, because they will receive less money. If the employer is going to give out a pot of £40,000, they will be giving some of that to the Exchequer, instead of to the individual as they currently would. The details show that the Exchequer expects to receive £210 million for 2023-24 as a result of the change; do Ministers expect individuals to receive £210 million less and that that money will go to the Exchequer instead, or do they expect employers magically to find some more money and to continue to pay employees who are leaving their organisation the same amount as before, while paying a slice to the Treasury as well? It would be useful to know how much less the Treasury expects individuals to receive as a result of the change, not just how much the Treasury expects to receive.
The NICs change is the only example of a class 1A charge on cash earnings that the Chartered Institute of Taxation could find. Why has the Treasury decided to take the route it has chosen? Class 1A contributions are normally paid in respect of things such as benefits in kind, rather than on cash earnings. The Bill seems to me to make a fairly fundamental change to how NICs are treated and to the different classes of NICs. It would be useful to know why the Treasury has decided to make this change. Is it part of some sort of long-term plan to use class 1A charges on cash in other circumstances? Or will they continue to be used mainly on benefits in kind?
It seems to me that it is a bit of an ad hoc change. Perhaps the Treasury is putting forward some grand plan, or perhaps it is just a small change. I have asked similar questions about the recent changes to the Financial Conduct Authority and the Bank of England. It seems that a lot of small ad hoc changes have been coming through with no blueprint for where the Treasury expects to be at the end of the process and what it expects the system to look like at that point. It would be useful to know more about that.
I would like to know about a few main things. On the £100,000 for sporting testimonials, is the Bill intended to operate in the way things operated under the previous legislation on sporting testimonials, but the language in the Bill is just unintentionally a bit woollier? On employees, we have that issue with the class 1A charge; does the Treasury intend to make further changes to class 1A contributions, or is this the last change it expects to make? We expect secondary legislation to come through as a result of the Bill, to tighten things up and make further changes in future, but when is that expected to come—in this Session, or quite close to the Bill’s implementation in 2020? If it is the latter and the secondary legislation does not come through in enough time, it might be difficult for employers to make sensible decisions.
It is always a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman). The two of us often seem to be in the Chamber at a similar time discussing tax issues.
These measures have been a long time in process. Back in the Budget of 2016, there was talk of a consultation on trying to align more closely national insurance with tax treatment. I note that, today, the Exchequer Secretary to the Treasury said that this is a form of simplification of the tax system. I might disabuse him of those thoughts by telling him to look more closely at the new rules regarding post-employment notice pay within payments in lieu of notice as part of termination payments. Far from being simple, it is actually rather complex.
As I said at the very start, these proposals have been making their way through this House in various forms. There were some delays because of the unexpected election in 2017, but they did find their way into a draft Bill in December 2016—the National Insurance Contributions Bill. Some proposed changes came through in the 2017 Budget, which included the scrapping of class 2 national insurance for the self-employed—currently £3 a week—and a corresponding increase in class 4 national insurance contributions for the self-employed. They were highlighted as fairly controversial at the time, but I did not share that view. I was quite supportive of the increase in class 4 national insurance because of the generosity, as I saw it, of the new state pension that came into play. That slight increase in the class 4 national insurance rate was, I felt, a fair quid pro quo for the quite substantial increase in the new state pension, but, for whatever reason, that measure was not taken through. I had some serious concerns about scrapping class 2 national insurance, and I will explain why.
The lowly paid self-employed person may not hit the threshold for class 4 national insurance contributions, which is, I believe, something above £8,500, but are more likely to have paid class 2 national insurance contributions and so would be ticking up a national insurance record into the future. Given that WASPI women have concerns about where they find themselves today, I was worried that this House and future Members of this House—I will probably be long, long gone—would face a raft of new people saying, “Where’s my pension. I have been self-employed all these years.” They would then be told, “Ah, but you didn’t pay any national insurance; you didn’t pay class 2, and you certainly weren’t earning class 4.” I was pleased to see that that idea disappeared and that we are back to what was the old system.
We have had this £30,000 threshold for tax-free redundancy payments—let me put it in easy terms—for quite some time. It could be argued that we have been at that level of £30,000 for too long. I did a bit of research before today and found that the last time that the £30,000 threshold was raised was with effect from 6 April 1988. It must have been considered to be the right rate at the time—it was an increase in rate from £25,000 to £30,000. I did not manage to find out when the £25,000 rate was first implemented, but it must have been deemed at the time to have been the right rate for what was a tax-free settlement, or payment, for years of service within a company. It was obviously deemed to be the right amount for people to adjust to a new work situation, or to act as a bridge towards retirement for people who were getting towards the end of their normal working life, which was perhaps more traditional in those days of the ’80s. I know the hon. Member for Bootle (Peter Dowd) raised some of those points in his speech.
Having consulted the Office for National Statistics for inflation increases since 6 April 1988, I found that £100 then is now worth £266 today. Applying that inflationary increase from 1988—no more, no less—that £30,000 would inflate to £79,800, or in broad terms £80,000. However, I do understand—for the record I am a member of the Chartered Institute of Taxation and a chartered accountant—that there is probably a perception that the £30,000 settlement payment has been a target to hit rather than a proper target for any other reasons. Hence we now have this fairly complicated formula for payments in lieu of notice. Changes came in on 6 April 2018, including this whole concept of post-employment notice pay. It was really to recognise the difference between contractual payments in lieu of notice and non-contractual payments in lieu of notice. I will not bore the House for too long with the formula that applies, but it is a fairly beefy one: it is basic pay multiplied by the number of days from the last day of employment, divided by the number of days in the last pay period, minus the amounts paid on termination—a formula given the letter T. Therefore, far from it being a tax simplification measure, the PILON rules have added quite a layer of complication to a figure of £30,000 that, in due course, should have been given adjustment for inflation in any effect.
We are now left with PILONs—new PILONs assessment of what they are actually worth—holiday pay, and any restrictive covenants being included within that £30,000 limit that is tax free and national insurance free. Above that, we have the normal rules of tax and—in complex speak—employers’ class 1A national insurance coming into play. What we are likely to see in terms of adjustment, in answer to the hon. Member for Aberdeen North, is an increase in employer contributions to pension schemes as part of a settlement on the way out, which is not any bad thing. There is nothing wrong with that.
We have a very powerful and strong message to tell about auto-enrolment. It must be the right thing for all employees now. We are now running into millions, and there will be a fund approaching tens, if not hundreds, of billions in due course, and that must be to the good, as people accumulate their own pension funds. We will look back at auto-enrolment and see it as one of the most successful and vital measures that any Government could have implemented. It is like any other measure. It sounds expensive—it means a percentage off salaries, which will always be unwelcome particularly in times of low inflation, and it means that people might see their take home salary go down—but there will be a lot of thanks from many employees in due course that these funds have been accumulated. If, in trying to circumvent, in an entirely legitimate way, paying the class 1A national insurance on these amounts—for normal employees over £30,000—employers provide more funding to a pension scheme, then that is something as a quid pro quo that the Treasury should actually support.
These measures should have come into play in April 2019. They were deferred last year for a further year, which is mentioned on page 42 of the official Red Book. Therefore, far from saying that these things have come out of the blue and have not been considered, they have been consulted upon since 2016. They nearly got somewhere, but were deferred for another year. Therefore, in terms of planning and getting that together, there is plenty of time for employers to make any due adjustment. I have really concentrated on part 1 of the Bill.
Let me turn to the sporting side of things and the £100,000 limit. There have been a lot of discussions on this subject, because we are talking about huge figures, especially when the very well-known sports stars have their testimonials. When there are millions of pounds involved, these people—who are already very wealthy—often decide to give all the money to charity, which is a laudable ambition. I suppose that the one downside of this type of legislation is that it is possible for the employer in such cases to suffer the national insurance on an amount that the recipient has never actually received because he or she has decided to put it through their tax return as a very generous donation to charity.
This subject brings out the debate about certain limits in our tax regime that have not been touched for a very long time. What was the purpose of the £30,000 threshold? There was a reason for it in 1988, but does it still apply in the modern employment market? Perhaps people do not work as long for the same employer now; that feature is probably slightly different today from how it might have been in 1988. What should the figure be? Does it deserve flexing up? We could have a similar debate across other bits of the tax code—perhaps including inheritance tax.
Lots of parts of the tax code have fallen behind inflation. They were originally there for a reason. Some were introduced when the Labour party were in government, but now that we are in government perhaps there is a debate to be had about what these things were for in the first place, as part of the tax simplification process. But if there is any fear or threat that there has been manipulation of the tax and NI system, it is right that these payments should be part of the normal weft and weave of what we are doing with national insurance. I therefore have no difficulty supporting the Bill, and I wish the Exchequer Secretary to the Treasury every success in its progress to the House.
It is a pleasure to follow the hon. Member for South Thanet (Craig Mackinlay), who always talks about these issues from a professional perspective, related to his work before he first entered this place. It was very interesting to hear his comments, and I will return to some of them as I set out the Opposition’s summary of our concerns about the Bill.
When the Minister was introducing these measures, he said that they were expected. As many Members have said, they most certainly were expected. In fact, they were introduced a lot later than we had anticipated, as the hon. Member for Aberdeen North (Kirsty Blackman) pointed out. In fact, the Government’s paperwork associated with the measures indicated that some revenue has been loss as a result of that late presentation. The hon. Member for South Suffolk (James Cartlidge) noted that the figures here were “baked in” to the Government’s accounts. Well, if he looks at the accompanying paperwork to these measures, he will see that it actually appears that those expectations have had to change given the late presentation of the Bill to the House. Of course, Labour would take very different decisions on taxation. We believe that the rates for the very best-off should be increased for the top 5%, that a different approach should be taken to corporation tax and, in particular, that we should not be focusing on trying to increase tax on those people who have, above all, lost their jobs—of course, that is part of the focus of this legislation.
I will, however, start by discussing the sporting testimonials element of the Bill. These measures would see NICs treatment of sporting testimonials charged to class 1A NICs, mirroring the tax liability. As has been mentioned, this would only apply to testimonial payments exceeding £100,000. Many members have already noted that the situation—I hesitate to say “playing field” because we have definitely had enough puns in this debate—has changed since these testimonials were introduced, when many players were not earning enough money adequately to save for their retirement. Particularly in football, which is the sport that I know best in this regard, players at the very top levels are earning more than enough throughout their lifetime not to have to rely on these testimonial payments for future revenue. It is therefore appropriate that clubs as employers, or the testimonial committees that would be providing the payments, look to make these national insurance contributions.
The public are rightly angry about the amount of tax avoidance that the wealthiest in this country engage in, but I am concerned that these measures do not come close to addressing systemic issues within football, particularly around taxation. As I understand it, as of January, HMRC was looking into the financial affairs of 173 players, 40 clubs and 38 agents. Now, I have little doubt that the Minister is itching to mention the case of Rangers football club when he responds to the debate—I am well aware of the case that was taken against Rangers—but I think we need to contrast what has occurred in our country with developments in Spain, for example, where firm action has been taken against the extremely well-paid players who sought to artificially avoid tax. We have not seen similar action taken here. For example, the problem around image rights companies was known about for quite a long time before action was firmly taken. It is an insult to the thousands of volunteers at clubs across the UK—who scrimp and save to ensure that the players are paid, the grounds and stands are properly maintained, and records are properly kept—to see some of those at the very top get away with sharp practices.
Ministers must be aware that testimonials are actually becoming less common as a means of ensuring financial security for players and that the funds from testimonials are very often donated to charity, as many hon. Members have mentioned. I would like some more detail from the Minister about the perceived impact of this legislation on funds being donated to charity. Yes, in some cases funds may pass straight to a charity, but in other situations they go to charity eventually—via a player. In fact, if one looks at the charities that have benefited from the most recent testimonials, many have been foundations associated with particular players. The Minister said that, of the previous 220 testimonials that have been examined in relation to coverage by such measures, most would not have been covered because the testimonial was contractual or because its value was less than £100,000, but he did not talk about testimonials where charitable donations were concerned. I am a little bit worried that this quite important source of funds for charities might not be getting the consideration it requires as part of the Bill. I hope that the Minister will reflect on that in his closing remarks or provide more detail in Committee.
I turn to the impact of the Bill on termination awards. The Bill would introduce a new 13.8% class 1A employer NICs charge to any part of a termination award that is already income tax liable. The Minister has stated his contention that abuse exists in this field, with the claim that some employers might be disguising final payments as termination payments. Again, we really need to see concrete evidence. We have probed on this issue in previous discussions of Finance Bills, but we have not been provided with evidence of abuse. Actually, from memory, consultations carried out in this area did not suggest that there was widespread evidence of abuse. Surely, we need that evidence before considering these measures in detail.
In fact, as my hon. Friend the Member for Bootle (Peter Dowd) explained very clearly, this measure on employers’ national insurance contributions on termination awards is likely to lead to employers being much less generous with non-statutory termination awards and to leave people worse off at a time when many of them are most vulnerable. That could have severe implications for the individuals concerned, but it could also have wider economic implications. I was interested to learn that around 30% of all small businesses founded in the UK in recent times have been started in response to redundancy, with many people only having the resources to pursue their entrepreneurial ambitions because of their termination award. It is necessary to think about those wider impacts.
The Government maintain—indeed, we heard it again this afternoon—that this measure does not affect individuals, as it is paid by the employer, but that surely is not the case. In fact, the Government themselves predict in the material presented alongside the Bill that the measure would reduce wages overall by 0.1% over the year 2020-21. It is crucial that the Government undertake more detailed consideration of the likely impact of this measure.
As has been discussed, this is not the first time that this Government have sought to narrow the scope of tax relief on redundancy and termination payments. In the 2017 Finance Bill, they removed any exemption for payments in lieu of notice from the tax-free scope of payments for injuries. As Members will remember, that was very concerning with regard to workers’ rights, which are one of the main aspects of compensation in discrimination cases. The Opposition rightly contested that change.
Again in the 2017 Finance Bill, the Treasury provided itself with the power to vary the tax-free amount for other termination payments. Trade unions raised their concerns about that measure, as they believed that if the Treasury further lowered the tax-free threshold, it would incentivise employers to lower non-statutory termination awards even further. Indeed, the TUC has suggested that the tax-free element should be increased rather than decreased. I was interested by the comments made by the hon. Member for South Thanet, who noted that the value of the £30,000 threshold has been eroded significantly over time and would be worth more than double the amount if it had kept pace with current prices.
The Opposition remain concerned that the Bill still includes the power to potentially vary the NICs threshold upwards or downwards without proper scrutiny in this place, and I hope the Minister will be able to rule that out today. I also hope he will return to this in legislative form, to make it crystal clear that the Government do not intend to reduce the threshold.
I note that the guidance published alongside the legislation emphasises that
“no statutory redundancy pay on its own will be affected”.
That implies that non-statutory redundancy pay could find itself affected, exactly as the Opposition have warned. Can we have a clear statement that we will not see, via secondary legislation, tax and NICs being applied to voluntary redundancy payments for individuals with two years, or more or less than two years, of continuous service?
The Minister will be aware that this kind of application of class 1A NICs to cash earnings is highly unusual, to put it mildly. That point has been underlined by the Chartered Institute of Taxation and was made eloquently by the hon. Member for Aberdeen North. This appears to be a set of rather ad hoc changes. The hon. Member for South Suffolk, in a wide-ranging and interesting speech, suggested that the Bill is part of a general push to simplify the tax landscape, particularly when it comes to the relationship between payment as an employee and other forms of payment. In reality, we have seen an increasing complication of that landscape. We have not seen an alignment between the tax treatment of individuals and their employment treatment. Instead, we see an increasing bricolage of measures to try to deal with the disjuncture, with what is happening around IR35 being a good example. One would hope that the Government will start to try to get a grip of this issue in a more determined and less ad hoc fashion in months to come—if, indeed, they have months to come.
There is one last administrative issue that I want to mention. We have had referred to us by experts in this area the fact that HMRC has suggested that the charge will arise and be paid in real time, rather than at the end of the tax year, as is the case with other class 1A charges. That seems to require a new process—again, additional complication—for submitting information through the pay-as-you-earn real-time information submission and for HMRC to have to adopt a different process for allocating the different elements of that payment. There are already many issues with it allocating real-time information payments into the wrong pots. This seems to suggest additional complication, and we need the Government to rethink this and consider an annual payment, rather than a real-time one. This change potentially comes at the same time as other significant forms of upheaval within the tax system, from making tax digital to preparations for Brexit.
As my hon. Friend the Member for Bootle stated very clearly at the end of his remarks, we will not oppose the Bill at this stage, but we hope that it will be possible to make some substantial changes in Committee, because they are very much needed, as has been reflected by the tenor of this debate.
I thank all right hon. and hon. Members for their contributions to this important debate, which is narrow in scope, as the Exchequer Secretary to the Treasury pointed out, but none the less important. There were a limited number of contributions, made up for, however, by their quality.
Let me bring us back to the essential element of what this Bill is all about, which is aligning the employer national insurance treatment in respect of termination awards in sporting testimonials to bring it into line with that of income tax. As a number of hon. Members pointed out, the rationale behind these measures is to bring in alignment and, with it, some elements of simplification. We should remind ourselves that, as we have heard, the genesis of this journey was back in 2013-14, with the report by the Office of Tax Simplification. Another rationale for these measures is to disincentivise any tendency towards the manipulation of payments as between earnings and termination payments on the tax side of things. There is, of course, additional revenue to the Exchequer of some £200 million per year as a consequence of these measures.
I turn now to some of the specific points that have been raised—first and foremost, by the hon. Member for Bootle (Peter Dowd). He told us some jokes about cricket that were not bad—well, by his standards, at least, they were passable. He managed to remember two of the three great football teams up in the Liverpool part of the country, proving conclusively, I have to say, that he knows far more about football than he does about economics and taxation. [Interruption.] Yes, cruel but fair. That was exemplified by his lamenting the fact that we did not abolish class 2 NICs. I was surprised to hear him say that, because he was at great pains, as he always is, to be the champion of the lower paid—as indeed are Conservative Members. The rationale for stepping back from that abolition, as he will know, is that it would have imposed a very significant burden on the very people he seeks to protect—the lower paid—by putting up the cost of the contributions that they would have to make in order to qualify for their state pension.
Curiously, the hon. Gentleman accused us, contrary to the assertions of the hon. Member for Oxford East (Anneliese Dodds), of having rushed the timetable for this legislation, despite the fact that its genesis was about five years ago. That is probably indicative of the speed at which a future Labour Government would get things done—five years is rushing it, in those terms. He also accused us of not taking the legislation seriously, but as he spoke there were precisely none of his hon. or right hon. Friends sitting on the Benches behind him.
My hon. Friend the Member for South Suffolk (James Cartlidge) gave a masterful performance in which he not only showed great in-depth knowledge of the issues at hand but understood the mentality and the challenges that we have as Ministers in the Treasury. It is indeed a restrictive environment where we do not want to put people’s taxes up, we make commitments not to do so, and we fight day in, day out to ensure that we stick to those pledges. But at the same time, we do of course have to raise revenue, as he described. He also cantered around the tax terrain, touching on IR35, auto-enrolment and various other aspects of tax. It was a very thoughtful contribution to the debate.
The hon. Member for Aberdeen North (Kirsty Blackman) specifically referenced the amount of consultation—or the lack of it, as she saw it—around the Bill. I should remind her that we have consulted on it twice. It was issued in draft in December 2016, and it was prefigured when we handled the income tax aspects of these issues in the 2016 and 2017 Finance Acts. Of course, the measures themselves were first mooted back in 2015, so we have been round the block with them.
The point I was making was not that there was necessarily a lack of consultation, but that we did not know how much consultation there had been, because the details are not in the explanatory notes, where they would often be. Normally, the explanatory notes will say a bit about the amount of consultation there has been, but they do not say anything at all. If that had been written down for us, and we had known how many consultation responses there had been, I would not have asked the question.
The Exchequer Secretary to the Treasury has just reminded me that there has been a lot of information out there—we have, not least, written to Members to explain the background to these measures.
As to the hon. Lady’s specific point, she has raised the quality of information memorandums with me before in a different context. I said on that occasion, and I will restate now, that I am happy to look at the point she has raised. While we may have disagreements over policy across the House, I think we all accept that it is important that the relevant information is clearly provided and in the right place, and I will certainly be happy to look at that issue.
The hon. Lady raised the issue of tax treatment where there is an expectation that a testimonial payment will be made. She understandably asked how we know whether such a payment should be seen as having an expectation attached to it. The answer is if that payment is customary. If someone is involved in a sports club of some sort, and there is a testimonial every year for a particular player or group of players, and that had been going on for some time, that would be a customary testimonial situation. In those circumstances, the tax treatment would follow accordingly.
The hon. Lady also raised a point about employer NICS at 13.8% being applied above the £30,000 threshold. She raised the prospect that some of that may be borne by the employee, because the employer would have a certain amount that they were looking at. She raised the question of what the balance was between who bears that cost and the £200 million per year received by the Exchequer. I very much doubt that that information is available, but if it is, I will certainly make sure that we provide it to her. That may be an issue she wishes to come back to in Committee.
My hon. Friend the Member for South Thanet (Craig Mackinlay) specifically majored on the threshold—the £30,000—and pointed out that it first came into effect in 1988. What I would say to him is that, in the case of Germany and the United States—certainly in the case of income tax—the threshold is effectively zero, so in terms of international comparisons, the figure of £30,000, while it is true that it has not increased by inflation since 1988, is none the less set at a reasonable and proportionate level. As a number of speakers have also pointed out, 80% of termination payments are below the £30,000 threshold in any event and would therefore not fall under this employers’ national insurance.