House of Lords
Tuesday, 6 May 2014.
Prayers—read by the Lord Bishop of Leicester.
Lord Cromwell took and subscribed the oath, and signed an undertaking to abide by the Code of Conduct, following the by-election under Standing Order 9.
Armed Forces Front-line Combat Roles: Women
To ask Her Majesty’s Government what steps the Ministry of Defence is taking to evaluate whether women should be allowed to serve in frontline combat roles in the infantry, prior to making a decision in 2018 in accordance with the European Union rules on reviewing that policy.
My Lords, first I am sure that the whole House will wish to join me in paying tribute to Captain Thomas Clarke of the Army Air Corps, Flight Lieutenant Rakesh Chauhan of Joint Helicopter Command RAF Odiham, Acting Warrant Officer Class 2 Spencer Faulkner of the Army Air Corps, Corporal James Walters of the Army Air Corps and Lance Corporal Oliver Thomas of the Intelligence Corps, who were killed while on operations in Afghanistan on 26 April. These tragic deaths remind us of the continued commitment and sacrifice of our Armed Forces, and I know that our deepest sympathies are with their families at this very difficult time.
Defence is required by EU law to conduct a review into the exclusion of females from ground close combat roles no later than 2018. This would include posts in the Naval Service, the RAF and the Army. While the nature, scope and timing of the review have not yet been determined, we are considering whether to bring it forward, recognising the need both to improve the diversity of the workforce across defence and to maintain operational effectiveness.
My Lords, will the Minister accept that the whole House will wish to be associated with his message of condolence to the families of those who have very sadly lost their lives?
I shall mention a past interest in this subject: 70 years ago my aunt was a pioneering woman who used to fly military aircraft to front-line aerodromes in the Second World War. If women have the inclination, aptitude, ability and strength required, is it not time for the Government to consider following the examples of such countries as Canada, Australia, France, Germany, Norway, Denmark, the Netherlands and, not least, the United States of America, all of which either have allowed women to take their place in combat roles on the front line or are in the process of doing so?
My noble friend is right, which is why we keep this subject very much under review. Women already serve on the front line with great distinction, and we will take into account the factors that my noble friend has mentioned, as well as other aspects, particularly the effect on unit cohesion. My noble friend mentioned other countries. That will be very relevant, although we need to be sure that the answer is right for our Armed Forces and the way they operate.
On this side, we also wish to express our sincere condolences to the families and friends of the five members of our Armed Forces who have recently lost their lives on operations. We are reducing the numerical strength of our Armed Forces in Afghanistan, but the dangers remain, and the enormity of the sacrifices which young service personnel continue to make on our behalf has been brought home to us all once again.
Women currently serve in theatre as engineers, intelligence officers, medics and fighter pilots. The ban on women serving on submarines has been lifted, and increasing numbers of women have been appointed to senior military posts in recent years, but more needs to be done to make sure that our Armed Forces reflect the communities they serve, in line with a key objective of Army 2020. Serious consideration needs to be given to the further roles that women can play, including serving in front-line combat, since we need to maximise the talent and expertise available. The Minister said that the Government are looking at bringing forward the review, which is due by 2018. I wonder whether he can be a bit more specific on that. Is it currently the intention to wait until 2018, or is there an earlier target date for a decision? What are the considerations that will be taken into account by the Government in looking at the issue of women serving in front-line combat roles?
My Lords, I associate these Benches with the condolences to those who were killed in the helicopter accident. Given the news, mentioned by the noble Lord, of the first women to serve in submarines and the appointment of the first two-star officer in the Royal Air Force, will my noble friend say what opportunities the Army is giving to extend career opportunities to women, whether in combat roles or elsewhere?
My Lords, I am very grateful for my noble friend’s kind words, very much in memory of her late husband, who was a very distinguished helicopter pilot. She asked what front-line roles women already serve in. They already serve in a variety of front-line roles, including as medics, fire support team commanders, military intelligence operators and dog handlers, with at least two having won the Military Cross. Looking round the House, I know that a number of noble Lords have been to Afghanistan, and I am sure they have met many of the women who play a very distinguished part in supporting our troops out there, particularly the medics, who do an incredible job.
When the Minister is able to inform us when the review will take place, will he also inform us of the factors that will be taken into account? A number of us have heard “force cohesiveness” over the years, but it is a bit like Heinz 57 varieties; it can mean a lot to different people. If we are not clear what factors are to be taken into account, the outcome may in fact be a different decision than many of us would want to see.
My Lords, in 2002 there was a review that took approximately two years. There was another review in 2010. The conclusions of both were mixed. As a result, Ministers concluded that a precautionary approach was still necessary and the exclusion of women was retained. It might be helpful to the House if I were to write to the noble Baroness and other noble Lords who are interested, giving a link to the Written Statements made in November 2010 and setting out the full report of the review and the information and research that was carried out.
My Lords, great progress has been made in the Armed Forces in dealing, for example, with homosexuality or pregnancy discrimination and other matters of that kind. Will the Government, in considering whether to bring forward the review, bear in mind a case in which I appear, Johnston v Chief Constable of the Royal Ulster Constabulary, in which it became clear that women already are performing vital undercover works of a combative nature, facing real danger, and are at least as important in the work that they are doing as their male colleagues?
My Lords, my noble friend makes an important point. As I say, we are reviewing seriously a date earlier than November 2018. I can say to my noble friend that the Ministry of Defence remains fully committed to treating everyone fairly and properly, whatever their gender, ethnicity or other characteristic. We will continue working to eliminate any form of discrimination.
Health: Liver Disease
My Lords, improving outcomes for people with liver disease is a priority. Public Health England has a wide-ranging programme aimed at tackling its three major causes—viral hepatitis, alcohol abuse and obesity—through strengthening local action, promoting healthy choices and giving appropriate information to support healthier lives.
My Lords, I gather from that that the Government are not prepared to consider introducing a strategy, which is a great pity given that liver disease is now the fifth biggest killer and we have some of the worst figures in the whole of Europe. How does the Minister see a more general approach, rather than a specific target in a strategy, producing a change in the terrible figures which we now see in the number of deaths, given that the deprived areas of the country where most of them occur, such as Manchester, had a reduction in the funding to commissioners and GPs for this purpose last month?
My Lords, as the noble Lord is aware, NHS England is responsible for the overall national approach to improving clinical outcomes for people with liver disease. At the moment, it has no plans to produce a strategy specifically for liver disease, but it is adopting a broad strategy to reduce premature mortality, including mortality from liver disease. There is a major emphasis in the work being done by NHS England and Public Health England on prevention. They are supporting clinical commissioning groups and local authorities with a suite of tools to help them maximise the best possible outcomes for their local communities, such as local authority profiles. That can help local authorities and CCGs indentify the significance of liver disease in their area compared to the rest of the country, and the actions they could take to tackle it.
Can the Minister identify more clearly for me his definition of liver disease? He cited various things. Do his liver disease figures include the metastases from cancers, which are often a terminal condition? Are they treated separately or classified as part of the existing numbers?
My Lords, there are over 100 types of liver disease, which together affect at least 2 million people in the UK. The main ones are derived from alcohol misuse, viral infection, being overweight and obesity, and there are conditions that are inherited as well as those which attack the immune system. As regards metastases, I would need to be advised but I would imagine that that falls under the general heading of “liver cancer”, which is certainly included in my remarks to the noble Lord opposite.
My Lords, given the sad news that we have had in the past 48 hours of the death of Elena Baltacha, one of our best young tennis players—I have no idea about the history of her illness, but I know it has gone on for many years—what is the availability of liver transplants? That is a question that will cross many people’s minds. It would seem to me that if it was available and she was a suitable candidate, that could have been looked at. Can the Minister give us any assistance on that?
My Lords, I, too, learnt with great sadness of the death of Elena Baltacha, and was also unaware of the history of her medical condition. It is not appropriate for me to comment at the Dispatch Box on whether she should have received a liver transplant. However, I can say that transplant services are very active in this country. More and more liver transplants take place compared with a few years ago, and there are better techniques to ensure their tolerability in patients. If I can find out some more information, I will be happy to write to the noble Baroness.
Do the Government recognise that a strategy needs to be far wider-reaching than health, given that alcohol abuse results in two-fifths of crimes being alcohol-fuelled and in a cost to society of £55 billion a year? That sum would be recouped in part if the unit price of alcohol was raised by 10%, which would help to decrease the binge drinking which results in young people ending up in liver units with fulminant end-stage liver disease.
I agree with the noble Baroness that if we are to tackle liver disease we need to look as broadly as we can at the causes of alcohol misuse. We remain concerned about the wide availability of cheap, discounted alcohol and will soon take action to ban sales of alcohol below cost, where the price is equivalent to duty plus VAT. As regards minimum unit pricing, that remains a policy under consideration, but it will not be taken forward at the moment while we gather further empirical evidence. We do not want to launch a policy that may have unintended consequences.
My Lords, the incidence of liver cancer and liver disease is increasing significantly in young people, and it is the only cancer that continues to increase. Can my noble friend state whether there is a high-profile health education strategy that will help to tackle alcohol abuse and raise awareness among young people, who now talk about getting “preloaded” before they go out to drink alcohol, and which will highlight the issue of obesity? We need a high-profile health education campaign in that area.
My Lords, as my noble friend knows, there is of course scope to include alcohol awareness in relevant lessons in secondary schools. However, I take my noble friend’s point. I am encouraged by recent figures which show a drop in binge drinking, but that is no cause for complacency. It still takes place, and too many young people end up in specialist care and sometimes lose their lives. That is very much on Public Health England’s radar.
My Lords, we are against the clock. It is the Labour Benches.
My Lords, I, too, pay tribute to Elena Baltacha, who was a truly remarkable and very brave woman. One in five people in the UK is at serious risk of liver damage, but a recent government response shows that the Secretary of State has not met any external organisations to discuss liver disease since May 2010, and current Ministers have not met representatives of people living with liver disease since September 2012. Can the Minister commit urgently to remedying this situation, particularly as it is in such stark contrast to the 130-plus meetings the Government have had with the drinks industry?
My Lords, liver disease is very much in the sights of my honourable friend the Minister for Public Health, as is evidenced by the document we published last week, Living Well for Longer, in which there is a whole section on alcohol and liver disease, and by what NHS England and Public Health England are doing to tackle them.
Transforming Rehabilitation: Mental Health
My Lords, our reforms will bring in the best of the private and voluntary sectors to work with offenders and reduce reoffending. Community rehabilitation companies will be contracted to work with low and medium-risk offenders in the community, and the National Probation Service will supervise high-risk offenders. Both will be required to deliver services for specific groups such as females and BME offenders, as well as those with mental health issues, to ensure that an offender’s treatment requirements are complied with, including in situations where a court order exists.
I thank my noble friend for that reply. I am sure that he will be aware that currently four out of every 10 people who are being supported by the probation service are actively mentally ill: that is, 39%. This underlines the range of skills and knowledge that is required today from experienced members of the probation service in managing and properly meeting the needs of these clients. Therefore, will the Minister clarify whether the new organisations now bidding for probation service contracts are specifically expected by the Ministry of Justice to include and implement mental health provision across the board—because there are not specialisms to this extent within the probation service, as far as I know—and whether this requirement will be included in the proposals? How will the quality of the proposals of the new probation service contractors and the performance of the new providers be assessed?
My noble friend, and the House, may recall that the Government lodged with both Houses of Parliament a detailed draft services agreement, which included provisions that would apply to mentally ill offenders. Clause 3 of the agreement provides that the contractor shall monitor that the treatment provider prepares a full treatment plan with details of the specific mental health needs of each allocated person, with the timescale indicated to the court at the time of the sentence. Therefore, companies will be contractually obliged to do this. They will have an obligation under the Human Rights Act and under the Equality Act. My noble friend is of course right that the skills should be preserved in relation to mental health.
Will the Minister clarify the relationship between NHS England’s responsibility for mental health and that of the Ministry of Justice, and how contracts are laid between the two, not only in the private sector but in the voluntary sector, where a number of organisations have lost contracts through this confusion? I declare an interest as a trustee of the Lucy Faithfull Foundation.
There is an obligation to treat offenders and non-offenders the same. The circumstances in which they come to be treated may be different. Those who are in prison may suffer from a number of different mental illnesses. Their treatment is the responsibility of NHS England. Of course, there are complications with the delivery of treatment in the community as well, but there is no absolute difference in the treatment that is appropriate to you when you are an offender in prison or out of prison or are an ordinary member of the public. Clearly there are matters of co-ordination that the noble Baroness would say are not sufficiently attended to.
Between 2010 and September 2012, 86% of the prison and probation-related work contracted out to the private sector by NOMS went to G4S, Serco and Sodexo. If the Minister is so confident of the performance of these contractors in this important and sensitive area, why has the Ministry of Justice refused to disclose the figures for the succeeding year, even after an FoI request from the Centre for Crime and Justice Studies? Is he aware that just three third-sector organisations accounted for two-thirds of the third-sector expenditure in the same field?
I cannot comment on the details of the noble Lord’s question, but I assure him that neither of those two organisations are part of the CRC delivery, as he may well be aware. The CRC contracts are being drawn up and will be in operation by 2015. This matter was fully debated before both Houses of Parliament and we believe that any difficulties should be capable of being found in the stress-testing that is currently being undergone.
My Lords, to follow on from my noble friend’s question about NHS England, can the Minister comment on a recent freedom of information question and answer that showed that only 5% of clinical commissioning groups were actually funding specific healthcare for probation and that 25% of the CCGs questioned did not even realise that it was their responsibility to fund medical health provision in probation?
I cannot comment on the specific freedom of information request to which the noble Lord refers but I can perhaps reassure him that the Government are particularly aware of the danger of individuals escaping the net who are suffering from mental illness—offenders who come to the attention of courts and police services. Much work is done by the liaison and diversion services, which have invested a considerable sum of money to make sure that those who are often reluctant to acknowledge that they have mental illness, when they come into contact with a court or police station, are identified by appropriate health professionals. The information about them is then passed on to the appropriate figure so that, when they go to prison or are in the hands of a CRC, that information is available. A considerable investment has been made and for altogether 22% of the population it is hoped to roll out the arrangement throughout the country so that there is much better liaison in future.
Yarl’s Wood Immigration Removal Centre
My Lords, a visit to Yarl’s Wood immigration removal centre was never agreed as part of this fact-finding mission. However, as part of her visit, the special rapporteur, Ms Rashida Manjoo, met the Home Secretary, the Minister for Crime Prevention and the Chief Inspector of Prisons.
My Lords, I am very grateful to the Minister for that reply. As he will appreciate, it can do our national reputation no good at all if it should ever be felt that the United Kingdom is refusing access to a UN special rapporteur who is here in connection with the signature that we have given to the optional protocol on the UN Convention against Torture and Other Cruel, Inhuman or Degrading Treatment. Therefore, I hope very much that, in future, that position will be clarified, as the publicity can have done no good at all. I would be very grateful if the Minister could inform the House of what action will be taken to ensure that future visits can be properly handled.
I disagree with the premise of the noble Lord’s question, because Ministers met the special rapporteur and were keen to support a programme for her visit that was more directly relevant to addressing violence against women and girls. That is why we offered the visit to a refuge, facilitated by Women’s Aid, and supported a number of other visits for the special rapporteur, including a visit to a number of government departments, devolved Administrations and front-line agencies relevant to the reasons for her visit.
My Lords, the recent report by Women for Refugee Women found that many of the women in Yarl’s Wood had experienced sexual violence, which surely makes it a relevant visit for the special rapporteur. What is the Government’s response to that report, which showed the traumatic impact on those women of detention?
No one can be unaware of the fact that detention is a necessary evil. It is part of the requirements that we have in enforcing an immigration policy. However, the inspection by the Chief Inspector of Prisons found very little evidence of victimisation of women at the centre. It was felt that there was insufficient recognition of particular vulnerabilities of detained women; those points were taken and are being addressed by Yarl’s Wood.
My Lords, apart from the chief inspector’s findings on the lack of recognition of the vulnerabilities of women detained in Yarl’s Wood, there was also a finding that the quality of rule 35 reports was poor. Was not the refusal to admit Ms Manjoo not only a kick in the teeth for the UN, violating the terms of its mandate, but an unfortunate indication that those concerns had not been addressed, as the special rapporteur seems to have suspected?
No, my Lords, that is not the case. Yarl’s Wood was inspected by Her Majesty’s Chief Inspector of Prisons last year and, overall, the report was positive. I mentioned those aspects of which I felt it was important for the House to be aware. Detention is an essential part of effective immigration control and we take the welfare of those in our care very seriously. Her Majesty’s Chief Inspector of Prisons has responsibility for ensuring that those standards are maintained.
My Lords, does the noble Lord not appreciate that Yarl’s Wood has caused a lot of concern not only in this country but internationally, and that a failure to allow the UN special rapporteur to enter causes even more alarm, although I accept absolutely what he says about detention being necessary in some cases?
I have explained to noble Lords and, I hope, to the noble Lord, Lord Ramsbotham, in responding to his Question, the reasons why we felt that it was more appropriate to give the rapporteur the opportunity to see the effective measures that the Government are taking to address violence against women and girls.
My Lords, the noble Lord has been very good in explaining the meetings that the special rapporteur had and sought to say that he thought those meetings were sufficient. However, he has absolutely failed to explain to the House why the special rapporteur was denied access to Yarl’s Wood. It is a very simple question, not about the meetings that she had but why, specifically, she could not go to Yarl’s Wood.
Access to Yarl’s Wood is in the gift of the Home Office, which determines whether it is suitable for people to visit it. Her Majesty’s Chief Inspector of Prisons has a statutory role to address that issue. It was not a question of denying this person the opportunity to do her job. She was given every chance to take up our offers to visit refuges, but she did not choose to do so.
House of Lords Reform (No. 2) Bill
Order of Commitment Discharged
That the order of commitment be discharged.
My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Clause 1: Removal of persons unlawfully in the United Kingdom
1: Clause 1, page 3, leave out lines 4 and 5
My Lords, I said on Report that I would table further amendments regarding the power to make regulations about the removal of family members.
In its 24th report the Delegated Powers and Regulatory Reform Committee remained concerned that the scope of the delegated power was still too broad and, as it currently stands, should be subject to the affirmative procedure. In seeking to address this concern, the amendment removes reference to making further provision for the removal of family members under any provision of the immigration Acts and limits the scope of the regulations so that they can not extend beyond the two provisions described, namely the time period for removal and the service of the notice to family members.
I hope that this reassures noble Lords that this limits the regulations strictly to procedural matters that should be subject to the negative resolution procedure. I therefore beg to move.
Amendment 1 agreed.
Clause 15: Right of appeal to First-tier Tribunal
2: Clause 15, page 14, line 11, leave out from “84” to “, and” in line 13
My Lords, Amendment 2 is to Clause 15(5), which provides that the tribunal may not hear a new matter unless the Secretary of State consents to its doing so. There was a debate on that provision on Report, and I am grateful to those noble Lords and noble and learned Lords who have had an opportunity since then to follow that up and to have a better understanding of the concerns which prompted the tabling of that amendment. Since the Government tabled this amendment a number of points have been raised by my noble friend Lady Hamwee and the noble and learned Lord, Lord Hope of Craighead. I hope that I can address those points in speaking to this amendment.
Our discussions were helpful and not least identified that the definition of a “new matter” is wider than necessary because it includes reasons for wishing to remain in the United Kingdom which, if refused, would not give rise to a right of appeal. This potentially extends the scope of the power to give consent beyond appealable matters. As the significance of “new matter” is restricted to circumstances in which an appeal would arise as a consequence of the decision, the definition should be similarly restricted—hence this amendment.
My noble friend Lady Hamwee has asked why the amendment does not address the substance of the arguments made on Report. The Government remain committed to the important principle that the Secretary of State should be the primary decision-maker. An amendment that provided for the tribunal to have discretion as to whether it should hear a new matter would undermine that principle. It could also create a substantial risk of satellite litigation about the circumstances in which that discretion should be exercised.
We have heard examples, particularly on Report, where it was suggested that it would not be right for the tribunal to be prohibited from hearing a new matter. It is our intention that the Home Office will publish detailed guidance on when consent should be given. I can assure your Lordships that the examples given—such as when the illness of the appellant makes determination of the appeal urgent, or where inadequate legal representation has meant that the new matter could not have been raised earlier—are the types of circumstance in which that guidance will direct presenting officers to give substantial weight when considering the issue of consent.
In certain circumstances, however, the Secretary of State’s consideration of a new matter is fundamental to that matter being correctly decided, including by the tribunal. For example, where the new matter is an asylum claim it is only the Secretary of State who, having taken fingerprints from the individual, can verify that the claim has not been made previously in the United Kingdom or another EU member state. It is in those cases that consent for the tribunal to hear the new matter may be refused. However, even in such cases, whether to grant consent will also be informed by the individual’s circumstances.
The noble and learned Lord, Lord Hope of Craighead, asked whether guidance would be provided for the situation where the presenting officer is unable to take instructions on whether to grant consent. I assure the noble and learned Lord that the guidance will provide for this situation. I can also elaborate on the details, which I hope will provide further reassurance.
In this context, it is important to note that at the tribunal the Secretary of State is generally represented by a presenting officer rather than by counsel, it being a First-tier Tribunal. From reviewing the file, a presenting officer can establish whether a new matter has been raised. If, having considered the guidance, the presenting officer takes the view that consent should be granted for the tribunal to hear the new matter, instructions do not need to be taken in order for that decision to be made. It is therefore only where the presenting officer, having considered the guidance, takes the view that consent should not be granted that instructions need to be taken. I believe it is highly unlikely that a presenting officer would be unable to take such instructions. There is an established process by which senior caseworkers in each presenting officer’s unit work on a rota system to provide instructions to presenting officers. If a presenting officer is unable to contact the senior caseworker in his or her unit, he or she can contact a senior caseworker in another unit. This system has, we believe, operated effectively for a number of years.
My noble friend Lady Hamwee asked for further detail about the guidance that I have referred to. This will be published guidance to presenting officers who appear for the Secretary of State before the tribunal. We do not propose to consult on the contents of this guidance, which will be to Home Office staff on the exercise of this power. However, it is important to note that if the guidance is not followed and there is no sound basis for departing from it, judicial review of any such decision may well be sought.
The guidance will set out the factors to be considered in each case when the presenting officer who has conduct of the case at the appeals stage decides whether to grant consent for the tribunal to hear a new matter. It will also set out the process to be followed in each case, including consultation with the original decision-maker where appropriate.
It was useful to have our discussions and I hope that I have clarified the position and have given appropriate reassurance to your Lordships’ House. I beg to move.
My Lords, I express my gratitude to the Minister both for his amendment and for the clarifications that he has given on the guidance that will be given to tribunals. I am sure that the amendment helps to remove an element of doubt about the scope of the words “new matter”. It became clear as we discussed the matter following the debate on Report that some change was needed, and I am extremely grateful to the Minister for his willingness to listen to us and to deal with that point.
As for the guidance, I gave rather short notice of the point that the Minister has dealt with but he has dealt with it to my satisfaction. Again, I am very grateful to him for his willingness to meet us to discuss these rather tricky matters.
My Lords, first, my apologies for missing the first two sentences of the debate on this amendment. I left 1 Millbank over the road as soon as debate on the Bill started but I am not as nimble as I thought and I make my apologies to the House.
I, too, am grateful to the Minister for his reflection on this matter since Report and for the amendment that the Government have laid. I join the noble and learned Lord, Lord Hope, in thanking him for the meeting that was arranged at short notice prior to the Recess. I, too, am grateful that the amendment narrows the definition of what the tribunal should consider to be a new matter and that what is or is not a new matter will be for the tribunal to determine according to the legislation. The narrowing of the definition is most welcome as, once the matter is determined to be a new matter, the tribunal cannot hear it without the consent of the Home Secretary.
I am also grateful for the specific guidance outlining the circumstances in which the Home Secretary will consent to such a new matter being in front of a tribunal. I am grateful for my noble friend’s explanation of what will happen if very junior counsel are in front of a tribunal when a new matter is raised and unfortunately they cannot get instructions or the file containing the necessary information.
Everything in the Government’s amendment is welcome as far as it goes but I do not think that it will come as any surprise to the Minister that I remain disappointed that the Government have not laid an amendment giving the tribunal an exceptional discretion to hear a new matter if the demands of justice require it. Justice is of course the overriding purpose of our courts and tribunals, and ordinarily the Secretary of State should be the primary decision-maker on a new matter but not if justice demands otherwise.
On Report, the constitution arguments were ably outlined by the noble and learned Lords, Lord Hope, Lord Woolf and Lord Brown. This is the first time that a party to any proceedings will have this kind of control over jurisdiction and I shall be interested to know—as I am sure all noble Lords will be—how it works out in practice. I would be grateful if the Minister could indicate whether, if this new power results in judicial review cases, there will be a way of keeping a record of the judicial review decisions in relation to the guidance and to consent being refused. Will those figures be available some time after the Bill is passed for the purposes of post-legislative scrutiny?
My Lords, the Immigration Law Practitioners’ Association has pointed out that this is a meaningless amendment because a tribunal would not be able to consider a matter that was not within its jurisdiction in any case. It is disappointing that the Government have not noticeably reflected, as my noble and learned friend assured me they would, on the alternative suggestions made by my noble friend Lady Berridge, on this clause, and supported by several noble and learned Lords, to give effect to the recommendations of the Joint Committee on Human Rights in its eighth report. Your Lordships were almost unanimous in condemning a proposal to allow one of the parties to an appeal to instruct the tribunal on what matters it can or cannot consider.
My noble and learned friend the Minister did not challenge the assertion that the tribunal had not allowed abuse of its own process in the past or had treated the Secretary of State unfairly, or that the existing process was inefficient. There was no suggestion on Report that the Government had raised any concern in the past over this alleged problem, but if we concede that there might have been cases in which a new matter—which is only to be defined in guidance, as we heard—was raised, that still does not mean that your Lordships should agree to grant this sweeping power to allow the respondent to veto the consideration of the new matter, even when the reason for its last minute appearance was the difficulty in getting hold of the presenting officer, as in one of the cogent examples given by my noble friend in introducing her amendments. In such cases the presenting officer who may have been unable to get instructions from senior counsel overnight can ask for an adjournment. My noble and learned friend did not say that he knew of any instance when such a request had been refused.
My noble friend said that she thought satellite judicial review went against what the Government were seeking to achieve, but that would still be the only way of challenging a decision by the Secretary of State to prohibit the use of a proposed new matter, after the amendment that is now before us. I asked my noble and learned friend whether the Government had made any estimate of the number of judicial review cases likely to be heard as a result of this provision and what would be the estimated reduction in the savings expected from it. I received no answer. I certainly agree with the suggestion made by my noble friend just now that a record should be kept of such cases.
The main reason why the Government insist that the Secretary of State should have this power seems to be, as we have heard, that she is the primary decision-maker of right on these applications rather than the late arrival of new matters, some of which is due to the inaccessibility of the Home Office. Nobody argues with that in principle, although my noble friend Lady Berridge pointed out that the Secretary of State had, in effect, voluntarily abdicated that role by allowing officials to make such a large number of wrongful decisions at first instance.
Even if that problem is solved, there remains a serious objection to what the Government propose. The fundamental principle of the rule of law is the right to a fair trial. In his wonderful book, The Rule of Law, the late noble and learned Lord Bingham emphasised that the right applies to,
“adjudicative procedures of a hybrid kind … proceedings in which one or more parties may suffer serious consequences if an adverse decision is made”.
He goes on to mention a recent case in the Supreme Court in Canada, where the Chief Justice, delivering the unanimous judgment of the court, said that,
“a fair hearing requires that the affected person be informed of the case against him … and be permitted to respond to that case. This right is well established in immigration law”.
Thus, if the applicant is denied the right to present what may be a crucial piece of evidence, he is denied the right to a fair trial. That right trumps the Secretary of State’s right to be the primary decider. This amendment, leaving Clause 15 effectively untouched, does not cover the mischief dealt with so effectively by my noble friend Lady Berridge.
My Lords, my noble and learned friend responded extremely speedily to my bank holiday inquiry, and I am grateful to him for that. The points about whether consent should be required for the tribunal to consider a new matter have been covered quite thoroughly, but I would like to mention the question of guidance. I was curious that this is guidance, because it must be guidance by the Home Office, and therefore the Home Secretary, to the Home Secretary. I would have understood had it been called a code of practice. The title does not really matter: it is the content. I wonder whether there is any distinction between the two.
Having seen the letter to the noble Baroness of 29 April, it seems to me that the way the guidance is described comes quite close to the exercise of discretion. I am aware that I have not put a question mark at the end of any of that, but I felt that I wanted to make those points.
My Lords, may I be forgiven if, despite my discourtesy in not being here earlier, I say a few words on this matter? It is very important, not only for the principles that noble Lords have clearly expressed already, but purely from a practical point. I urge the Government to think again about this, based on the experience of dealing with immigration cases for the majority of my career in the legal profession. The repeated use of the justice system to obtain delay was always a problem. I understand the motivation of the Government all too well, but that does not justify the departure from principle about which we have heard.
However, this is the point that I am most anxious to make. In reality, if the first tribunal before whom this matter is happening does not have the power to say what the procedure will be, that will create a lacuna which will be exploited more and more frequently by those who realise that they just need to make a new point and the Government’s representative will have to ask for adjournments so that he or she can take instructions on what action to take. Not only is this wrong in principle, it will create an undesirable position. Although it is not intended, it will undermine the status of those who adjudicate on these matters. More and more immigration matters are now being dealt with outside the High Court, so we should not be undermining that status but supporting it.
I urge the Government to take this away again. I do not think that they have met either the problems of principle that were raised on the last occasion that this was discussed or, more importantly perhaps, the practicalities of sitting on a tribunal and having to deal with applications. As an adjudicator, if you are in doubt about the right course to take, of course you can always adjourn. Most legal systems are plagued by unnecessary adjournments. In my view, what the Government are creating here is unnecessary scope for adjournments. Even if there is just the ability to make applications—you can never stop them—they will result in adjournments, which I would have thought is the last thing the Home Office wants.
My Lords, I thank all noble Lords who have contributed to this debate. I do not think I tried to oversell what the amendment will do because it is in many respects technical and addresses a problem that was identified as the result of an amendment moved on Report by my noble friend Lady Berridge. Even those noble Lords who have raised questions acknowledge the principle that the Home Secretary is the primary decision-maker; it is something that Parliament has agreed. What this subsection seeks to do is to accept that there will be circumstances where the consent of the Secretary of State is given for the tribunal to hear a new matter, albeit that the Secretary of State is the primary decision-maker. I am also sure that the guidance will reflect what the noble and learned Lord, Lord Woolf, has said. It will be based on the great experience garnered over the years on how these tribunals work, and the intention is to facilitate rather than to frustrate.
I would say to my noble friend Lord Avebury that, as I indicated in responding to the point raised by the noble and learned Lord, Lord Hope, if a presenting officer, having considered the guidance, takes the view that consent should be granted for the tribunal to hear the new matter, he or she does not need to take instructions in order for that decision to be made. It is only where the presenting officer, having considered the guidance, takes the view that the consent should not be granted that instructions would need to be taken. I discussed the position with officials before coming to your Lordships’ Chamber today, not least because the noble and learned Lord, Lord Hope, had raised it, and I have been assured that it is very unlikely indeed that a presenting officer would be unable to take instructions. I shy away from using the word “impossible” because you can bet your life that, if I say that, something will happen in the first week. However, I am told that it is highly unlikely because an established process is in place by which the senior caseworkers in each presenting officer’s unit work on a rota system to provide these kinds of instructions to presenting officers. It is anticipated that there would be a very brief adjournment to allow the instruction to be taken.
My noble friend Lady Berridge asked about judicial review, a point that was echoed by my noble friend Lord Avebury. The Home Office keeps a record of the judicial reviews that are brought, and certainly it will continue to monitor closely the effectiveness of this new power. It is important to note that judicial review can be brought for a number of reasons, not just the ones that have been identified in this debate. The question I was asked was whether a record is kept, and the answer is yes. A record is kept which will help to inform a review of the effectiveness of this provision.
My noble friend Lady Hamwee is right inasmuch as this guidance is technically for the Home Secretary, but it is intended for the presenting officers who act on behalf of the Home Secretary. However, as I say, it will be published and so people will know what it contains. I also indicated to my noble friend when moving the amendment that, if the guidance is not followed and there is no sound basis for departing from it, I rather think that a judicial review may follow hot on the heels of any such decision. How the judicial review is determined is of course a matter for the courts, but the fact that it will be published should, I hope, provide some degree of certainty and consistency in how the Home Secretary exercises the consent provision set out in this subsection. I therefore commend the amendment to your Lordships.
Amendment 2 agreed.
3: Before Clause 66, insert the following new Clause—
“Persons unable to acquire citizenship: natural father not married to mother
After section 4D of the British Nationality Act 1981 insert—“4E The general conditions
For the purposes of sections 4F to 4I, a person (“P”) meets the general conditions if—(a) P was born before 1 July 2006;(b) at the time of P’s birth, P’s mother—(i) was not married, or(ii) was married to a person other than P’s natural father;(c) no person is treated as the father of P under section 28 of the Human Fertilisation and Embryology Act 1990; and(d) P has never been a British citizen.4F Person unable to be registered under other provisions of this Act
(1) A person (“P”) is entitled to be registered as a British citizen on an application made under this section if—
(a) P meets the general conditions; and(b) P would be entitled to be registered as a British citizen under—had P’s mother been married to P’s natural father at the time of P’s birth.(i) section 1(3), (ii) section 3(2),(iii) section 3(5),(iv) paragraph 4 of Schedule 2, or(v) paragraph 5 of Schedule 2,had P’s mother been married to P’s natural father at the time of P’s birth.(2) In the following provisions of this section “relevant registration provision” means the provision under which P would be entitled to be registered as a British citizen (as mentioned in subsection (1)(b)).
(3) If the relevant registration provision is section 3(2), a person who is registered as a British citizen under this section is a British citizen by descent.
(4) If the relevant registration provision is section 3(5), the Secretary of State may, in the special circumstances of the particular case, waive the need for any or all of the parental consents to be given.
(5) For that purpose, the “parental consents” are—
(a) the consent of P’s natural father, and(b) the consent of P’s mother,insofar as they would be required by section 3(5)(c) (as read with section 3(6)(b)), had P’s mother been married to P’s natural father at the time of P’s birth.4G Person unable to become citizen automatically after commencement
(1) A person (“P”) is entitled to be registered as a British citizen on an application made under this section if—
(a) P meets the general conditions; and(b) at any time in the period after commencement, P would have automatically become a British citizen at birth by the operation of any provision of this Act or the British Nationality (Falkland Islands) Act 1983, had P’s mother been married to P’s natural father at the time of P’s birth.(2) A person who is registered as a British citizen under this section is a British citizen by descent if the British citizenship which the person would have acquired at birth (as mentioned in subsection (1)(b)) would (by virtue of section 14) have been British citizenship by descent.
(3) If P is under the age of 18, no application may be made unless the consent of P’s natural father and mother to the registration has been signified in the prescribed manner.
(4) But if P’s natural father or mother has died on or before the date of the application, the reference in subsection (3) to P’s natural father and mother is to be read as a reference to either of them.
(5) The Secretary of State may, in the special circumstances of a particular case, waive the need for any or all of the consents required by subsection (3) (as read with subsection (4)) to be given.
(6) The reference in this section to the period after commencement does not include the time of commencement (and, accordingly, this section does not apply to any case in which a person was unable to become a British citizen at commencement).
4H Citizen of UK and colonies unable to become citizen at commencement
(1) A person (“P”) is entitled to be registered as a British citizen on an application made under this section if—
(a) P meets the general conditions;(b) P was a citizen of the United Kingdom and Colonies immediately before commencement; and(c) P would have automatically become a British citizen at commencement, by the operation of any provision of this Act, had P’s mother been married to P’s natural father at the time of P’s birth.(2) A person who is registered as a British citizen under this section is a British citizen by descent if the British citizenship which the person would have acquired at commencement (as mentioned in subsection (1)(c)) would (by virtue of section 14) have been British citizenship by descent.
4I Other person unable to become citizen at commencement
(a) P meets the general conditions;(b) P is either—(i) an eligible former British national, or(ii) an eligible non-British national; and(c) had P’s mother been married to P’s natural father at the time of P’s birth, P—(i) would have been a citizen of the United Kingdom and Colonies immediately before commencement, and(ii) would have automatically become a British citizen at commencement by the operation of any provision of this Act.(2) P is an “eligible former British national” if P was not a citizen of the United Kingdom and Colonies immediately before commencement and either—
(a) P ceased to be a British subject or a citizen of the United Kingdom and Colonies by virtue of the commencement of any independence legislation, but would not have done so had P’s mother been married to P’s natural father at the time of P’s birth, or(b) P was a British subject who did not automatically become a citizen of the United Kingdom and Colonies at commencement of the British Nationality Act 1948 by the operation of any provision of it, but would have done so had P’s mother been married to P’s natural father at the time of P’s birth.(3) P is an “eligible non-British national” if—
(a) P was never a British subject or citizen of the United Kingdom and Colonies; and(b) had P’s mother been married to P’s natural father at the time of P’s birth, P would have automatically become a British subject or citizen of the United Kingdom and Colonies—(i) at birth, or(ii) by virtue of paragraph 3 of Schedule 3 to the British Nationality Act 1948 (child of male British subject to become citizen of the United Kingdom and Colonies if the father becomes such a citizen).(4) A person who is registered as a British citizen under this section is a British citizen by descent if the British citizenship which the person would have acquired at commencement (as mentioned in subsection (1)(c)(ii)) would (by virtue of section 14) have been British citizenship by descent.
(5) In determining for the purposes of subsection 1(c)(i) whether P would have been a citizen of the United Kingdom and Colonies immediately before commencement, it must be assumed that P would not have—
(a) renounced or been deprived of any notional British nationality, or(b) lost any notional British nationality by virtue of P acquiring the nationality of a country or territory outside the United Kingdom.(6) A “notional British nationality” is—
(a) in a case where P is an eligible former British national, any status as a British subject or a citizen of the United Kingdom and Colonies which P would have held at any time after P’s nationality loss (had that loss not occurred and had P’s mother been married to P’s natural father at the time of P’s birth);(b) in a case where P is an eligible non-British national— (i) P’s status as a British subject or citizen of the United Kingdom and Colonies mentioned in subsection (3)(b), and (ii) any other status as a British subject or citizen of the United Kingdom and Colonies which P would have held at any time afterwards (had P’s mother been married to P’s natural father at the time of P’s birth).(7) In this section—
“British subject” has any meaning which it had for the purposes of the British Nationality and Status of Aliens Act 1914;
“independence legislation” means an Act of Parliament or any subordinate legislation (within the meaning of the Interpretation Act 1978) forming part of the law in the United Kingdom (whenever passed or made, and whether or not still in force)—
(a) providing for a country or territory to become independent from the United Kingdom, or(b) dealing with nationality, or any other ancillary matters, in connection with a country or territory becoming independent from the United Kingdom;“P’s nationality loss” means P’s—
(a) ceasing to be a British subject or citizen of the United Kingdom and Colonies (as mentioned in subsection (2)(a)), or(b) not becoming a citizen of the United Kingdom and Colonies (as mentioned in subsection (2)(b)).4J Sections 4E to 4I: supplementary provision
(1) In sections 4E to 4I and this section, a person’s “natural father” is a person who satisfies the requirements as to proof of paternity that are prescribed in regulations under section 50(9B).
(2) The power under section 50(9B) to make different provision for different circumstances includes power to make provision for the purposes of any provision of sections 4E to 4I which is different from other provision made under section 50(9B).
(3) The following provisions apply for the purposes of sections 4E to 4I.
(4) A reference to a person automatically becoming a British citizen, or a citizen of the United Kingdom and Colonies, is a reference to the person becoming such a citizen without the need for—
(a) the person to be registered as such a citizen by the Secretary of State or any other minister of the Crown;(b) the birth of the person to be registered by a diplomatic or consular representative of the United Kingdom; or(c) the person to be naturalised as such a citizen.(5) If the mother of a person could not actually have been married to the person’s natural father at the time of the person’s birth (for whatever reason), that fact does not prevent an assumption being made that the couple were married at the time of the birth.””
My Lords, the rationale behind this amendment, to put it as simply as possible, is to enable a child born before 1 July 2006 to a mother who is not married to the natural father to become a British citizen automatically, or to have an entitlement to be registered as a British citizen in circumstances where the child would have had either of those rights if the parents had been married.
I am grateful to the Minister for accepting in principle the amendment that I moved for this purpose in Committee and for deploying the formidable resources of the Bill team to turning the inadequate wording of my original attempt into the text now before your Lordships in Amendments 3 and 5, as well as for the useful exchanges that I had with the Minister and the Bill team during that process.
The reason for the cut-off date is that, after that, a child born to parents who were not married is already covered by the definition of “father” in Section 50(9A) of the British Nationality Act 1981—the BNA. These amendments will now cover the child born before 1 July 2006 whose mother never married the father or who was married to someone else at the time of the child’s birth. This reflects the way the Home Secretary has previously exercised discretion under the Act and will continue to do so for children born post-2006 where the mother’s husband is not the child’s natural father.
Proposed new Section 4F deals with persons who would currently have had an entitlement to register as British citizens under the specified sections of the BNA if their parents had been married. Currently, these persons can be registered at the discretion of the Home Secretary under Section 3(1) of the BNA, but Section 4F gives them an entitlement. If a person would be entitled to registration under Section 3(2) only, had their parents been married, registration under Section 4F gives them citizenship “by descent”—the status they would have acquired if their parents had been married. Section 14 of the BNA needs to be amended to secure this outcome, and this is accomplished by Amendment 5.
If a person would be entitled to registration under Section 3(5), had their parents been married, there is an additional discretion to waive parental consent. For the other specified subsections of the BNA in Section 4F, consent is required from both the mother and the “natural father”—the person who satisfies the proof of paternity regulations made under Section 50(9B) of the BNA.
Proposed new Section 4G covers those born after 1 January 1983 and before 1 July 2006 who would have become British citizens automatically if their parents had been married. The main beneficiaries of this section will be persons born in the UK to a British or settled parent who would have become British citizens under Section 1(1) or 1(1A) if their parents had been married and persons born abroad to a British parent who would have become British citizens under Section 2(1) if their parents had been married.
Proposed new Section 4H covers persons who were citizens of the UK and colonies immediately before 2 January 1983 but did not become British citizens because their parents were not married. This will benefit those who acquired citizenship through birth in a British colony and still had that status on 31 December 1982—for example, a person with a UK-born natural father who was born in a current overseas territory or was born in a former colony and did not acquire citizenship of that country when it became independent. Here again it is necessary to place these persons in the category “by descent” or “otherwise than by descent” to correspond with the status they would have had if their parents had been married. The distinction between these two categories occupies 26 pages of Fransman’s magisterial tome on British nationality law, so I hope your Lordships will be content with that reference.
Proposed new Section 4I benefits people who would have acquired British citizenship in three situations: first, if they were British subjects or citizens of the UK and colonies by birth in a former colony and would not have lost that status when that country became independent if their parents had been married; secondly, if they were British subjects before 1 January 1949 and would have become a CUKC on that date if their parents had been married; and thirdly, if they did not acquire the status of British subject or citizen of the UK and colonies but would have done so if their parents had been married. This will also benefit those who would have acquired citizenship under Section 5(1)(a), (c) or (d) of the British Nationality Act 1948. I am sorry to say that that will not apply to those whose parents had the right to register their births at a British consulate under Section 5(1)(d) while they were minors but omitted to do so. That reflects existing law for persons whose parents were married, and the rights of both groups will have to wait for a future opportunity.
Proposed new Section 4J defines a person’s “natural father”. It is interesting to recall that when the BNA was originally going through another place in 1981, the Minister—now the noble Lord, Lord Luce—said that citizenship could not be extended to illegitimate children because,
“the problem of identifying the father in such cases remains insurmountable”.—[Official Report, Commons, Standing Committee F, 17/3/81; col. 623.]
Watson and Crick had received the Nobel Prize for determining the structure of DNA 19 years earlier but the practical applications of their discovery were still a long way in the future. The power in proposed new Section 4J(2) is a broad one but this reflects the power to make different provisions for different circumstances that already exists in Section 50(9B) of the BNA. The provision is intended to benefit potential applicants and ensures that regulations for establishing the proof of paternity can be adapted if circumstances change; for example, following scientific advances.
It has not been possible to deal with the British Overseas Territories in these amendments because of course they would have to be consulted about any proposed amendments to the Act dealing with the forms of citizenship connected with those territories, as we have acknowledged. I would be grateful if my noble friend the Minister could assure me that the Government will launch such a consultation, preferably in the next Session of Parliament, so that, having done so, next time we have an immigration Bill we can deal with the limited number of stateless persons left with only BOTC status. At the same time this will enable us to annul some of the reservations we have put to our accession to the convention on the elimination of discrimination against women.
At Third Reading of the then Nationality, Immigration and Asylum Bill, the then Minister, the noble Lord, Lord Filkin, said:
“One can only go so far back in seeking to right the wrongs of history and of previous generations”.—[Official Report, 31/10/02; col. 298.]
My noble friend the Minister echoed this on the last day of Report. In the thickets and undergrowth of immigration law, there are still plenty of wrongs of history waiting to be rectified, but at least if your Lordships agree to these amendments they will remove most of the discrimination against people whose parents were not married that has infected our immigration law in the past. I beg to move.
My Lords, I am grateful to the noble Lord, Lord Avebury, for his explanation of his amendment. Immigration law is far more complicated than most people realise and he did a great service to the House in explaining his amendment, which of course we welcome and support.
Turning to Amendment 6 concerning the Long Title of the Bill, which the Government have amended, I share with your Lordships my confusion and hope that the Minister can give some clarification. I am grateful to the Minister for meeting me last week to discuss this and other issues. He gave me a letter explaining the amendments before us today, which was very helpful. But he also said about what was then Amendment 4 and is now Amendment 6 that,
“an amendment to the Long Title is necessary to ensure that it covers nationality matters”.
He then referred to the amendment moved by the noble Lord, Lord Avebury,
“with a view to appropriate amendments on the issue at Third Reading to create a new registration provision for persons born before 1 July 2006”.
However, he did not say that that was not the only amendment being made to the Long Title, because the amendment as printed—although not referred to in his letter—says that it also makes,
“provision about the removal of citizenship from persons whose conduct is seriously prejudicial to the United Kingdom’s vital interests”.
Yet when we debated that issue here in your Lordships’ House at both Committee and Report stages—they were very good and lengthy debates, unlike those which took place in the other place, which were rather cursory—it was decided, despite the length of the debate and the complexity of the issue, that an amendment to the Bill would be made removing the Government’s clause and inserting a new clause saying in effect that this was a complex matter which should go to a committee of both Houses. That amendment, in the name of the noble Lord, Lord Pannick, was passed by a majority of 62. Although that issue is not in the Bill, it is now in the Long Title.
The other amendment to be passed on Report was that in the name of the noble and learned Baroness, Lady Butler-Sloss, on child trafficking and guardians for those children who are trafficked. Your Lordships’ House voted by a majority of 98 in favour of an amendment which would provide guardians for such trafficked children, yet that is not proposed to be in the Long Title. We therefore have the slightly curious position where something that was taken out of the Bill is now being inserted by the Government in the Long Title—although it is no longer in the Bill other than in the form of referral to a committee for further and proper examination—yet something that was inserted in the Bill is not referred to in the Long Title. Although I am sure that it is not the case, it would be outstandingly arrogant of the Government if they were to say, “Well, we know what is going to happen in the other place; we know what is going to happen later, so we will prepare for then”, whereas my understanding is that the Long Title should reflect the Bill as it leaves your Lordships’ House.
I wonder whether, in that, the Minister is trying to give us a clue as to what the Government’s intentions are when the Bill leaves this House today and goes to the other place for consideration of the amendments that we have proposed. If he is able to comment on why something that is not now in the Bill is in the Long Title, while something that is in the Bill is not in the Long Title, that would be very helpful, because the issue of deprivation of citizenship was removed from the Bill yet that of guardians for trafficked children was inserted. Can the Minister shine any light on that and say whether further amendments are expected and how the Government intend to consider further the amendments already passed in your Lordships’ House? If so, it would be a helpful contribution to this debate.
My Lords, perhaps I may begin by taking this opportunity to thank my noble friend for tabling these amendments, which he will know we welcome. The House will recognise that nationality law is a complex and difficult area. Anomalies do arise, and have indeed done so, particularly as the way in which people view the family has changed since the British Nationality Act was introduced in 1981.
In 2006, amendments to that Act enabled illegitimate children to inherit nationality from a British father in the same way as a legitimate child. However, those amendments were not made retrospective. To have done so could have caused problems for individuals who were now adults and had made a life for themselves in a different nationality.
The amendments proposed by my noble friend today will enable illegitimate children born to British fathers before 2006 to register as British if they choose to do so. The measures apply to those who would have become British citizens automatically if they had been born legitimately. I realise that my noble friend is concerned also about the situation of those who could have become British if their unmarried parents had been able to register them as British, or in some circumstances if they had been able to register the birth with the consular service. However, the Government’s position—indeed, my noble friend restated it in his introduction—remains that we can go only so far to right the wrongs of history. There can be many reasons why parents may not choose to exercise these options and we cannot, therefore, now make assumptions about whether unmarried parents would have chosen to exercise them if they had had the opportunity to do so.
I know that my noble friend is also concerned about British Overseas Territories citizens. Changes to those provisions require consultation with the territories concerned and this has not been possible in the time available. However, I assure my noble friend that the Government will look for suitable opportunities to discuss this issue with the overseas territories once the provisions are implemented.
Perhaps I might now turn to the change to the Long Title of the Bill, under Amendment 6. Looking at the Bill, we still have deprivation as an issue under Clause 66. It is covered by that clause and it is quite proper that it should therefore be part and parcel of the Bill, but I will not suggest for one moment, while speaking at the Dispatch Box here today, what may be considered by the House of Commons when it takes on the amendments that we have made to the Bill. We have made a number of amendments and, as the noble Baroness will know, it is quite in order for the House of Commons to consider them and let us know what it thinks of the amendments that we have made.
I am sure that, as a former Member of the other place, I was not suggesting for one second that it does not have the right to look at our amendments and come to its own decisions. This is about the contrast between the two issues. While I am happy to accept the explanation that deprivation will be considered further by a Joint Committee of both Houses once the Bill leaves your Lordships’ House, that contrasts with the issues of the trafficking of children and guardians for trafficked children. That provision was passed by your Lordships’ House and does not now appear in the Long Title, even though it has been amended to deal with something that is not in the Bill in the same way. It is just that contradiction between the two and I would hope that the Minister can reassure me that, since this House has committed to the guardians for trafficked children, the Government will also remain so and are not taking for granted the support from the other place on the issue of deprivation of citizenship and making people stateless.
It would not be in my nature to take anything for granted where Parliament is involved. However, I think I made the position of the Government quite clear on guardians for trafficking when the amendment was considered, and the noble Baroness herself has been well aware of that. I hope she will accept what I am saying. It will be a matter of our listening to the House of Commons, as we must now call the other place, and giving it an opportunity to present to us what it considers of our amendments. That is a reasonable position to take. Meanwhile, this change to the Long Title facilitates the adoption of my noble friend’s amendments, which I hope the House will support because they will be welcomed by many and assist individuals hitherto precluded from British citizenship by historical anomaly. They will therefore be able to register as British citizens if they wish to do so. I am extremely happy to be able to offer my support to my noble friend in this matter.
I am extraordinarily grateful to the Minister for his kind remarks and for his undertaking to take an opportunity, I hope in the near future, to raise the question of overseas territories and how their position can be brought into line with what we are now about to agree, as far as our own citizenship is concerned.
We have whittled away at the wrongs of history in 2002 and 2006, and now again in 2014. It is not beyond the bounds of possibility that on a future occasion we will be able to rectify some of the remaining difficulties that affect our nationality law, particularly the wrong that I think we did to people whose parents did not register them when they were minors. It would have been right, not just in the case of the illegitimate but also for those who were born to married parents, to allow those individuals when they became adults to exercise the rights that their parents had not exercised on their behalf.
However, that is only a very minor niggle compared with my pleasure at being able to move an amendment that grants citizenship to people who are illegitimate in circumstances where, if their parents have been married, they would have had it long ago.
Amendment 3 agreed.
Clause 74: Orders and regulations
4: Clause 74, page 59, line 27, leave out “or an order under section 43;” and insert—
“( ) an order under section 43, or under a section amended by such an order;”
My Lords, Amendment 4 is a technical amendment concerned with bank account measures. It is intended to ensure that, should any of Clauses 40, 41 or 42 be amended by the Treasury using the power provided in Clause 43 in such a way that further matters may be specified by order under any of those provisions, then any orders so made will be subject to the affirmative resolution procedure.
Clause 43 currently gives the Treasury the power to amend any of Clauses 40, 41 and 42 to allow it to ensure that the restriction on opening accounts remains effectively targeted. This power allows the Treasury to amend those provisions in such a way that a particular matter could be specified in a further order, should that be considered appropriate. To give an example, Clause 42 could be amended so that the reference to “bank” means a reference to an institution of a type to be specified in a further order made by the Treasury.
In that example, though, any subsequent order that specified the types of institution would then properly be made under the amended Clause 42, rather than by Clause 43. Any order made under Clause 43 that amends any of Clauses 40, 41 or 42 is already subject to the affirmative resolution procedure. However, orders subsequently made under Clauses 40, 41 or 42 are not referred to in Clause 74(2) of the Bill, which means that without this amendment they would be subject to the negative rather than the affirmative procedure. Given the importance of the matters involved, the Government’s intention is that any such order should be subject to the affirmative resolution procedure, and the amendment confirms that the affirmative procedure should therefore apply. I beg to move.
Amendment 4 agreed.
Schedule 9: Transitional and consequential provision
5: Schedule 9, page 125, line 40, at end insert—
“Part 8AProvision relating to persons unable to acquire nationality because natural father not married to mother British Nationality Act 19811 (1) The British Nationality Act 1981 is amended as follows.
(2) In section 14 (meaning of “British citizen “by descent””), in subsection (1), after paragraph (d) insert—
“(da) the person is a British citizen by descent by virtue of section 4F(3), 4G(2), 4H(2) or 4I(4); or”.(3) In section 41A (registration: requirement to be of good character), in subsection (1), after “5,” insert “4F, 4G, 4H, 4I”.
British Nationality (General) Regulations 20032 (1) In regulation 14 of the British Nationality (General) Regulations 2003—
(a) after “4D(3)” insert “or 4G(3)”;(b) after “section 4D” insert “or 4G”.(2) The provision inserted into regulation 14 by this paragraph may be amended or revoked by the exercise of the powers conferred by section 41 of the British Nationality Act 1981 as if that provision had been inserted by those powers.”
Amendment 5 agreed.
In the Title
6:In the Title, line 4, after “nationals;” insert “to make provision about the acquisition of citizenship by persons unable to acquire it because their fathers and mothers were not married to each other and provision about the removal of citizenship from persons whose conduct is seriously prejudicial to the United Kingdom’s vital interests;”
My Lords, I will be moving this amendment formally at the conclusion of what I believe is now the practice of the House to thank the House and Members of the Bill team at this stage of the proceedings. I should like to do so because this has been an extremely interesting Bill. I have enjoyed myself in taking it through and have enjoyed the House’s engagement with the issues that have been presented. Even this afternoon, although we have been dealing with clearing-up matters, we have had the opportunity to listen to the power of argument of noble and learned Lords, my noble friends and the noble Baroness, Lady Smith of Basildon.
A lot of people have been involved. I thank in particular my noble and learned friend Lord Wallace of Tankerness and my Whips, my noble friends Lord Attlee and Lord Ahmad. They have been great stalwarts during the period in which we have been taking this Bill through. I thank the noble Baroness, Lady Smith of Basildon, and the noble Lord, Lord Rosser, who have been extremely courteous to me throughout the proceedings. We have had the opportunity of a number of meetings that have helped the passage of the Bill through the House and have improved it. I particularly thank my noble friend Lady Hamwee, as a coalition partner, the noble Lord, Lord Avebury, and a number of other noble Lords from the Lib Dem Benches who have provided penetrating observations on the Bill, from which we have all been able to benefit.
A lot of other government departments have been involved in the Bill. I hope noble Lords will realise that it is not just the Home Office but the Government who have brought forward the Bill. I am sure that noble Lords will recognise the way in which my noble friend Lord Howe has worked to establish the health provisions in the Bill in the context of health reforms generally. It was a great advantage to us all to have the opportunity of a joint meeting with him.
Although they are not in their places, I thank the noble Lords, Lord Hannay and Lord Best, for making it possible to find ways of dealing with the issues concerning students and landlords, which were causing a great deal of anxiety when the Bill appeared before the House at Second Reading.
There are too many noble Lords to mention by name. I shall just say to all those who have been involved in this Bill that I hope they will look back on it with pleasure and know that they have been party to a Bill dealing with an important matter in a proper way.
We are all grateful to our friends in the Box and the many elsewhere who have been briefing us. We have been very demanding. The House has been extraordinarily demanding of their time. That is quite proper, and they would not wish it to be any other way. They have responded as we have asked. It reflects great credit on the skills and abilities of those who lie behind Ministers at the Dispatch Box that they have been able to satisfy the House in the way that they have. With those words, I beg to move.
Amendment 6 agreed.
I concur with the comments made by the Minister and respect those about this being a much improved Bill. That is accurate. We are pleased that the Bill has seen significant improvements, with amendments and concessions from the Government addressing issues raised by noble Lords. I was also pleased that he thanked the noble Earl, Lord Attlee, for his help and advice during the passage of the Bill.
I also thank the Minister. Where he has been unable to address issues from the Dispatch Box, he has been prepared to meet and discuss them, and to clarify those issues in writing. All noble Lords who have taken part in these debates have contributed to the improvement of the Bill, and we hope that some of those improvements will remain as debates continue. There are others that we would have liked to have seen and have not been able to achieve, but we still agree with the noble Lord that this is an improved Bill from that which presented itself to your Lordships’ House.
I add my thanks to colleagues, not only on the Labour Benches but across all Benches, who have put a lot of work into and contributed much to the Bill. I also thank the Bill team for its efforts and for being prepared to meet, and the Labour research team that helps us on our side of the House. It is no surprise that Sophie Davis, who has been advising the Labour Front Bench on this, was the Labour researcher of the year, which we all thought was very well deserved. We look forward to another Bill and another debate in the next Session.
My Lords, with the leave of the House—I know that it is unusual to speak at this stage—I promised my noble friends that I would say something at the appropriate point. It will have been an open secret to your Lordships that a number of us on the Liberal Democrat Benches have found these issues particularly difficult. The negotiations within our little group were sometimes quite difficult, because these are difficult issues.
I am sure that in the next Session we will tax my noble friend the Minister with matters that are mostly outside the scope of the Bill but which some of my noble friends showed considerable ingenuity in raising. I thank the Minister personally for his generosity, including extraordinary generosity with his time and his patience.
Bill passed and returned to the Commons with amendments.
Pfizer and AstraZeneca
My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Business, Innovation and Skills to an Urgent Question in another place on the Pfizer bid for AstraZeneca. The Statement is as follows.
“The life sciences industry is of paramount importance to the UK as part of the Government’s industrial strategy, which is securing a long-term plan for key sectors where we are global leaders. We are committed to ensuring that we continue to be at the forefront of life sciences research and development, with high-quality jobs, manufacturing and decision-making in the UK.
There has been a lot of comment and debate in the press recently on this important issue, although I should stress that there has not been a formal bid from Pfizer to take over AstraZeneca. The Government must and are approaching it from the position of even-handed neutrality and recognise that this is ultimately a matter for the shareholders of both companies. But I can assure the House that my colleagues across the Government and I engaged early with both companies to ensure the outcome is positive for the long-term future of this sector in the UK, precisely to avoid previous Governments’ failure in this type of situation.
The Opposition call for changes to the law, but we are operating within the framework that they introduced in 2002. They removed Ministers from making decisions about mergers apart from in a few specified public interest areas. I notice that they chose not to reform the regime in response to the Cadbury/Kraft merger.
One of our options as the Government would be to consider using our public interest test powers. This would be a serious step and not one that should be taken lightly. We are open-minded about it, but we should stress that we are operating within serious European legal constraints. I can, however, assure the House that we are very alive to the national interest considerations here. We see the future of the UK as a knowledge economy, not as a tax haven. Our focus is on what is best for the UK: securing great British science, research and manufacturing jobs and decision-making in the life sciences sector”.
My Lords, I thank the Minister for repeating the Statement made by his right honourable friend the Secretary of State in the other place.
The bid from Pfizer for AstraZeneca, like others before it in recent years, raises questions. We are a party of business. We believe in free trade and open markets. We also celebrate the extraordinary success of the UK over decades in attracting FDI and R&D. There is no doubt that the largest global companies see the UK both as a centre of excellence and as a gateway to European markets. However, we have to work hard to retain that position.
We have heard a lot from the Government over the past few years about the need to rebalance the economy. The recently published BIS industrial strategy suggests that pharmaceuticals, and life sciences more generally, is one of the sectors that could make the greatest contribution,
“to future growth and employment in the UK”.
Given that, and the need to ensure that we have sustainable clusters of industrial activity across the whole UK, we need to consider the proposed takeover very carefully. This company contributes more than 3% of our exports and provides more than 7,000 jobs directly around the country. Any takeover could have a big impact on employment in Cheshire, Macclesfield, Luton and Bristol, as well as in London. Many more small and medium-sized firms are part of their supply chain, and they, too, are at risk.
The issue is whether this transaction will be good for jobs and growth in the UK, whether it will protect Britain’s knowledge, research and skills base, and whether it represents a long-term investment in the UK. However, it is also a question of whether such key decisions can be left to shareholders and boards. With that in mind, perhaps I may ask the Minister the following questions. First, Pfizer has said it is committed to making a long-term investment in the UK through this purchase, but this is the same company that shut down its R&D facility at Sandwich in 2011. Why do the Government believe that the same fate will not befall AstraZeneca? Have they not learnt the lessons of the Kraft takeover of Cadbury Schweppes? What assurances will they obtain from Pfizer? Secondly, do the Government support the case for an immediate independent assessment of this deal and the impact it may have on our science base, as called for by the Leader of the Opposition? If not, why not?
My Lords, the good news is that this country is very attractive for inward investment from across the world. Long-term economic plans play a key role in making Britain the best place in the world for global companies to invest and create jobs. Therefore this approach by Pfizer, which will be one of the biggest investments in Britain in our history, is a vote of confidence in our economy. However, as it is a vital part of the scientific research base and supports thousands of high-quality jobs, we will scrutinise any proposal extremely closely to ensure that it is in the UK’s best interest.
On the history of Pfizer in Kent, this is like any other large corporate company. We live in the age of the global economy, when large companies quite often take over our companies, and our companies do the same abroad. They tend to consolidate and try to remove duplication. What happened in Kent was regrettable. We lost 2,500 jobs. I am glad that the site has been regenerated. However, we are keeping a very close eye on the situation. A large number of Cabinet Ministers are involved in this proposal. There has not as yet been a formal approach for a takeover—it is just being discussed—but Cabinet members are involved, as are some civil servants, and the department is keeping a very close eye on this bid by Pfizer.
My Lords, it would be unwise for the Opposition to make a party issue of this. I will put a point to the Minister which I have not heard made before. It is said that the only people who have an interest in the outcome are the shareholders, but surely there is a wider public interest here. Does not the taxpayer, through the National Health Service, spend more than £12 billion a year on branded drugs? Is it, therefore, in the interests of the British taxpayer that there should be fewer but ever more powerful companies in this market?
My Lords, AstraZeneca is a global company with activities around the world. It has a strong Anglo-Swedish heritage. It is not 100% British-owned, having a large number of shareholders right across the world. It is a business that brings expertise from both the UK and the US. It has a French CEO and a Swedish chairman. Yes, it supplies drugs to the NHS and makes a very good contribution in that respect, but I am sure that if the deal goes through we will watch very closely to make sure that we protect ourselves. It will go through the Competition Commission. The deal will also go through the European Commission to make sure that this takeover is in the best interests of this country, taxpayers and the public.
My Lords, the history of acquisitions in the pharma industry is that R&D facilities are shut down. AstraZeneca has developed a very strong collaborative culture with scientists, working particularly in the life sciences, in drug development. What effect will the merger have on our science base and the excellent facilities that AstraZeneca has for drug development?
I agree with the noble Lord that AstraZeneca does some of the best research in this country. This is why it is in our interests to make sure that if the merger does take place, we will scrutinise everything that is being put forward by Pfizer to our Government. As I said earlier, the NHS makes very good use of this company when it comes to research and development.
My Lords, we cannot get away from the fact that Pfizer has form. It closed its successful R&D facility in Kent, as was mentioned; it bought and gutted three American competitor companies; and now it plans to set up a tax-inversion wheeze to buy a British gem. Does the Minister agree that this deal is not in the British interest, that it is not even in the American interest and that it is certainly not in the interests of one of our great science-based companies?
My Lords, as a Government we have a role to play—but a very limited one—when it comes to takeovers and mergers. All takeovers and mergers depend on boards of directors and shareholders. Like all global pharmaceutical companies, Pfizer has faced challenges from many of its drugs going off-patent and having to replace them with new, innovative medicines. Both Pfizer and AstraZeneca have had to restructure major research projects around the world. That is a reality for some of these research and development companies.
My Lords, it seems that without a formal bid it is important that the Government maintain their neutrality on the merits of any bid but that they still have a major interest in jobs and research. Have the Government researched whether the advantages of the so-called tax-inversion scheme could be obtained without Pfizer establishing their international corporate headquarters in the UK?
I agree with the noble Lord; the Government are very neutral on this thing and there is no formal bid at this stage. If the merger or acquisition process continues, we will keep a close eye on the subject to make sure that Pfizer cannot come and invest in this country simply as a tax haven.
My Lords, the World Health Organisation advises that priority number 1 in public health is to develop new antibiotics, because germs are becoming resistant to old ones. The Government’s major responsibility is public health. In what way will this merger help public health in this country?
My Lords, as I said earlier, as yet there is no formal bid for this merger. The relevant government department is looking into a number of things, including public health and the supply of medicines to the NHS by AstraZeneca. We will have to wait and see what developments take place over the next few weeks on this merger.
My Lords, I was glad to hear the Minister say that the Government would do whatever was best in the UK public interest in this case. I was disappointed that the Cadbury merger was not fully scrutinised or blocked, and concerned about a succession of takeovers by utility companies, which ensured that they are now owned from Germany or France and that the UK interest is not always preserved. What powers do the Government or the EU have to ensure adequate scrutiny of this important merger, and how will they ensure the observance of any promises on jobs or R&D?
The noble Baroness makes a very important point. The law already backs boards that feel that a takeover would be against the long-term interests of their company. Directors must have regard to the likely long-term consequences of their decisions. With regard to foreign takeovers, the code was amended to make it explicit that directors are not required to consider the offer price as a determining factor when deciding whether to recommend a bid. They can take full account of the bidders’ plan which, since 2011, has also had to be set out in more detail.
Quite often takeovers or mergers are looked at on a case-by-case basis. Cadbury Schweppes was a classic example of a large takeover. Although there is a limitation on what the Government can do under present legislation, the party opposite, when it was in government, had the opportunity to make the necessary changes. It did not happen, and the Cadbury Schweppes takeover went very smoothly. We are very concerned to make sure that the interests of British research and development and British exports are taken into account if any such merger or takeover takes place.
National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) (No. 2) Regulations 2014
Motion of Regret
That this House regrets that the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) (Amendment) (No. 2) Regulations 2014 create arrangements for the management of services for very rare conditions that are much more fragmented than those in place prior to the Health and Social Care Act 2012; and further regrets that the process by which services for rare and very rare conditions are considered by the Prescribed Specialised Services Advisory Groups and NHS England for commissioning nationally are unclear and lacking in openness and transparency. (SI 2014/452)
My Lords, I am grateful to have the opportunity to debate services for very rare conditions. The House has long had an interest in those rare conditions and, indeed, in specialised services more generally. During our debates on the Health and Social Care Bill in 2012, we had extensive discussions about how to protect specialised services. Of course, the funding of those services is at the moment the subject of much debate because of the overspending under the auspices of NHS England. That clearly emphasises some of the problems arising because of the changes brought about by the Health and Social Care Act 2012.
Rare diseases are more of a feature of healthcare in the United Kingdom than many people think. Indeed, I understand that there are reckoned to be about 6,000 such diseases, and it is calculated that 6% of the population have such a rare disease, but each separate disease can affect fewer than 500 people. Those diseases can often involve some of the most vulnerable patients; given the small patient numbers and clinical complexity involved, it can be difficult to plan and manage. I understand that work has shown that four in 10 patients with a rare disease report difficulty in getting a correct diagnosis and then face similar challenges with obtaining suitable treatment.
Prior to the 2012 Act, these services were commissioned by a single national specialised commissioning team, subject to approval by Ministers on advice from the Advisory Group for National Specialised Services. That single commissioning team could draw on advice from the advisory group’s broad multidisciplinary membership to ensure high-quality service developing. The advisory group itself benefited from the bespoke ethical decision-making framework appropriate to considerations of products and services for such small patient populations.
Under the new system, responsibility for highly specialised services has been fragmented in a number of ways. Services are planned by an advisory group within NHS England called the rare diseases advisory group, while new highly specialist technologies are due to be developed and evaluated by NICE under a new methodology currently under development. Separately, the prescribed specialised services advisory group advises Ministers which services to instruct NHS England to commission, including new highly specialised services, such as in the statutory instrument that we debate this afternoon.
Apart from the complexity of these new arrangements, a number of problems have been identified by the Specialised Healthcare Alliance. First, the separation of these complex and interrelated functions between different national agencies risks the loss of efficiency and expertise in planning highly specialised services. As an example, links between NICE and NHS England would need to be extraordinarily close given that many highly specialised services are heavily dependent on high-cost, low-volume drugs.
Further, changes to the commissioning of these services present additional causes of concern. Rather than retaining a single national commissioning team to manage relationships with providers of highly specialised care across the country, delivery is now delegated, I understand, through NHS England’s four regional offices, with contracts held by the 10 area teams with responsibility for specialised commissioning which have providers on their patch. The alliance has expressed concern that cohesive oversight of these services is likely to be undermined in the process and may even introduce a greater degree of clinical risk. The efficiency of the arrangements, moving from one national to 15 different teams with a greater or lesser involvement, also seems highly debateable. As an example, where access to a service across the country is dependent on only three or four providers, problems at one will have an immediate consequence on the others as well as on patient referrals.
The prescribed specialised services advisory group advises Ministers on changes to the scope of specialised services to be prescribed in regulations for direct commissioning by NHS England. Under the terms of the 2012 Act, Ministers prescribe services for NHS England to commission directly, including specialised services, while all the other non-prescribed activity falls to clinical commissioning groups to commission for their local populations. In prescribing a service as specialised, four factors in the Health and Social Care Act 2012 are taken into account: the number of individuals who require provision of the service; the cost of providing the service or facility; the number of persons able to provide the service or facility; and the financial implications for clinical commissioning groups if they were required to commission the services or facility themselves. Ministers receive advice from the advisory group hosted within the Department of Health to inform such changes. However, this has not been at all transparent. Indeed, in its first year of operation, the advisory group was hidden from public view. It was not until 2 May 2014 that the first details of its membership, decision-making processes and recommendations were published. A few members of the alliance have campaigned to secure inclusion of their services as specialised services but were taken by surprise by the publication of this statutory instrument as they did not know that the advisory group had issued a recommendation to Ministers.
The noble Earl may have good news for us about the publication of a report on this matter either today or in the past few days. As it reached me by e-mail this morning, I have not had time to read it, and it is certainly not available in the Printed Paper Office. That is a pretty poor do if we were meant to have it in time for this debate. It is very important that this work is transparent. I hope the noble Earl can give us more assurance on that this afternoon.
Will the noble Earl respond to the evidence given by the NHS England chief executive to the Commons Select Committee on 29 April, in which Mr Simon Stevens suggested that the scope for specialised services had been overextended and needed to be reviewed? The noble Earl will know that the overspend by NHS England is causing great concern in the health service not only because it suggests that NHS England has lost control over the commissioning of specialised services but because the resources have had to be taken from other parts of the health service. Clearly, this position is not sustainable. I would be grateful if the noble Earl would respond to that question.
I should also like to ask the noble Earl about access to medicines, a matter which is very relevant when it comes to the issue of rare diseases. Like the noble Earl, I am sure, I listened carefully to the previous debate on the proposed takeover of AstraZeneca. As he will know, one of the concerns about the relationship between UK pharma and the NHS is the slowness of the NHS in the widespread uptake of innovative new medicines. I know that the noble Earl, with his responsibilities in the department, has been anxious to see some change in the NHS regarding that issue.
Perhaps I may ask the noble Earl about the potential impact of the new PPRS agreement on the way that the Government negotiate with the pharma industry. The Department of Health and the ABPI have agreed a limit on growth in the overall cost of branded medicines. If expenditure goes over the overall cost and exceeds the permitted level, retrospective payments will be made quarterly to the Department of Health. In return, the pharma industry has been able to maintain flexibility in the pricing mechanism, which has always been one of the advantages that the industry has sought in the United Kingdom. We may not be very good at buying the industry’s new products, but pricing in the UK often sets a marker for the rest of the European market and has been one of the reasons why it has been prepared to invest so heavily in the United Kingdom.
The question that I want to put to the noble Earl is this. I do not know whether he knows the returns from the first quarter of the new scheme yet, but let us assume that the industry is to make regular payments back to the department. Has the department given any consideration to how that resource will be spent? Although I can appreciate that the department—or, indeed, the Treasury—might make first call on such payments, I also wonder whether the Government have considered using that resource to fund innovative medicines for rare diseases. That would create a fund with which the UK could invest in new medicines, particularly in the area of rare diseases, where funding has proven to be such a problem.
The way in which medicines for rare diseases are commissioned and provided in this country is important. Although it is fairly early days, there are some discouraging signs, and I am grateful for the opportunity to raise my concerns with the Minister this afternoon. I should have declared my interests as the chair of a foundation trust, a consultant and trainer with Cumberlege Connections, and president of GS1. I beg to move.
My Lords, the regulations, which address an important Cinderella service in the NHS that not many know about, are extremely important. I thank the Specialised Healthcare Alliance for its briefings, which have provided an extremely helpful background. I know that the noble Lord, Lord Hunt, has provided a couple of figures, but it might be worth pointing out that there is a clear distinction between “rare” and “very rare” diseases. It sounds silly to say, but those with very rare diseases would welcome having, for the one in 17 or fewer of the population who will be affected by a “rare” disease—that is the ratio—a reasonable coverage throughout the country, although it may be in specialised areas. However, “very rare” diseases may affect fewer than 500 patients in the UK and, in the case of one or two diseases, may affect perhaps only one or two patients.
With the implementation of the new clinical commissioning groups it has obviously been important to reassess how treatments for rare diseases are commissioned. I do not have to declare an interest because I do not have a rare disease but, as someone who has to access rare biological medicines, I know that my local CCG and many others are struggling with the whole issue of prescribing expensive drugs. However, they cost pocket money when compared with the cost of medicines and treatments that we are looking for as regards rare and very rare diseases. The key is that one-size commissioning will absolutely not fit all, even within the definition of one rare disease, because it would be very unusual to find one clear clinical route. These days, the personalisation of drugs based on genes identification—80% of rare diseases have a genetic component—and the range of co-morbidities with most of these diseases mean that we absolutely must have clear and individualised treatment routes, with a much higher level of understanding of the diseases.
That is why I welcome the prescribed specialised services advisory group, which, for brevity, I shall refer to from now on as the PSSAG—I do not know what the Department of Health is calling it but we may as well add something else into the alphabet soup. It is important that the Secretary of State consults the PSSAG. The regret Motion was laid prior to the publication last week of the recommendation from that special advisory group. Inevitably, the timing is unfortunate, but life is like that. However, I believe that the publication of this report significantly reduces the concerns in the regret Motion about fragmentation and transparency. For example, the sections on membership and process on pages 7 and 8 of the report, some of which the noble Lord, Lord Hunt, referred to, make it very clear that both lay members and representatives from the royal colleges, as well as members with financial and technical expertise who can offer assistance, will come together to look at things. The noble Lord referred to what has to be reviewed but the other elements are equally important. The PSSAG must also consider how activity can be identified to enable separate contracting, monitoring and payment, which I think addresses the noble Lord’s point about what happens when things are devolved to a regional level. It also has to address the running costs associated with separate and direct commissioning, as well as consider defining elements of service to be commissioned. Therefore, I think that I am more reassured than the noble Lord, Lord Hunt.
It will be very important to monitor implementation, partly because, certainly in the early days, it will be difficult to budget for it, in part because of what I said about the personalisation of treatment routes and medication but also because, as we and the commissioners become much more familiar with the changes taking place in the treatments, particularly the gene therapy treatments, we may find that the costs of associated treatments are significantly reduced quite early on if the biologics and other superdrugs, as well as stem cell drugs, begin to work. Therefore, I would be grateful if the Minister could reassure the House about monitoring the situation once the PSSAG gets fully into its stride and commissioning starts to take place.
I have one area of concern, which is perhaps where more than one of the specialist groups that are going to be looking at treatment routes are involved in commissioning a patient’s treatment. Often two, three or possibly even four specialist groups are likely to be involved. In cystic fibrosis there would obviously be a principal neurological one but blood and kidney specialist groups might be involved as well. My fear is that we may end up, as we have done in the NHS in the past, with the position where a patient in a hospital sees lots of different consultants but does not know who has overall responsibility for holding the ring. Is there an equivalent in this sector to make sure that one group has a specific responsibility, partly so that clinicians and therefore their patients are not passed from pillar to post among these different specialist advisory groups?
My Lords, I am grateful to the noble Lord, Lord Hunt, for raising this crucial matter. This issue of rare diseases is of increasing importance with the developments in knowledge and in new forms of treatment that are beginning to emerge. For many years in the NHS, doctors and scientists recognised that there were a good many rare diseases, but those received comparatively little attention save for supportive treatment because no effective drugs were available that were curative or that would at least alleviate significantly the effects of such diseases.
Of course, one has to recognise that many rare diseases still exist in medicine but every single disease, even if it is incurable, can have its effects modified to some extent by pharmacological, psychological and physical means. However, that was not particularly brought to public attention until the past few years, when developments in molecular biology—not least in genetics—highlighted by the rare diseases consortium and by the Genetic Alliance UK meant that in a very large number of rare diseases the causal gene was identified, isolated and localised in the genome. In addition, drugs have begun to emerge which will alleviate or overcome the effects of the genetic defect. For those patients who have a rare disease, affecting up to several thousand individuals, these are known as orphan drugs; for those affecting a few hundred or a few dozen patients, these are known as ultra-orphan drugs, which are very expensive. The number of patients likely to benefit is relatively small so the commercial viability of these remedies is at least a matter of grave concern.
While there are important things to take on board here—we were talking about R&D and AstraZeneca a little while ago—we must recognise the fact that Britain has an outstanding record in medical research and development. As I have often said, today’s discovery in basic medical science and in applied science brings tomorrow’s practical development in patient care. People with rare diseases can be helped by these remedies that are now coming on stream much more rapidly than has been the case in the past. The important thing is this: as the noble Lord, Lord Hunt, said, before the Health and Social Care Act was passed, we had the Advisory Group for National Specialised Services which commissioned services for some people with rare diseases. When the Act was passed, we—those who debated it extensively in this House—were reassured by the knowledge that there was an agreement that highly specialised services would be commissioned by NHS England. In recent debates with the noble Earl, he has been able to reassure us that that organisation has a rare disease advisory group, advising it on the management of these conditions. He was also able to reassure us about the early availability in this field, and in others, of unlicensed drugs in specific circumstances that may be effective in the management of many conditions in medicine—not just for cancer but for rare diseases, too. That is crucial.
However, as the noble Lord, Lord Hunt, said, we are concerned that the services are somewhat fractured in the sense that I have been unable to find out with any great clarity the terms of reference of the prescribed specialised services advisory group. It is not at all transparent at the moment. As the noble Lord said, nothing has been clearly published about its membership, its modus operandi and how it will function, or to what extent it has a relationship, if any, with NICE on the new procedures that NICE is introducing for the examination of orphan and ultra-orphan drugs. We need reassurance and more information on how this group works and, in the interests of public scrutiny, how it makes an effective contribution to health service decision-making. These are matters of great importance because rare diseases, though rare, are a major blight on people in the community. However, we cannot assess human suffering in purely numerical terms. The suffering resulting from many of these rare diseases is in many ways serious and exceptional and deserves very special attention.
For that reason I was very concerned, and I hope that I have misinterpreted the remarks of the director of NHS England, Mr Simon Stevens, in his report to the Commons Health Select Committee. He said that he thought there was a need for the scope of specialised services to be reviewed because he thought that they had been overextended. This is a phase in medicine in the UK when that would cause great concern to patients and their families and to many doctors who are concerned about the treatment of these diseases.
My Lords, I am grateful to the noble Lord, Lord Hunt, for initiating this debate and giving us the opportunity to talk about the new health service arrangements as they affect rare and very rare conditions. As other noble Lords have done, I shall range wider than the regulations—only briefly—because it is not often that this subject comes up for debate. The opportunity should not be missed to say something about those of us with a rare disease, in my case muscular dystrophy, and how it is faring as the new NHS arrangements are being put in place. I declare that interest.
All muscular dystrophies are rare diseases and some are very rare and there has been a great deal of uncertainty about how existing services for patients would fit into the way that services are commissioned, planned and delivered in the new NHS landscape. However, the situation was far from perfect before the changes. Some patients might not see a consultant for several years and many found it very difficult to access the right respiratory and heart checks, physiotherapy—especially hydrotherapy—and emotional and practical support. It was very much a postcode lottery. I had to discover for myself, 20 years ago, how helpful an exercise regime was, and this is now advised by healthcare professionals.
The new NHS set-up has provided not just a challenge but an opportunity to get things right from the beginning. The Muscular Dystrophy Campaign has worked closely with NHS commissioners on both a national and regional level and has achieved significant and encouraging progress in developing a dedicated neuromuscular standard through a specific annexe in the specialised neurosciences service specification. This has ensured that there are now more than 40 neuromuscular care advisers and specialist nurses funded by and embedded in the NHS, who provide invaluable support and advice to those with muscle-wasting conditions and their families. More are still needed, particularly to help guide patients and families through the transition from childhood to adulthood.
Another valuable initiative is Bridging the Gap, a Department of Health-funded project run by the MDC which began last July to help shape the future of neuromuscular services in England. This project brings together NHS commissioners, clinicians and health professionals through regional patient-led neuromuscular forums. Already it is bearing fruit, such as the development of GP online modules and emergency care plans, which it is hoped will improve the quality of care and support of people with neuromuscular conditions.
Clinical reference groups have been a positive step overall towards the effective commissioning of specialised services, although there are still problems. First, there is a disparity of CRG arrangements for rare diseases. Cystic fibrosis, for example, has its own CRG for children and adults and works well, but neuromuscular diseases are spread across three CRGs. I am taken with my noble friend Lady Brinton’s suggestion of there being a designated clinical lead so that everyone knows who to turn to. I believe that a one-off meeting has been arranged by NHS England to bring together these CRGs, but a long-term plan is also needed to work out how they will work together in the future.
Secondly, the main neuromuscular service specification prepared over the past three years, which covers children, transition and adults, mainly sits in the adult neurosciences CRG, which has adult-only expertise. It is a very welcome and recent step in the right direction that the paediatric neurosciences CRG has agreed to adopt the neuromuscular annexe of the service specification, but further work is needed here. I look forward to my noble friend’s reply.
My Lords, I am well aware that the noble Lord, Lord Hunt of Kings Heath, retains a keen interest in this topic, and I thank him for bringing it to the Floor of the House. I was naturally disappointed to hear that he feels that the new commissioning arrangements for specialised services which were put in place through the Health and Social Care Act 2012 are fragmented, and that the process for determining which services are considered to be specialised is unclear and lacking in openness and transparency.
Let me begin by emphasising that the Government continue to uphold the principle that no one is left behind, no matter how rare their condition, and that people with rare conditions should receive the same access to high-quality care as people with more common conditions. The Health and Social Care Act 2012 established the NHS Commissioning Board, now known as NHS England, and gave it responsibility for commissioning, among other things, specialised services. These services are prescribed in the regulations that the noble Lord has referred to. The arrangements for managing the commissioning of these services replace a system whereby 10 specialised commissioning groups and one national commissioner were responsible for commissioning both specialised and highly specialised services. Under that previous system, it became clear that there was variation in the range of services which some specialised commissioning groups were commissioning and the policies that were being applied to these services. This led to an inequity in access to services. Furthermore, the lack of standard contracts across the 10 specialised commissioning groups meant that the quality of services across the country was inconsistent.
All that has been replaced with a new system whereby one national commissioner is responsible for commissioning all specialised services for people with rare and very rare conditions. NHS England has developed standard service specifications and policies for commissioning these services, and these are underpinned by detailed identification rules that allow the commissioner of the activity, either NHS England or CCGs, to be determined. NHS England has implemented a robust process for developing and consulting on commissioning specifications and policies that includes public consultation. NHS England works with the 10 area teams responsible for the delivery of this work to ensure that highly specialised services continue to be commissioned in an effective way at the national level. I understand that all those involved in commissioning these services meet on a monthly basis to discuss any issues arising and how they might be resolved.
The noble Lord, Lord Hunt, raised the issue of the separation of functions carried out previously by AGNSS. I note his concerns that the system will be worse off without AGNSS. As a consequence of the 2012 Act, AGNSS ceased to have a role and its key functions have been picked up by other groups. From April last year, Ministers retained the power to decide which services should be commissioned, but NHS England became responsible for determining the number of centres and levels of funding in commissioning all specialised services. The prescribed specialised services advisory group has been established to provide Ministers with advice on whether services are specialised and should be directly commissioned by NHS England. NHS England worked with the former chair of AGNSS to consider how best it might receive high-quality clinical advice on highly specialised services. The Rare Diseases Advisory Group was set up by NHS England to provide it with this advice. The assessment of very high-cost drugs for patients with rare conditions was the final strand of AGNSS’s work which needed to be properly secured for the future. Ministers decided that NICE was best placed to offer this advice. I hope that that gives clarity to the arrangements that are now in place and the reasons why we considered this to be a compelling set of arrangements.
As I am sure noble Lords will acknowledge, the changes that were made through the Health and Social Care Act were extensive. With change being made on such a broad scale as this, one might expect that the processes for setting up the reformed commissioning arrangements will take a little time to settle in.
There are a variety of reasons for the trend in spending on specialised commissioning, which the noble Lord, Lord Hunt, mentioned, including increased demand for specialised services and increasing demand for high-cost drugs. NHS England is taking steps to address budget management and reviewing the opportunities to reduce costs while maintaining the quality of services, which I know it attaches great importance to doing.
I remain confident that these new arrangements will lead to high standards for all patients needing to access specialised services, wherever they live and no matter how rare their condition is. I listened with care to my noble friend Lady Brinton. The intention and ultimate effect will be to ensure that patients in need of specialised services receive consistent access to high-quality care, wherever they live, and that services are organised and delivered as efficiently as possible.
Our agenda is very much one of continuing improvement. Although I am aware of the concerns expressed by the Specialised Healthcare Alliance, neither I nor NHS England accepts the premise that the changes we have made are leading to greater fragmentation. However, I am grateful to noble Lords for drawing these issues to my attention. I assure noble Lords, not least my noble friend, that I share their wish to see joined-up, consistent services across the country. I can give an assurance, too, that I will monitor the provision of specialised services over the coming months.
The noble Lord, Lord Hunt, said that the process by which services for rare and very rare conditions are considered by PSSAG for commissioning nationally are unclear and lack openness and transparency. That concern was echoed by the noble Lord, Lord Walton. It may be helpful if I talk a little about the group and its role. The National Health Service Act 2006, as amended by the 2012 Act, requires that before making regulations setting out which specialised services are to be prescribed, and thus made the commissioning responsibility of NHS England, the Secretary of State must obtain advice appropriate for that purpose and consult NHS England.
PSSAG was established in 2013 as a Department of Health expert committee to provide this advice. Its role is to provide advice to Ministers on whether services are specialised and should be directly commissioned by NHS England rather than by clinical commissioning groups. The appointment of this group helps to ensure that the Secretary of State has appropriate advice when exercising functions under Section 3B of the NHS Act 2006. The group met for the first time in September 2013.
The noble Lord, Lord Walton, asked about the group’s terms of reference. It has working terms of reference, which are currently being further developed and will be signed off at a future meeting. As part of the exercise in advising Ministers, the group will also consider proposals for NHS England on the formulation of its service descriptions, which are used to explain what NHS England is providing under the different headings for the specialised services provided for in the regulations. The group will provide advice to Ministers on whether the service descriptions and any proposed changes are appropriate in respect of the prescribed service.
Evidence, supporting information and activity in respect of those services currently prescribed in legislation for direct commissioning by NHS England, along with any new services identified as potentially specialised and warranting commissioning by NHS England, are all made available to PSSAG from a range of sources. These sources may include clinical reference groups—CRGs—patient groups, clinicians, commissioners and members of the public. The proposals that the group considers are in large part generated by NHS England through its CRGs, which cover different areas of clinical practice. As PSSAG is still relatively new, the processes for enabling services to be referred to the group for consideration, and the annual cycle for considering whether services are specialised or not, are still being refined.
I agree with the noble Lord, Lord Hunt, that we need to bring greater transparency to the processes that are in place. We have recently created a webpage for PSSAG, located on the gov.uk website, which sets out information about the group, including its membership and contact details for those wishing to suggest a service for consideration by PSSAG. We also published a report on 2 May 2014 which details the recommendations that PSSAG has made to Ministers on the specialised services it considered in 2013, and our response. A copy is available at gov.uk. I give the House my assurance that timely publication of PSSAG’s report will form an integral part of the annual PSSAG process going forward.
I will cover some of the questions that I have not already dealt with. It may help the noble Lord, Lord Walton, if I explain that NHS England and NICE have a partnership agreement and have been working together across the range of specialised services. In addition, NHS England’s Rare Diseases Advisory Group has been established specifically to maintain a focus on highly specialised services, as I have already mentioned. It has a role in developing the strategy underpinning highly specialised services and is working with NICE on the highly specialised technologies programme.
The noble Lords, Lord Hunt and Lord Walton, both referred to the comments of the new chief executive of NHS England, Simon Stevens, in his evidence to the Health Select Committee. I agree that the list of prescribed specialised services should be kept under careful review to ensure that we get the balance right, and I am sure that view will be shared by the noble Lord, Lord Walton. Of course, NHS England will be able to advance views on this matter; again, it is entirely right for it to do so. Ultimately, however, the scope of these services is a matter for Ministers, with independent advice from PSSAG and with reference to whether services meet the requirements for national commissioning by NHS England on the basis of the four factors set out in the National Health Service Act 2006, as amended by the 2012 Act.
Finally, the noble Lord, Lord Hunt, asked me about the impact of the 2014 PPRS agreement, and in particular whether payments from pharmaceutical companies could be channelled or earmarked for particular purposes. The broad position here is that the anticipated payments under the PPRS have been taken into account as part of future planning by NHS England. It is not the case that these funds have been hypothecated or earmarked for a particular purpose. Indeed, that has been made clear to the pharmaceutical companies.
I hope that I have been able to reassure the noble Lord, Lord Hunt, in particular about his concerns, not least around transparency, which, as I have indicated, we are determined to address. I thank all noble Lords who have spoken about these important issues. I hope that they are reassured by what I have been able to say today.
My Lords, first, I thank the noble Earl for his response, and the noble Baronesses, Lady Brinton and Lady Thomas, and the noble Lord, Lord Walton, for taking part in the debate. I say to the noble Baroness, Lady Brinton, that of course the Motion was drafted well before the publication of the report. In fact, I received notification of the report only this morning. She seems to have got hold of it before me. Obviously it is helpful to have the report, which I have no doubt we will study, but I hope that this will be the start of an engagement between the advisory group and Parliament, and I hope that the advisory group will offer an open meeting for parliamentarians in the near future where we could discuss these matters with it.
The noble Lord, Lord Walton, was absolutely right to remind us of the increasing importance of ensuring that we have appropriate mechanisms for providing services and funding for these very rare diseases, particularly as technology advances and given the likelihood of orphan drugs being required more in the future.
I had hoped that I might identify a way to fund some of these services, but the Minister has told me that the money has perhaps been discounted and is already in the system. I say to him, however, that the low uptake by the NHS of innovative new medicines is a major problem. Alongside the issue of AstraZeneca, we have to persuade and cajole the NHS that it has to change its approach to new medicines. My own experience is that increases in staffing, in units and in medical equipment are all regarded as a good thing but that an increase in the drugs budget is seen per se as a bad thing. This, frankly, is nonsensical given what many drugs can bring to the public. The fact is that we have a hugely innovative R&D and pharmaceutical industry in this country which we should be very proud of, but the NHS has a lamentable record in investing in the output of that R&D industry. This is a very serious issue from the point of view both of patients and of our continued success—one hopes—as a country in attracting that R&D investment in the future. My understanding is that, in research and clinical trials in the future, unless we are able to compare innovative new drugs with what would in many countries be the normal drug usage, we will find it even more difficult to have clinical drugs started in this country. This is a very serious issue and we have collectively to tackle it.
I note what was said by the noble Baroness, Lady Thomas, who made some very powerful points. The noble Earl, Lord Howe, believes that the current system is not fragmented in the way that I described. Obviously, we will have to see whether this proves to be the case in the future, but there is a risk, with four regional and 10 area teams, of pretty widespread inconsistency within those teams and areas. We need to keep that under very close review.
I am very grateful to the alliance for its briefing and the work that it does. I wonder whether Ministers would be prepared to meet the alliance to discuss our debate and the advisory group’s report. I have already asked whether the advisory group would be prepared to meet parliamentarians. I am grateful to the Minister for expanding on the comments made by Simon Stevens to the Health Select Committee about the overspend on specialised commissioning. NHS England is not very visible in the Palace of Westminster and it should become more so. Before it makes pretty fundamental decisions on specialised commissioning, it would be very good if it was again to agree to meet parliamentarians to discuss it. This has been an excellent debate. I beg leave to withdraw my Motion.
Businesses: Small and Medium-Sized Enterprises
Motion to Take Note
My Lords, I welcome particularly the former members of the Select Committee which produced the report which is the subject of this debate—the members of the old comrades association, if I may say so, of the Select Committee. Our committee report had a good reception from the Government and others last year. We were particularly glad that the Government agreed to report again on developments a year later, which my noble friend the Minister did on 27 March, and to facilitate this further debate.
The theme of our work was government help for SMEs—small and medium-sized enterprises—to export. Exporting is obviously good for SMEs and essential for the prosperity of our country. Government help for this purpose is not controversial between the parties or, for that matter, within the coalition but it is also supported and assisted by many outside bodies. The Government’s support is of course shown by the appointment and excellent work of the Ministers concerned, particularly, until not long ago, by my noble friend Lord Green of Hurstpierpoint and now by my noble friend Lord Livingston of Parkhead.
Our report was very strong about the need to improve awareness of UK Trade & Investment and UK Export Finance—UKEF—among businesses. It is after all no use for UKTI to make excellent services available, as it does, if not enough SMEs know about them. The Federation of Small Businesses, among others, emphasises that increasing awareness of the services available is the most pressing need. It is of course not always easy to get through to SMEs. They are very busy and self-reliant, almost by definition. They are used to working out problems for themselves. They have a lot to think about and their dealings with government and their many agencies are usually about taxing and regulating them. So the message “We are here from the Government to help you” does not immediately switch on the “Welcome” sign. I hope that my noble friend the Minister can tell us a little more about the progress and effects of the effort, mentioned in a recent paper, to contact all the 8,900 medium-sized businesses by this summer. The Bank Holiday weather has encouraged me to believe that summer—that most flexible of dates—is about to arrive. How, too, are they getting on with the “Exporting is GREAT” campaign?
A real shock to us on the Select Committee was the tiny number of firms, or at any rate of SMEs, being supported by UKEF. We were told of UKEF’s new marketing campaign, which of course I welcome; that three new schemes had been introduced in 2011, particularly to help SMEs; and that UKEF was recruiting additional staff. In the recent Budget, some further proposed improvements to UKEF’s terms were announced, whose purpose included trying to ensure that smaller companies could benefit. Can my noble friend the Minister tell us what is now expected to be the level of UKEF support to SMEs in the coming period?
On SME finance generally, we were, like many others, critical of the banks. Recent figures suggest that the borrowing environment for smaller businesses has improved. Certainly, when one goes into branches of the large clearing banks one sees trays of leaflets encouraging SMEs to approach them and start-ups to come and see them. However, I have also seen recent evidence that decisions are still made well above the branch level and take a long time to gain approval, longer sometimes than the timetable that export sales require. Captain Mainwaring of Walmington-on-Sea is dead—replaced, one feels, by distant computer watchers.
One of our points was that businesses can borrow from a much wider range of sources than just the clearing banks. This has been widely discussed since, with much talk of challenger banks and so on. SMEs can and should look around. There are many ways to access finance and the clearing banks have lots of competition in this field nowadays. Some of it was formally considered novel but is now thought normal, such as internet banks, crowd funding or peer-to-peer lending—a term that can be misunderstood in your Lordships’ House. SMEs have a vitality that needs to be matched by flexible financial backing, and that is available.
We did not deal separately in our report with the effects of technology on SMEs, although the amazing changes that it continually makes ran like a thread through much of what we did. My noble friend Lord Livingston has great expertise in this area, not least from his period as chief executive of Dixons plc and PC World. As technology connects the world at an ever faster rate, it changes markets radically. You can find and reach customers much more widely across continents. The English language is helpful in this. After all, it is so often the language that computers use to speak to humans. But retail customers in particular need to be spoken to in their own language and with regard for local customs. Finding customers by technology is one thing, but selling also depends on how easy it is to deliver to your customers in distant places. More and more can be delivered electronically—books are the obvious example—and other products of the creative industries, which are so important in this country.
We have always been an innovative and outward-looking country, and IT gives us so many extra chances both to innovate and to reach out to the world. SMEs, with their flexibility, are in the forefront of all this. However, IT also makes the world more complicated. It is partly responsible for the increase in regulations and forms of every kind in all countries. That is one reason why the Government need to help SMEs to export through UKTI, the FCO and other bodies such as the chambers of commerce.
I particularly want to mention two more detailed matters that we referred to in our report. The first is intellectual property. As we learn with morbid fascination of the latest developments in that great lawyers’ feast, the titanic intellectual property struggle between Samsung and Apple, which I think is now in its third year, we should remember that for SMEs such things can be an existential challenge. How can you protect your idea or special product in foreign markets in many countries? I am not going to go into all the aspects, but I ask the Minister how the new IP attachés in our overseas embassies are doing in China and elsewhere. Is there any recent progress to report on international negotiations on IP? China at least is said to be realising that it has intellectual property to lose these days as well as to gain from.
I also want to mention bribery law. The definitions of what precisely constitutes a crime remain only partially understood by SME exporters despite 40 pages of careful legal guidance from the Ministry of Justice. We on the committee worried that the Government were waiting for case law to remedy this deficiency—in other words, that some businesses may suddenly find themselves the specimens being pinned down for examination in the courts while lawyers and judges work out in their confrontational way, in ever higher courts, what this Parliament intended the legislation to mean in practice.
The International Chamber of Commerce wrote after our report saying what was needed was not more parliamentary scrutiny or change in the law or guidance, but more efforts to promote awareness of the present guidelines, particularly by our embassies in relevant countries. We agree about awareness, but we thought that further consideration in a Lords committee might help both awareness and clarity.
All are agreed that the Government should, through their agencies, help SMEs to export in whatever ways are effective. I welcome the appointment of Dominic Jermey as chief executive of UKTI. He has unusually wide experience, including in both UKTI and the FCO, recently as ambassador to UAE.
I pay tribute to my noble friend Lord Green of Hurstpierpoint for his unceasing efforts while he was in the Government. He invigorated the whole process, and UKTI in particular. He proved once again the case for people of energy and expertise to be appointed to the House of Lords specifically to be Ministers. I am delighted that he is here today to speak. His successor, my noble friend Lord Livingston of Parkhead, has brought his own successful high-level commercial and financial experience, as well as his vigour, to the job over the past few months. It is essential work for our national prosperity. We wish him well and look forward to his speech today. I beg to move.
I thank the noble Lord, Lord Cope, for securing and introducing this debate on a subject so vital to our economy. Indeed, our report goes on giving. This is effectively the second debate that we have managed to have on it, and I very much welcome it. I also thank the noble Lord, Lord Livingston, for feeding as many of us as could be assembled in a hurry to discuss the report when he was appointed.
Britain Open for Business sets out an impressive range of services and improved delivery of those services, but it still does not seem to me to be directed towards the smaller end of the market—the smaller medium-sized companies, if I may so describe them, the really small companies and, above all, the problem of start-up. At one level, that is fair enough. In the short term, the big wins in increased exports must come from concentrating on larger and medium-sized companies. However, we need to look beyond them. In any case, they are reasonably well placed to access the information they need, once you prod them into action. We heard many views that smaller companies may not be able to spare a hand from the day-to-day business to put in the effort to export, and it is there that we need to concentrate.
Since our report was completed, and after reading the Government’s formal response, Britain Open for Business, I have been thinking about how the national goal of increasing exports can be achieved. Let us be clear that at the moment it is not a success story. Our balance of payments on manufactured goods is worsening. We must improve. I believe that means putting in the hard, long-term slog to get smaller companies into exporting.
In this context, when we think about concentrating on larger companies, the example of the proposed takeover by Pfizer of AstraZeneca stands as a kind of living, breathing horror about what can happen to your larger companies. As an ex-director of the London Stock Exchange and a director of many companies in my time, I say that fine words about carefully considering takeovers by foreign companies do not really come to much when you find yourself faced with a bid of 30% more than the existing stock market price. That tends to overrule any amount of careful consideration, partly because not to take account of such a stock market price increase would be damaging to the interests of shareholders. The Government—and we, when we are once more the Government—will have to think about how we protect jobs and vital national infrastructure in a reasonable and measured way.
For the moment, however, I am thinking about developing some more vital national infrastructure. I come to the report’s particular concerns and targets. The whole committee was started at the request of the noble Lord, Lord Popat, then a Back-Bencher in your Lordships’ House. He won the right to set up the committee that we are still discussing.
Small and very small companies need lots of encouragement and advice and access to finance at reasonable prices if they are to export and grow. We indentified a critical role in the advice and support for the LEPs and chambers of commerce. There is almost nothing about LEPs in Britain Open for Business, but I will not have a go at that one because my noble friend Lord Haskins will be speaking later in the debate. He chairs a large LEP and will be able to tell us.
We are not yet offering enough help, both advisory and financial, and we lack the culture to provide it. The noble Lord, Lord Heseltine, in another report, identified this gap and noted that is was filled in other European countries by the chambers of commerce. There is work to be done here. We were told on our travels that some chambers were inactive or unwelcoming. There is nothing in Britain Open for Business about how they might be revitalised. They could indeed be given funding to improve. Like everyone else, they need competent central organisers, which many cannot afford. I recommend this and wonder whether the Minister will comment on this in his reply.
We could also think more carefully about how small companies get started. This has been a lifelong interest for me. Although two of the companies that I have helped are restaurants and have never exported a thing, I could have done better if I had thought about it. That is also particularly true of whether we can find a way to help our immigrant business men and women, who can see a market in their countries of origin for goods made here. We met a couple of such businesses in our travels, one exporting curries and chutneys to the Indian subcontinent. Of course, this business had none of the obvious difficulties in exporting: it knew its markets, what to sell and to whom. There were none of the usual problems of language barriers. It would be well worth while for UKTI to consider zeroing in on such companies as a particular sector and helping them to grow. We noted that the owners of these businesses were careful people, only using such finance as could be generated within immediate family and friends. I have been there. This is how I worked but, with better information and advice, we could have grown faster.
In fact, the incentives available to friends, family and investors in general to invest in start-ups have been immeasurably improved by the introduction of the small enterprise investment scheme which allows top-rate taxpayers a concession of 50% on any investment after the enterprise in question has been trading for a few months. This last was introduced after our report and the Government are to be congratulated on it. When we are once again the Government, we should keep it.
Small businesses have difficulty servicing debt. When I was in the start-up business, like the careful Indian businessmen we met, I tried to depend as little as possible on a bank. However, if you have to take on debt, the new government scheme, which allows small companies to borrow up to £10,000 at about half the rate that any bank would offer, provides a welcome and timely piece of help and encouragement for start-up companies.
In conclusion, we do not yet do enough to encourage very small businesses and small business start-ups. Our report recommended several measures that would help, including working through LEPs and chambers of commerce, which are not yet happening. The SEIS and the government loan scheme are of real value on the financial side, but they are necessary rather than sufficient. We and UKTI could do more, possibly by concentrating more attention in this sector, particularly with people who have a natural route to exports to the countries from which they come. Start-ups are difficult and so are very small companies, but they are the medium-sized and larger businesses of the future. I ask the Minister what the Government’s further plans are to provide increased services to this most critical area.
My Lords, I thank my noble friend Lord Cope for securing this important debate. His chairmanship of the Select Committee on Small and Medium Sized Enterprises, of which I have the pleasure of being a member, was exemplary.
When my noble friend secured the debate in June last year on the Select Committee’s report, we had high hopes of an export-led recovery. Sadly, those prospects seem far less certain at the moment. The trade deficit has remained high, and the value of exports fell by 2.5% between August and November. I am glad to see that the trade deficit has been gradually reducing since imports have reduced. However, that demonstrates how precarious the situation can be, exacerbated by the fiscal situation of the eurozone. I suggest that we need to ensure that we look to the future and are thoroughly prepared for what it holds.
Britain may be the sixth-largest exporter in the world and number one for e-commerce in Europe, but we have a massive trade deficit and therefore need to double our exports to £1 trillion by 2020. Only 17% of mid-sized businesses generate revenues outside the European Union, compared with 25% in Germany and 30%—I stress—in Italy. While we have thousands of great exporters, others balk at doing business in countries embraced by our competitors. The CBI has reported that if mid-sized companies maximised their potential they would deliver an extra £20 billion to £50 billion to the economy. The House of Lords Select Committee’s report clearly and cogently identified what needs to be done and we can clearly see a number of very important initiatives coming forward. The International Festival for Business in my home city of Liverpool should be a must for every businessman and businesswoman, and I am sure that our Minister will be there as well.
I will give an example. The expansion of UK Trade & Investment has been vitally important. I will give noble Lords a local example of its sterling work, because it is on many occasions an unsung hero. It held an export week in the north-west that reached 400 businesses, with free events that explored opportunities that ranged from Africa and Europe to southern Asia and Japan. The challenge was for existing exporters to make this the year that they expand into at least one new market. In the weeks before it achieved its target of creating 1,000 new exporters in the north-west, the north-west UKTI director, Clive Drinkwater, said that if every current exporter in the region rose to the challenge,
“we could increase the GDP in the north west by an estimated £2 billion, significantly aiding economic recovery and giving a boost”,
to the competitiveness of the north-west itself.
On support, large companies have a knack for prospering, with their intangible assets and intellectual capital—Pfizer’s recent bid for AstraZeneca is a prime example. Meanwhile, budding SMEs struggle to gain any funding. Figures suggest that 57% of those innovative firms struggled to find funding in 2012, which represents a steady increase from 38% in 2007. Why am I voicing such concern? SMEs are particularly vulnerable: should unlucky circumstances befall them, they may have to sell their shares quickly at knock-down prices and lose the prospect of scaling up. What is worse, if they find themselves having to sell off their enterprises to foreign companies, the UK economy will face losses. If we solve this problem, the returns could be huge.
Take the following example from my city of Liverpool. Focus Commercial is a commercial finance house situated in the heart of Liverpool which aims to provide SMEs with funding without depending on high street banks. However, its support for SMEs does not stop there, as it also attempts to provide a plethora of financial options, with its remit extending to the property and construction sectors. Such co-operation is important, and the flexibility and tailored support that growing SMEs require depend on them not being boxed into a financial corner. Who knows—such support might just fulfil the premonition of the Centre for Economics and Business Research, which says that the UK could be the largest economy in Europe by 2030 if we continue to create businesses and jobs at our current rate.
SMEs are in disagreement about the precariousness of the exports market at the moment. Some feel that niche products are needed to tap into markets that have never been targeted before. It would be less difficult for more SMEs to make the most of those markets with a raised awareness of what UKTI can offer them. If 100,000 new exporters are required to double the value of exports by 2020, this support will be required. I am very glad that the report has raised the issue of awareness from both UKTI and SMEs. Enterprise is, after all, the driving force for economic growth.
I turn to education, an area of great interest to myself. It has been said for years that SMEs need to, and indeed should, invest in apprenticeships. In fact, ICM figures suggest that 20% of SMEs plan to take on at least one apprentice in the next year, with forecasts suggesting this figure will grow the year after. The Prime Minister has already made the step of subsidising workplace training and giving £1,500 grants to SMEs to take on their first apprentices, but this needs to be developed further. In Germany, apprenticeships generally last for three years; they consist of eventually assessed classroom learning for one day a week. While big companies can afford to do this, most enterprises cannot. As sanguine as it may sound, we need to make sure that the Government put in place a means of making sure that the terms, conditions and schedules of apprenticeships are clear from the outset. This is important for both the apprentices and the SMEs that hire them.
My noble friends will be aware that Madeleine Atkins, chief executive of the Higher Education Funding Council for England, recently expressed her desire for universities to improve their interaction with SMEs. The money that universities obtain could be put to good use by boosting knowledge exchange with SMEs. This proactive attitude is already evident. For a number of months now, Cambridge Regional College has been offering completely funded training to SMEs as part of a £2 million European Social Fund programme to improve professional skills at work. This initiative has been hailed as a good stepping-stone to formal qualifications such as apprenticeships, and these developments can be amplified only with a can-do attitude from Ministers in Parliament, SME owners and youngsters.
It is easy to see how young people can benefit from an apprenticeship; it is an alternative to further or higher education and is tailored to their vocational needs. It can also help SMEs, which reap benefits from apprentices; it is important that they make sure their business is sustainable and that they train those apprentices to understand the idiosyncrasies of that particular field of work.
I want to mention another opportunity, which I believe that we have not really thought through. I happen to be a member of the advisory committee of the Regional Growth Fund, which has given almost a £1 billion in grants and growth fund money to encourage business growth, particularly in the least prosperous regions outside the south-east. Businesses are encouraged and helped through the process, and the straightforward criteria are used of leverage ratio and job creation in areas too dependent on the public sector for jobs. It has been very adept at supporting business growth, but would it not be wise to consider whether we should look at targeting those businesses that have the capacity and will to export or those that want to expand their exports? Perhaps the Minister might consider taking up this issue with the noble Lord, Lord Heseltine.
I can only hope that the support objectives outlined in the report are fully achieved—and the sooner the better. We must never ignore the fact that SMEs are the driving force behind the sustainable growth that this country sorely needs.
I add my thanks to my noble friend Lord Cope for securing this important debate, and I add my congratulations to him and his Select Committee on a report that highlights the critical importance of ensuring that SMEs—and I am always conscious that that means small as well as medium-sized businesses—get as smooth a pathway and as effective a helping hand as possible on their journey on that path. I well recall appearing before the committee and being grilled closely on the details of the Government’s approach to the reform of UKTI and UKEF.
I shall make one general economic comment and three specific points about the continuing task. First, the economic point is in two halves, one a macro point and one a micro point. At the macro level we are clearly seeing a real economic recovery, continuing evidence of which was evident in the latest, first-quarter growth data. But it is also clear that we have to make a lot of further progress in rebalancing the economy if we are to achieve the ultimate objective of a more sustainable growth model for the British economy. None of us believes that growth is sustainable when it is driven too much by domestic demand and fuelled by debt. The fact is—we are all aware of this but we need to remind ourselves of it—that the trade account and, indeed, the current account more broadly, is still weaker than it should be. This has been the case for something like the past 40 to 50 years. Trade is not yet contributing properly and consistently to economic growth. In fact, it is still at best neutral and, more often than not, a drag on growth. So far we have not had a problem with financing that deficit but it would be folly to assume that that is always the case.
Therefore, at the macroeconomic level, there is a real, high-priority imperative to address this question of exports, particularly the role of smaller companies in the export performance of the country, to remove the vulnerability of our current account position and to achieve a more balanced approach to growth in the economy. I know that the Government recognise this and that they also recognise the importance of what might be described as the microeconomic imperative—that is, to get more companies, particularly smaller ones, into the international markets.
The evidence is clear and compelling. I used to cite it and make no apologies for calling attention to it again. A very impressive BIS study was done some two years ago but private sector studies also essentially demonstrate the same point—namely, that companies of all shapes and sizes in almost every sector which get into the international markets enjoy higher profitability, last longer, grow more and create more jobs. In other words, whether we look at this from a macroeconomic point of view or a microeconomic perspective, the conclusion is the same—we need to encourage more companies into the export markets.
I turn to my three specific points on the strategy. First, it is sometimes argued that all our focus should be on the emerging markets and on building the UK’s position and share in organisations such as ASEAN and in places such as China, the Middle East and what we might call the African lions, in recognition of the fact that six out of the 10 fastest growing countries in the world today are African. That is clearly undoubtedly important but it is wrong to conclude therefore that the EU somehow does not matter. We need to remind ourselves that the EU is a market of 500 million people. It may be growing relatively slowly but it is prosperous. As an aside, I think that it will surprise us by emerging on the upside in the coming year or two. Indeed, not all of it is slow- growing. Some of the east European markets in particular have many emerging market characteristics. Last but not least, the EU is near at hand and getting into it involves lower costs. It is also easier to navigate than many of the emerging markets and is often the best place to start for a smaller company exporting for the first time. In other words, this is not a question of either/or, as it is sometimes presented, but of both/and.
That leads me to stress the importance of the single market and of broadening and deepening it. This complex topic is perhaps worthy of a debate in its own right on another occasion in this House. However, a quick stocktaking suggests that good progress is being made in goods. You can export a car to 28 markets without making any adjustments because of the standardised EU regulations applying to goods in the single market. On the other hand, I think we all recognise that we have a long way to go on services, and on the digital single market we are barely off the starting blocks with regard to EU-wide broadband, roaming charges, consumer rights across borders, collective rights negotiation and so forth. I strongly suggest that the task of strengthening the single market and making its development, management and governance more efficient should be very high on the list of priorities for the reform of the EU. That is an interest, by the way, which all members of the EU share; this should not be presented as just a piece of British exceptionalism. I hope that my noble friend the Minister will comment on some of the key milestones on this important journey which has so much direct relevance to SMEs and their export opportunities.
My second point is that whether we are looking across the channel or further afield, proactive and high-quality support for SMEs is clearly essential. We should recognise that UKTI now stands reasonable comparison with many of its peers in the relevant countries; I think particularly of countries such as Germany, France and Italy. What does not stand comparison is the quality of business support for business. The role of chambers of British business groups around the world is critical, and their performance has been varied. At their best they stand comparison, but they are too often little more than lunch clubs providing no meaningful support for incoming British small businesses. Yet, at their best, they can provide a really welcoming environment providing mentoring and buddying, sectoral working groups and office space. They can showcase that country back at home to small business here, and so on. This is what the Germans do. We should not always shamelessly imitate the Germans but in this case we should. We began a journey some 18 months ago to work with business groups to upgrade these presences around the world, and I know that the British Chambers of Commerce is very active in developing an international programme to this effect. There is a lively interest in linking up among the more energetic domestic chambers and a rising interest among their members in exporting—so we have some good traction. I should be grateful if my noble friend the Minister can comment on progress, the way in which the Government have been supporting that initiative, how he expects it to pan out over the coming years, and the implications for UKTI as it is enabled to move into a more strategic role in those overseas presences.
Finally, much, though not all, of exporting requires effective financial support. The Government have begun over the past couple of years to rejuvenate UKEF, broaden its project range, make it better known to SMEs, strengthen its marketing, strengthen its presence around the country, and provide advice to banks—I am sorry that it has to provide advice to banks, but it is none the less there and it does and should do so—and, of course, to its clients. Anecdotal evidence is that progress is being made but I am sure we all recognise that there is a long way to go. Again, I ask my noble friend to comment on progress in developing UKEF’s offering to small businesses up and down the land.
My final comment is one that may well provoke a wry smile on the faces of the civil servants in the Minister’s office, because it is one that I made often when I had the honour to be in his position. We have lived with a weak trade position for many decades, we have lagged behind our obvious peers, we have fewer companies engaged in exports than should be the case and we leave great export opportunities on the table. There are many good stories as well, though. Many companies in many sectors in all parts of the country have their tails up and are exporting energetically around the world. Achieving more balanced growth with stronger trade performance is critical to us all and is a major task for us all. Furthermore, I believe that it is a task that is non-party political and that we have to stick at, probably for the next 20 years. It is a task that is collective because it involves government, of course, but also businesses and business representatives—and we need to keep at it. As I said—to the point where my civil servant colleagues were, I suspect, bored with hearing it—this is a marathon, not a sprint.
My Lords, let me congratulate not only the noble Lord, Lord Cope, but all noble Lords involved in the production of this report. I speak as someone who was not on the committee. The report is wide-ranging, authoritative and packed with interesting ideas and proposals. As a social scientist, I particularly like the comparative parts of the report, including the well documented section on Bavaria. The Bavarian successes with small business start-ups are relevant not only to the UK but to other parts of Germany, some of which lag well behind that area. I also echo what the noble Lord, Lord Green, said about the importance of Europe to our export markets and the single market. I welcome his sort of “hmm, hmm” comments on Germany because I do not think that the way to go for Britain is just to copy Germany. That country was the sick man of Europe only about 10 years ago, it still has structural weaknesses alongside its strengths, and we should therefore be a bit careful about that and develop our own model.
I shall concentrate here on only a few issues among the many powerful points made in the report. One is the core question of finance. It is disturbing to see in the report that:
“Lending had dried up even to SMEs with full order books and strong collateral and strong cash flow”.
What interventionist measures would the Minister suggest for breaking through this somewhat disastrous situation over and above those contained in the response already made? Would he not agree that it reflects structural factors, not just the hesitancies of the banks in the aftermath of the financial crisis? The economy has become dominated by finance-to-finance lending, often on the large scale, and lending to small productive enterprises comes very low down on the list. Microfactors are very important too. Does the Minister not agree that the demise of relationship banking, to which the report quite rightly draws attention, needs to be put into reverse? Speaking as someone who has studied the German economy quite intensively, the comparison with Germany, or at least the avant-garde sectors of the German economy, is quite telling here. What policies would the Minister propose to revive relationship-based banking in a speedy way? It seems to me that what one needs here is a new combination of high tech and low tech: on the one hand burgeoning processes of automation and, on the other, a distance between the banking system, the finance system and customers, including productive enterprises. I think that some structural reorganisation is needed here.
The report mentions that many SMEs are “born globals” in the internet age but I am not sure that this thought is followed up in the detail needed. To me, the advent of the internet, the coming of the internet of things and the transformations in manufacture linked to this are absolutely extraordinary. I do not think that there has ever before in human history been a period of transformative change of such an intense kind, and it is very important that we surf the wave of these changes. Even tiny start-up firms, through using internet-based collaboration, can produce and sell around the world, and indeed they are doing so. They come into existence one day and, almost the next, sell on a global level.
Tiny companies can now make use of facilities once available only to very large enterprises. McKinsey estimates that in the United States one-third of all SMEs now make extensive use of cloud technologies. That is a quite remarkable statistic. Whole departments were once needed to harness facilities that are now available either for free or at very low cost. Some cloud computing services cost only 10 cents an hour to utilise gigantic computing capacity. We have quite a range of microstudies which indicate that SMEs in this country are on average well behind those in the US and in some of the leading European countries in making use of these facilities. I ask the Minister what more can be done to get this country more into the forefront of these extraordinary transformations. Of course, many small businesses are local but we are seeing the fusion of local and global in a way that has never been seen before, and this is where enormous productive and export capacity will lie in the future.
The report does not discuss import substitution. I understand why but I think it is a pity. I do not think, as has been conventional wisdom up till now, that we should accept the inevitability of offshoring and deindustrialisation. A feature of history is that it does not move in a unilinear way—it quite often goes into reverse. I think that active policy should be engaged to try to push some of these trends into reverse, no matter how dominant they have been over the past 20 or so years. In this country we should actively seek to reverse these trends, both in manufacture and in the service industries. 3D printing is just the cutting edge part of what looks to be a thoroughgoing revolution in manufacture—perhaps even bigger than the original Industrial Revolution because of its global scope. Not just 3D printing but digital production more generally will be an enormous boon to SMEs, even tiny enterprises, and at the same time will serve to relocalise production.
Does the Minister agree that we should seek to reverse some of these trends that have previously been so dominant? It is not stupid to talk about the possibility of a partial reindustrialisation of the British economy. It is not stupid to suppose that the service industries will become massively more productive as a result of these emergent trends, and that policy should therefore follow and support them. What are the Government doing to help accelerate these trends of such potentially massive significance?
I thank the noble Lord, Lord Cope, for initiating this very important debate. It is very important for our country’s growth and it is so essential that the committee has addressed the issue of exports.
SMEs in particular need every possible help they can get to enable them to negotiate such a difficult and challenging path of business growth. There are many issues to raise and I shall quote from the Federation of Small Businesses which made four key points. It called for more effective sign-posting of existing export support and said that finance is important for small businesses. It talked about more effective targeting of support to microbusiness exporters and said that UKTI should perhaps consider setting up a microbusiness first-time exporter desk in each region so that businesses starting out had an accessible place to go for advice. It also wanted more readily available advice on export finance at local level with the UK export finance regional advisers.
A number of colleagues have already raised the issue of financing. It is a continuing issue for SMEs generally. The business bank was mentioned in the report. In practical terms, will the Minister say how the business bank is operating, in particular with regard to exports? How is it bedding down and doing the work that it needs to do? When it comes to finance for SMEs, in times past there used to be a strong local focus, whereby the local branch manager generally had a good understanding of local businesses. I can attest to that as back in the 1980s and 1990s I was managing director of a small plastics manufacturing company of tubing, cables, and such like, which went to the aircraft and defence industries. We were able to export successfully, but it was very much with the help of a local bank and a local bank manager. The importance of regional finance is just as important today.
Perhaps I may raise a general point on the issue of late payment, which particularly affects small businesses. It comes to quite a point of concern when many small businesses have to wait for 30 or even 60 days to get paid by big contractors, some of which have been given contracts by the Government. This is a general issue, but of course if a small firm has difficulty in financing, it will have difficulty in being able to export.
Will the Minister look into a specific issue that came into the report about UKTI and the Overseas Market Introduction Service? Concern about the Government’s discount scheme, which is covered by OMIS, has been raised because until recently the Government had a discounting scheme whereby 50% was taken off the charge by OMIS to small businesses with their first order. I understand that will not continue after 31 March because the Government say that discounting is not sustainable. But it is really helpful as a doorway for those firms that need this help to get it. Has there been any assessment of how discounting has helped in the past in increasing exporting? It is so important for businesses and this country. Has an examination been done about how the discounting, which will no longer be available, has helped?
Many points have been made by colleagues and we look forward after this debate to the Minister and the Government looking to address the many issues that have been raised. In passing, I would like to ask the Government whether they feel that the local enterprise partnerships have a strong enough focus on export towards the firms in their areas. This debate has been very worth while and I hope that it will encourage more and renewed efforts to help SMEs to export.
My Lords, I too thank my noble friend Lord Cope for initiating this welcome debate. The report by the Select Committee was published before I was introduced to the House. Accordingly, I have had the advantage of looking at it from the outside. As a relative new boy, it is sometimes easier to make observations. I have observed that the House has had relatively few debates and questions on the area of finance and enterprise. As the noble Lord, Lord Cotter, has just said, nothing can be more important to the well-being of our country than a flourishing economy from which everything else is generated.
Our success as a society stems from the ability of government to raise money from the domestic population and, essentially, other than mineral extraction, this relies on businesses growing, employing more people who pay taxes, generating revenue on which people pay VAT, generating profits and dividends on which tax is paid, and helping entrepreneurs to build businesses, which eventually leads to capital gains tax being paid. It is therefore vital that everything possible is done to help and encourage SMEs which, of course, are typically not multinational, but domestic. As they grow, they are more likely to pay taxes in this country than in other jurisdictions and employ more people in this country. In this context, I welcome the tremendous focus on business growth by a number of government departments. The Treasury has created an environment in which investment into the UK and UK business is proving to be extremely popular and attractive, which is something that I see regularly in my day job. The Department for Business, Innovation and Skills is helping business and young people to gain employment through apprenticeships and, as a result, according to a recent CBI survey, growth expectations among SME firms is the highest since 2003, with manufacturing growing at its highest rate.
There is a feeling in the country that the Government are providing a joined-up approach to promoting business, which has not been seen in the UK for many years. Undoubtedly, the recruitment of my noble friend Lord Livingston as Trade Minister was a real coup for the Government. Having someone with tremendous business expertise and experience leading UKTI sends a message to international business that the UK Government understand what needs to be done and are urgently seeking to promote our businesses. I saw UKTI action at first hand when I accompanied the Prime Minister and Ministers on the trade trip to China in December. However, despite my praise and admiration for UKTI, I have a number of observations and, I hope, helpful suggestions to make in three main areas.
The first is in many ways a function of our own success. There is a plethora of schemes available to SMEs to finance their growing businesses for export. In fact, last week I attempted to put myself in the shoes of such an SME businessman and visited the government website to seek help. As your Lordships may know, the new entry portal for all government help is www.gov.uk and on the very front page there is a link to business. Within two clicks I reached a page that enabled me to read about government-backed support and finance for my imaginary business. This in itself is incredibly impressive. However, unfortunately the clarity ended there. To my horror, the next page offered a choice of 791 different schemes to assist me. Equal prominence was given to the somewhat parochial Barking Enterprise Centre and the Crofting Counties Agricultural Grant Scheme in Elgin. While undoubtedly very worth while, they were given the same prominence as the perhaps more relevant export credit guarantee scheme. There is of course the opportunity to filter down your requirements, and I did then select finance for a business based in London with up to 250 employees in the service sector at the growth stage, and this managed to narrow the schemes down to 42, although surprisingly no filter was offered for people looking specifically for export finance. Accordingly, I would like to suggest providing a very early help button in the government website so that potential SME exporters can have short but direct conversations with experienced UKTI advisers about the route through the maze that is offered to them—because the help is actually there. I believe that this was included in Recommendations 11 and 12 of the Select Committee report, but I have not found any real evidence of their being implemented.
My second point relates to the excellent work being done by the Foreign Office to help SMEs export, and while not strictly on the point of finance for SMEs, it is part of the road to success. Many large UK corporates have consistently mentioned to me that they have noticed a dramatic change in the approach by the Foreign Office in parts of the world where they are seeking to do business. Perhaps it reflects a change in the role of diplomacy abroad, but more likely it reflects the commercial approach to life taken by the current Foreign Secretary to ensure that UK plc benefits from our existing foreign service facilities. Perhaps I may encourage my noble friend the Minister to publicise these enormous benefits that are of value to both the large corporates and SMEs. They are able to obtain advice from UKTI representatives in our embassies abroad and, of course, from Foreign Office personnel. It seems to have worked for large corporations and there is no reason why it should not work for SMEs.
Thirdly, and finally, is the issue of the relationship between the large retail banks and SMEs, which I believe needs further examination. It is a large topic so I will not take too much time here, but even last week the Treasury Select Committee heard that some of the banks really did not cover themselves in glory during the last recession, and there needs to be a realisation that they may not be the long-term answer for SME lending. I therefore welcome the initiatives that have been started to encourage new entrants to the market.
My Lords, I, too, congratulate the noble Lord, Lord Cope, on arranging this debate. It is nice to know that someone has listened to us and has read our work, and that the Government have kept their promise to report back. I also thank the Minister for his letter of 27 March. He told us what has been and is being done in response to the matters we have raised. From his letter, it seems that quite a lot is happening: refocusing the work of UKTI; building more partnerships and working with intermediaries in order to create more awareness and confidence; and focusing on medium-sized businesses. All this is very positive and a welcome response to our report. So, like the noble Lord, Lord Cope, I have to ask: does UKTI have the resources and back-up it needs for all this increased activity? Are adequate staff with business experience available, especially to satisfy the needs of medium-sized businesses, which will be more demanding?
As we have not taken any evidence, it is only indirectly that we can find out how effective all this work has been. For instance, the noble Lord, Lord Leigh, spoke of the various finance schemes. Parliamentary Questions last month in the House of Commons revealed that the export refinancing scheme has still not helped a single business. The direct lending scheme has not helped a single firm. These schemes were designed to replace the export enterprise finance guarantee scheme, which was abandoned after it assisted only five firms. Yes, the number of transactions by UK Export Finance has increased, up to a not very impressive 370, but how many of these deals apply to SMEs? Judging by the briefing received from the Federation of Small Businesses, not many do.
The point is that, as many noble Lords have said, this is a long-term project and it will take time. There will be mistakes, which have to be put right. While working on our report, we went to Bavaria, which interested my noble friend Lord Giddens. The state of Bavaria exports more to the UK than the whole of the UK exports to Germany and we wanted to find out why. Of course, having Mercedes there helps, but the real point is that the state of Bavaria has been supporting exporters for 60 years. There has been unbroken political support, whoever was in power.
That is why I was rather disappointed that the heading on page 9 in the Minister’s document Britain Open for Business: The Next Phase spoke about:
“Sustaining the many good initiatives of the last three years”,
as if it all started when the coalition came to power. The Minister is misinformed. There was government help for exporters when Labour was in power and before that. Many noble Lords have spoken about the need for continuity. For that, Ministers have to show that we are building on the past, not blaming previous Governments as this Government seem to like to do. This is what will help to convince small businesses that government is and will be serious about exports.
To give credit where it is due, I welcome the Minister appointing trade ambassadors from all the political parties and none. Do the ambassadors work with SMEs, or do they concentrate on big deals in special countries? Does that mean that the staff are organised on a sectorial or a geographical basis? I hope that the Minister will listen to other noble Lords, and take politics out of the equation and keep commitment and cross-party continuity in.
We also have to move with the times, which means looking at exports more broadly—perhaps more broadly than in the Minister’s report. The noble Lord, Lord Storey, mentioned intangible assets. On 31 March, the Minister’s own department told us that intangible investment,
“continues to outstrip investment in tangible assets”.
Perhaps this different kind of investment explains the success of many of our younger and newer rising SMEs. Is UKTI doing enough to encourage exports by this business sector? Events such as Export Week and the Liverpool festival that the noble Lord, Lord Storey, told us about are very welcome. They must help many business sectors, but do they help the knowledge sector?
Last month we won a contract to run 16 FE colleges in Saudi Arabia—yes, helped by a government unit designed to boost exporting education. Great—it is a welcome sign of co-operation between government departments and of using exports to assist building capacity. Were SMEs and UKTI involved? Education and intangibles are all part of the knowledge economy, requiring the best brains. So why does the Home Office put barriers in the way? The Minister does not need me to tell him of the problems between the Home Office and BIS over visas for students, technicians and engineers. We need them if we are going to build our exports of knowledge. Indeed, the Minister’s report speaks about this. It is no use saying, as the Minister does in his report, that because this is part of the cross-government industrial strategy there are no longer any problems. Every businessman or researcher’s day-to-day experience tells him or her otherwise. This is where there is growing export potential for SMEs, so let us have a unity of purpose over this.
In our report we emphasise the importance that SMEs attach to working with local organisations. The Minister hardly mentions this. There seems to be little in the Government’s report about the softer or more technical skills of exporting that are so important to SMEs—language and culture, licences, training, signposting. The noble Lord, Lord Cotter, got the same briefing as I did from the Federation of Small Businesses, which speaks of their absence. These are serious barriers and will become more so as normality returns.
At the IMF spring conference the Chancellor said that normality is returning—normal interest rates, normal rates of inflation and normal growth. This is already affecting our exchange rate and the price of our exports. How does UKTI see this affecting our export performance and what advice is it giving to SMEs to prepare for this?
At the same time lots of negotiations are going on under the auspices of the WTO. How are these going to affect our SME exporters? Are their interests being taken into account? Most importantly, how does UKTI respond to the promise of an EU referendum and the uncertainty that that creates, bearing in mind the importance of the European single market that was stressed by the noble Lord, Lord Green? I assume that UKTI has answers to these big questions because all exporters, large and small, must be thinking about them if they have not started asking already.
Finally, last month we were told that from September the Office for National Statistics is going to overhaul our national accounts. All our R&D, knowledge and intangible business are now going to be included in our GDP instead of being seen as a cost of production. Of course, this will bolster our GDP numbers. Leaving aside that this usefully coincides with the run-up to an election, and that there is more to life than GDP, what about exports? Will this reform bolster our export figures as well, to show that really we have been doing better than we thought and are getting closer to the admittedly very testing targets mentioned by the noble Lord, Lord Storey? If so, I hope the Minister will assure us that in no way will this reduce the commitment, hard work, energy, investment and support that UKTI and Ministers from other departments will put into encouraging SMEs to export. Whatever the new figures say, more exports will remain an essential part of balancing our economy in the general economic interest, as the noble Lord, Lord Green, explained, not just for business but for our common good. That is why we have to continue with our efforts, and I wish the Minister every success.
My Lords, I join those who have thanked my noble friend Lord Cope for securing this debate and for chairing the committee—but, most particularly, I want to thank him for allowing me to participate in that committee and for listening to me drone on during the many hours of debate. Speaking this late in a debate, you always have that sinking feeling that everything you wanted to say has been said. That is not particularly true in this case, although I have great difficulty in disagreeing with any of the points made by so many distinguished Members of this House.
The issue that I want to raise is by way of the tradesman’s entrance into this debate: I want to talk about salesmanship, a word that has not been used during the past hour or so. Behind every successful company is a successful salesman or saleswoman. That was graphically illustrated to the committee by a wonderful woman from Harrogate who came in and told us that she had been to a conference organised by Goldman Sachs. She had a small speciality cake company and had decided that she was going to export her speciality cakes to the most difficult and competitive market in the world: the United States. So what did she do? She did not go on to a website; she did not seek help. She bought herself a cheap ticket to New York, smuggled in a few tins of cakes from Harrogate and did what everybody has done in their time: pounded the pavements until she had sold some cakes—which she did to some high-class hotels and establishments. Her business is now thriving. I rest my case.
The importance of salesmanship was drummed home to me by my late and beloved uncle, Lord Grade of Elstree, who is probably one of the greatest salesmen that this country has produced. He was into the American market, selling television programmes to the Americans in the 1950s and 1960s, which was unheard of. He valued his salesmen; he loved a good salesman. He was a great salesman himself, if not the greatest. He was asked to give a final interview to somebody who was more or less the successful candidate, subject to his sign-off, for the new head of advertising sales in his media empire, which included a commercial television contractor. The salesman came in and Lew said to him, “They tell me you know how to sell, young man”. He said, “Yes, Lord Grade, I think I do, sir”. Lew was smoking a 10-inch Havana cigar—he was on about his fifth, because it was 7 am. He picked up the jug of water on his desk and said, “Young man, sell me that jug of water”. The guy scratched his head and he got up and went behind Lew’s desk. He picked up the waste-paper basket, which was full of paper, put it on the desk, picked up Lew’s matches, dropped a lighted match into the basket and said, “How much will you give me for this jug of water?” The point of the story is lost in this country in a whole history. We have used the word “salesman” in the past as a term of abuse—“Oh, he or she is just a salesman”. My goodness, how the world has changed. In the world of casual work, the kids in the schools have got to learn to sell themselves into jobs; they have got to learn how to sell themselves.
My noble friend Lord Leigh alluded to the Foreign Office and the wonderful prosperity agenda. Diplomats in embassies around the world are trying to help our exporters. What training has the Civil Service had in selling and salesmanship, or even in recognising who is capable of selling? Where is the training to back up the prosperity agenda of the Foreign Office? It is a very important initiative to go to a new country and to have the support of the British Government locally. It can open many doors that pounding the pavements would not. It is terribly important, but the training is very important.
My noble friend the Minister has many issues to deal with here. I am absolutely convinced that he understands the issue. The initiatives coming forth from the Government, not least in their response to this report, are hugely valuable and demonstrate beyond doubt the importance that they attach to the SME exporting agenda. If I could ask him to do one thing, it would be to have a word with his colleague in education to see what can be done in schools to teach children the importance of learning how to sell themselves. Anybody who is selling a product has to sell themselves first; then they can sell the product if they believe in it.
Salesmanship is at the heart of everything we do in business. Without it, we are going to be lost, and we need to recognise that. The Government’s assistance through all their initiatives—UKTI, banking and export credit guarantees—is invaluable, but in the first instance somebody has to make a sale. They have to eyeball somebody and say, “Here’s a product—will you buy it?”. To have exports, somebody has to import. It is a two-way deal and that takes salesmanship, so my last word is to implore the Government to try to move the art of salesmanship up the curriculum a little. We should celebrate and not denigrate people who are great salespeople.
My Lords, I thank the noble Lord, Lord Cope, for securing this debate, which has been very interesting. It is obviously just my luck to follow the best speech. I seem to have a habit of finding myself in the list immediately after the noble Lord, Lord Grade of Yarmouth. This time I am going to turn it back on him, as he did not tell us whether the guy got the job, and without that I think that his story lacks a certain amount of credence. Nevertheless, he made a very good and important point which had not been made before—that somehow in our British make-up, we do not yet recognise that salesmanship ethic. I do not believe that this is a political point. We do not really understand what it is that people who trade do, nor do we embrace them. We also have problems with engineers and others who are at the heart of what we can make out of our society in terms of the growth, jobs, employment and prosperity that we hope will flow from that. That is a good context for what we have been listening to today.
I thank the noble Lord, Lord Cope, for getting us into the debate, although I understand that the earlier credit has to go to the noble Lord, Lord Popat, for suggesting this proposal. As my noble friend Lady Cohen said, this seems to be a report that gives and gives—which is nice as we have had a second chance to come back and look at the issues that were raised. They are important and I agree that they are not party political; these are issues that we can all get behind and support. The original report had a government response, and what we are looking at, in a sense, is that response. What have the Government made of the original report and how much has changed since then? We are grateful to the Government for doing that and particularly to the noble Lords, Lord Green and Lord Livingston, whose work in this field we all applaud because they have put a huge amount into it. Having done his stint the noble Lord, Lord Green, is now able to reflect and give us the elder statesman-like view, which was very nice, while I am sure that the noble Lord, Lord Livingston, has much more to give us.
However, one of the themes that comes through is that we do not really focus enough on SMEs—and it is “S” and “MEs”, because there are differences. As my noble friend Lord Haskel said, some of the original recommendations have not really picked up on some of the particularities in the report. In many cases, there is not quite enough detail on what we are doing. We are a trading nation and we cannot survive in the modern world without generating a much greater level of exports than we currently have. It is important, as the report makes clear, that attention is paid to small firms. That is not just because they export less while larger firms export more, which is obvious from both the macroeconomic and microeconomic side, but because of the potential that they have, being smaller, to grow and employ more—and to generate more wealth.
My noble friend Lord Giddens mentioned the different world that we are in: the age where we have the internet of things as well as the internet of ideas. As we know, in that world there are often real opportunities for small to be big without having to go through some of the difficulty with growth and the other difficulties in earlier traditions of the way in which the world of commerce and business works. I think we are agreed that there is a need for strong government intervention, working with partnerships and existing business organisations. As I have said, it is not a party-political point and we support that.
There are perhaps four areas which I would like to pick up because the list that the noble Lord, Lord Livingston, has to respond to is very long and covers a wide range of things. I would not want to particularly burden him but it might help him if I signposted the areas where there is some need to make points.
The noble Lords, Lord Cotter and Lord Green, and my noble friends Lady Cohen and Lord Haskel picked up on the need for more integration at a local level between SMEs, local enterprise partnerships, chambers of commerce, UKTI and UKEF—a point that was picked up originally in the report by the noble Lord, Lord Heseltine, No Stone Unturned—to ensure that the whole group of people who are involved in the process of getting exporting happening has a fructifying base of activity within those groups. It would be interesting if we could understand a little more about that, so perhaps we could have a comment from the Minister on what UKTI has been able to do with UKEF, the chambers of commerce and LEPs in relation to that work.
There is a point related to that which has been touched on only a couple of times but it is important: there has been a growth in the number of international trade advisers. My noble friend Lord Haskel asked for a bit more information about that. I tried to look this up beforehand—I keep bumping into people who say, “I’m off being a trade ambassador these days”, and, as has been said, they are from all parties and none—and it would be useful to have a list of them but I could not find one anywhere. I wonder if in fact it is published and perhaps it is just me who cannot find it. What exactly is the task that those ambassadors have and what performance indicators are they measuring up to? I am sure that they are a good thing but I lack some detail, and this subject was picked up in the report as something about which more information would be available.
The bulk of the comments received today have been on recommendations 5 to 8 about access to appropriate finance. It is a point that reaches way beyond the main focus of the report, which is about export, because it is also about import substitution, which my noble friend Lord Giddens spoke about, as well as general activity within the domestic market. Why are we so bad at financing those who seem to be able to generate wealth, who have full order books and who want to grow, in a way that will allow them to do that? The latest report that I was able to find was the NAO report on the combined Treasury and BIS work in relation to SMEs. It is interesting that that report comments that there have recently been reports about the flow of new bank term lending to SMEs. The latest figures show that it fell by 23% between 2009 and 2012; that 70% of SMEs whose loan applications are rejected can find no alternative finance, and the younger and smaller firms are obviously the worst affected by that; and that—this is quite an important figure—the funding gap, which the NAO defines as the difference between the funding required by SMEs and the funding available, is about £10 billion to £11 billion, and it may reach about £22 billion by 2017. The point being made by the NAO is that there are significant problems in this area. Not surprisingly, it concludes that there are a lot of data on SMEs seeking finance,
“and there has been a renewed focus on research into SME financing. Many of the individual schemes have been delivering against their individual targets. But BIS and HM Treasury have not managed the range of initiatives sufficiently as a unified programme, and have not clearly articulated what the schemes are intended to achieve as a whole, given the resources available. As a result … at present, value for money has not been demonstrated”.
That is a fairly critical point. Time has moved on since that report in 2012, but I would be grateful if the Minister could pick up on that point because I think we need a new fix on some of it.
It is easy to be critical about that, although clearly there is good work going on in UKEF, but maybe we need some new initiatives—perhaps more support for bodies such as the British Growth Fund, which seems to have been doing good work in getting companies from an early stage of development up to the next phase where they are developing greater coverage domestically and exporting. What about, as has been suggested in some areas, a tax break for those who wish to export? We currently have tax breaks in the entertainment industry, for instance, which is a good thing for film, high-end television, animation and now for games, but there is no tax break for exporting. I wonder if that is something that the Government might look at. I am sure that the Minister will say that that is a matter for the Treasury and not something that he could possibly dare comment on, but I hope that it might feed into thoughts in those areas.
The point made in recommendation 14 about language and cultural differences is one that often throws up problems for the relevant bodies. My noble friend Lady Cohen mentioned this and had a solution for how perhaps to get people up to the first stage of this, but there is a point in the original report asking for a language management strategy. I wondered how much progress had been made with that.
The noble Lord, Lord Storey, talked about skills training and particularly about apprenticeships. It is always important to ensure that the training elements that are required to see the current generation supported but also to help future generations to grow are in place, whatever the size of the organisation, so perhaps we could have some comments on that.
The final item in my list—although, of course, there are many others—is intellectual property. It was originally raised by the noble Lord, Lord Cope, and is something that I have had to spend some time on as it falls within my brief in my BIS activities.
There has been a significant number of changes in the way that the Government have approached intellectual property in the UK, and there are limited opportunities to make changes because we are subject to substantial international agreements, particularly European ones. That is not necessarily wrong, but what is wrong is the feeling that there is a lot you can do on this. I suspect that the grounds for movement are very small. However, I worry that the changes that are being brought forward are largely changes for change’s sake rather than part of a coherent approach. Given what has been said about the future of IP and the internet of things as well as of individuals’ thoughts, we need to get intellectual property right. I do not think that it needs a root-and-branch review, because there is limited scope, but it would be helpful to think again about the balance between innovation, the premium that you need in order to get people to innovate, the IP framework that is required to protect that innovation and the reward that comes from it. I wonder whether life plus 70 years is the right tariff for that equation. That is a big question. The original arrangements for design rights, which limited them to a more patent approach, have a lot going for them. It is a pity that we have seen government proposals moving away from that in the past couple of years. This is not an easy area, but we have to get our thinking absolutely right on IP and the way forward if we are to make a success of the new world.
There are a number of points that I am sure the Minister will want to cover in the brief time available to him. If there is not time for him to respond to them all, perhaps he will write to us, because this debate has been so good that it would be helpful to have more detail. I look forward to hearing from him.
My Lords, I thank my noble friend Lord Cope for initiating this important debate and I thank all noble Lords for their contributions, particularly those who were members of the committee which produced such an excellent report last year. I particularly thank my noble friend Lord Popat, who not only initiated the report but chose to keep me company on the Front Bench.
It is clear that those who have spoken this evening understand the challenges small and medium-sized businesses face and the advantages to be gained from trade not just for them but for the UK economy more widely. Many good points were made, and I will try to pick up as many as I can. Noble Lords will understand if I focus particularly on exports rather than on wider economic policy, given the time available.
The noble Lord, Lord Grade, raised sales and salesmanship. I can assure him that in the Government I have seen a huge focus on selling the UK and UK trade around the world. In fact, the Prime Minister is one of the best salesmen for Britain, and the reason I am standing here doing this job today is that he is such a good salesman. We note the need for very good salesmen. I come from a family background of sales, a bit like the noble Lord does.
UKTI recently issued Britain Open for Business: The Next Phase. It was called The Next Phase because it builds on the very good work of my predecessor, my noble friend Lord Green, who spoke in the debate today. We are seeing progress. We are seeing more companies than ever being helped by UKTI. That means that more companies are receiving advice on how to enter new markets; more companies, particularly small ones, are being helped to go to trade shows; and more are using UKTI to improve their digital presence around the world—again, particularly small companies. Indeed, in the current year, we are looking to double the numbers of companies assisted four years ago. It will be a substantial improvement, and that means more small and medium-sized companies are getting help.
The noble Baroness, Lady Cohen, asked about overseas chambers of commerce, and my noble friend Lord Green highlighted the point. We are supporting chambers of commerce around the world to improve the services they offer to exporters. As part of this initiative, I have been travelling around the world. In the past few months, I have opened British business centres where British businesses, particularly small businesses, can go, meet people, use the facilities and get advice. I have been to Mexico City, Dubai and Budapest, to name but three. We will continue to work with the chambers of commerce and see the overseas business networks as very important. We will encourage those chambers which do not exist to exist and those which do exist to be better, and those which are good to become real champions of exporting for UK companies.
My noble friend Lord Leigh stated that Britain’s diplomatic network overseas is now a real asset to British business. Our diplomats and UKTI officials are helping new businesses export every day. I have had so many unsolicited comments from companies of all sizes about the help they receive from embassies or people in post. Of course there is more work to do, but the improvement over the past five years has been outstanding. We are also seeing a positive impact from some of these changes. We have seen surveys from the CBI and chambers of commerce showing a high degree of confidence among manufacturers in exporting.
A number of noble Lords raised the point about recent falling exports. This is of course one of the impacts of the high pound. Just translating goods sold in foreign currencies into sterling has an impact. For instance, in dollar terms, in February our exports actually rose by 8%. Certainly, a 10% increase in the value of the pound will have an impact on the translation of foreign currency exports, which many of them are, into sterling. Indeed, despite all the improvements, I recognise, as many noble Lords in the House have said, that there is a lot more to do. That is what I want to talk about.
Before I get into the details, I want to make an important distinction. We talk about SMEs but, actually, medium-sized companies—the “M”—are different from the small. Medium-sized companies are typically small versions of large companies rather than large versions of small companies. They have to be treated differently. They are also the area, as was highlighted by some noble Lords, where the UK underperforms our competitors. This is what the CBI calls “the forgotten middle” and focusing on them as a country, the CBI believes, could be worth to our economy overall somewhere between £20 billion and £50 billion.
That is why I recently wrote, as was mentioned by a number of noble Lords, to the 8,900 MSBs in the UK to raise awareness of how UKTI can assist them. A UKTI team will then contact each and every one of them, as long as they can get through on the phone, and find out, first, if they are exporters, and, if they are not, whether they could be exporters. If they can, they will offer them a tailored programme and a named account manager. Simply, there should not be a medium-sized company in the UK that does not fulfil its potential as an exporter because it is unaware of the help that government can provide. That named adviser will also be able to point them to other government assistance; the noble Lord, Lord Leigh, raised this point. That may be relevant to their business, because they will get to know them as salesmen and account managers do. They will also form a first point of contact for many government issues for these businesses.
Moving more generally to companies of all sizes, I say that the issue of awareness is very important. It was raised by my noble friends Lord Cope and Lord Cotter, among many others. We are very much revising our marketing strategy, first to ensure that we understand what smaller, often first-time, exporters need, and improving our communications to make them, frankly, more relevant for businesses. We will also be significantly improving our use of the internet. The “Exporting is Great” campaign, of which many noble Lords will be aware, will raise awareness of the benefits of exporting and of the support available. Export weeks continue to bring in new customers. Last year, we held two export weeks which brought in 8,600 customers to UKTI. Our latest export week took place just a few weeks ago and reached over 3,000 companies on its own.
We are also working with intermediaries, whether they are business representative bodies—such as the CBI, the Engineering Employers Federation, the FSB or the British Chambers of Commerce—professional service firms and even the banks, to increase awareness of UKTI among their members or customers. We are also co-ordinating with other government bodies to ensure that this is a cross-government effort to raise the profile of our export efforts.
My noble friend Lord Storey kindly advertised some of the conferences we are holding. I echo his comments on the Liverpool International Festival for Business: noble Lords should visit it. I will be speaking there, but there will be other, better speakers. The noble Lord advertised Liverpool, and if he does not mind, I will advertise Glasgow. At the Commonwealth Games we will have the British Business House and a business conference which will encourage both inward investment and exports. Also, so Yorkshire does not feel left out, I mention that the Tour de France is leaving from Yorkshire—Le Grand Départ. I was up there recently and we will shamelessly use this as an opportunity to sell the UK around the world.
As my noble friend Lord Leigh highlighted, government could generally simplify the business assistance proposition. I can assure him that senior BIS Ministers are currently engaged in a Star Chamber process to look at how we can improve matters. UKTI itself, however, talks directly to companies and tries to provide a tailored service which depends on what they need rather than trying to sell them individual products.
On the question of access to finance, availability of finance is a topic that arises whenever the issue of companies—in particular our smaller companies—is debated. That issue was raised by many noble Lords, including the noble Lords, Lord Giddens and Lord Stevenson. While there is some improvement in the position, bank lending remains muted at best. The Government have introduced a number of schemes to assist with this, such as Funding for Lending, the Start-Up Loan Scheme and the establishment of the British Business Bank. We are also trying to encourage a number of challenger banks and non-traditional sources of finance. Unfortunately, to discuss all those initiatives in depth would take a full debate on its own, so I hope noble Lords will excuse me if I concentrate on what UK Export Finance is doing to help exporters.
Our aim is to make UK Export Finance one of the most competitive export credit agencies in Europe and to substantially increase the numbers of companies it supports. It is a reasonable criticism that it concentrates on the large companies, but we are seeing some improvement in that position. The number of companies that UKEF helped last year has risen by 50%. However, there is more to do. We have doubled UKEF’s lending facility to ensure that more businesses are able to take advantage of it. We have improved and widened UKEF’s product range to better support exporters and their customers who want to buy British. We are doubling the number of export finance advisers that are available to UK companies. They will not only advise on what UK Export Finance can do but will also provide advice to smaller companies on how to structure their help from banks, which is very important.
We also have a marketing campaign to raise awareness of UK Export Finance, which is, unfortunately, somewhat lower than UKTI—which in turn needs to improve its awareness. Further, we hope to introduce new legislation next year that will enable UKTI to lend to exporters rather than just supporting individual contracts, which it cannot currently do under the law. It will also widen the type of exports that can be covered by UKEF in future. We are consulting with businesses and business groups such as BExA on further improvements to both products and processes within UKEF and are in close contact with the banks to ensure that they are geared up to play their part in expanding our activities.
My noble friend Lord Cope raised the issue of intellectual property. UKTI works closely with the Intellectual Property Office. There is a significant amount of joint working both with the UKTI regional network of international trade advisers and the geographical desks. IPO trains business advisers through its IP Master Class, which is integrated into UKTI programmes. UKTI posts overseas also provide help locally through our IPO advisers in key markets and the regions around them such as Brazil, China and India and south-east Asia. They work with local IP enforcement agencies to protect British products, alerting companies to IP exposure and supporting UK businesses with IP issues. Indeed, they helped over 200 companies in the last year alone.
Many noble Lords highlighted the issue of confusion among companies around the Bribery Act; I can provide some help on that. The MoJ and BIS are currently engaged in a project which seeks to obtain feedback from small companies on the impact of the Act and the MoJ’s guidance on it. I hope that that will provide some guidance to us on our next steps to make matters clearer for smaller businesses.
I turn now to the digital economy, which is becoming more and more important for exporters. We should be proud that the UK is the leader in the whole of the EU in online selling, but we should note that we can build on that position. That is why UKTI has launched the Grow Online, Expand Worldwide campaign, which delivers training and advice to exporters and provides funding to help to improve their web capability and capitalise on the rapid growth of mobile technology and social media.
In addition, UKTI’s digital acceleration programme is designed to enable companies to exploit the opportunities in the world’s online shopping malls. For example, the Prime Minister and I, on our trip to China in December mentioned by the noble Lord, Lord Leigh, announced a partnership with the massive online shopping platform Alibaba Tmall, which will support UK brands and have a UK channel. In doing that, we see a great opportunity; in just a few months since we announced the deal, 100 companies have applied to join the scheme and roughly a quarter have their products online.
I turn to free trade agreements, which this Government are championing between the EU and its trading partners around the world. One of the most important of these would be with the US. TTIP, as it is known, is a huge opportunity, but there is often a misconception with it, in that people think that it is about large companies—and that is the same for free trade agreements more generally—but, actually, it is the smaller companies that cannot cope with regulatory differences between countries, non-tariff barriers or the impact of tariffs on their businesses. Our role in championing free trade agreements is most important for small businesses, and that is what we will continue to do.
My noble friend Lord Green pointed out that completing the single market was a very important part of that. Again, this will help small businesses. Often the UK is painted in terms of what it is against with regard to the EU; I would like to state what it is for. It is championing the single market, free trade and competiveness for EU companies, and we will continue to do that for companies of all sizes.
A number of noble Lords mentioned languages. Of course, the English language is used around the world, but we need to improve the language capabilities of our exporters to give them an edge in competitive markets. UKTI recently commissioned an academic report to review the impact of language skill deficiencies on UK exports. I have to tell noble Lords that it was significant. We have provided funding to each English region to create language and culture adviser posts, which will deliver advice to small and medium companies who are exporting. UKTI also provides small companies with an export communications review, a bespoke report that will look on how they can overcome language and cultural barriers when working overseas. Over 700 companies are expected to take advantage of this service in 2014-15.
In direct response to this report and debates in this Chamber, we have recently announced the launch of the Postgraduates for International Business scheme. This aims to improve language capacity for smaller and mid-sized businesses by placing postgraduates with language skills, who usually have come from other countries, in companies to undertake project work, either during or shortly after their degree. I also remind noble Lords that we have a large number of locally engaged FCO and UKTI staff in posts around the world who are expert in the local language and business culture and who offer day-to-day practical advice to new companies on doing business in the countries that they are based in.
I shall pick up a number of other comments that were made. My noble friend Lord Storey raised the issue of LEPs and the RGF. It is up to LEPs to bid for funds, and we will continue to work with them to raise the funds that they need to improve exports and inward investments. The LEPs, the chambers of commerce and UKTI regional staff work together very well in a number of regions. However, I will not pretend that it is uniform or effective in all places; we are certainly looking to bring the best as a model and bring the others up to that standard.
The noble Lord, Lord Giddens, raised the issue of reshoring. The Prime Minister announced at Davos that we would establish Reshore UK, a one-stop shop, as part of UKTI and the Manufacturing Advisory Service, to enable UK companies to come back to the UK and set up again. I believe that, with the attractiveness of the UK as a market, this presents a real opportunity to reinvigorate our manufacturing and supply base.
The noble Lord, Lord Cotter, referred to OMIS, which is a heavily subsidised service. The cost is usually about £1,000 to £1,500, which I think is reasonable for a very valuable service. As always, we have to balance priorities. We will continue to review its use, and our support for it, along with the many other services we support, virtually all of which are done on a subsidised basis.
The noble Lord, Lord Haskel, and, I think, the noble Lord, Lord Stevenson, mentioned business advisers and trade envoys. I should clarify that we have business advisers who are usually business experts who travel round the world on behalf of their companies. They tend to be the CEOs and chairmen of large companies. When they do so, they raise the profile of British businesses free of charge, particularly in the sectors they represent, whether that be professional services, automotive or whatever, and do an excellent job. The trade envoys are geographically based. In fact, many of them are Members of this House and also do an excellent job. They seek to promote the UK in countries which do not get the level of ministerial visits that others do. I would be very happy to provide a list of them, as requested by the noble Lord, Lord Stevenson, and take this opportunity to thank all of them for the very difficult work that they do. It is unpaid and sometimes thankless but is very important.
A number of noble Lords raised the possibility of introducing some sort of tax credit for exporters. As anticipated by the noble Lord, Lord Stevenson, of course I would say that this is a matter for the Treasury but I know that it is aware of this suggestion. There are challenges with such a scheme, not least that of people exporting and reimporting but, as I say, I know that the Treasury is aware of this suggestion.
I apologise if there are any matters that I have not covered. I have tried to pick up the main issues and will follow up any others in writing. I end as I began by thanking my noble friend Lord Cope and his committee for the report. I also thank all noble Lords who have taken part in the debate. I thank noble Lords for their continued interest and for being salespeople—that seems to be the phrase of the day—for our export effort and ask them to continue to be so.
I echo what my predecessor said. I expected him to say that this issue is not a sprint but a marathon, and, sure enough, he said just that. We have suffered for decades from a weak trade performance over a number of Governments and it will take some years of sustained effort to change this. I assure the noble Lord, Lord Haskel, that we will continue with this effort and work tirelessly. Irrespective of what the figures may say, we will continue to push to make exports and our export efforts for companies of all sizes, but particularly for small and medium businesses, a key priority of our Government.
My Lords, I thank everyone who has contributed to the debate. I thank particularly my noble friend the Minister for a clear and encouraging speech, for which we are grateful. I am grateful to all those who complimented the Select Committee’s report, particularly those who were not on the Select Committee.
I am excited about the prospects for Britain in the digital revolution, which I think are as great as they were in the Industrial Revolution all those years ago. That is partly why I worry about IP and issues of that sort.
The Minister spoke about “salesmanship” being the word of the debate, as it were—at least following the speech of my noble friend Lord Grade. After all, if the House of Lords cannot confer respectability on salesmanship, who on earth can? It is our job to try to do that, and I would add engineers to the list—as was suggested from the opposite side. By the way, if anyone wants to look up the exquisite hand-made cakes, the reference is on page 65 of the report. One can follow up from there, and I believe that the cakes are delicious.
Also mentioned was my noble friend Lord Green’s reference to the task of rebalancing the economy as being a marathon, not a sprint. That may also prove to be true of debates on SMEs and exports. I feel sure that we will contrive further debates to monitor the progress of UKTI in particular and rebalancing the economy in general. My noble friend Lord Popat started something when he godfathered the creation of the committee. This will run and run until the economy is rebalanced.
Defence Reform Bill
Returned from the Commons
The Bill was returned from the Commons with amendments agreed to.
House adjourned at 7.01 pm.