Thursday 21 January 2021
The Grand Committee met in a hybrid proceeding.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. A small number of Members are here in person, respecting social distancing, and others are participating remotely, but all Members will be treated equally. I must ask all Members in the Room to wear a face covering except when seated at their desk, to speak sitting down and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. The time limit for the following debate is one hour, and before calling the noble Baroness, Lady Rock, I call the noble Baroness, Lady Bloomfield of Hinton Waldrist.
My Lords, with this number of speakers, and the difficulty of intervening remotely in Grand Committee, I kindly remind noble Lords to please stick to the speaking limit, which will enable the Minister to respond fully to the issues raised by noble Lords.
Rural Landlords and Land Letting: Reform
Question for Short Debate
My Lords, I declare my interests as set out in the register as a director of Wrackleford Farms, a tenanted farming business. I thank all noble Lords taking part in this important debate today, and greatly look forward to their contributions. I also thank my noble friend the Minister, who so recently took the then Agriculture Bill through this House. I was most encouraged by his supportive comments on the vital importance of agricultural tenants.
The tenanted sector of agriculture brings together those with assets—landowners—and those with entrepreneurial flair—tenants—to create sustainable and profitable businesses while providing landowners with a return through the payment of rent. The landlord and tenant system also provides liquidity to the most fixed factor of production in agriculture: land. Farm businesses looking to expand or contract can use the flexibility of the landlord and tenant system to meet those objectives. Also, agricultural tenancies remain the only viable route for many aspiring farmers to enter the sector.
It is disappointing that this important sector is adversely affected by short-term thinking. The introduction of the Agricultural Tenancies Act 1995 represented a major deregulation of the legislative framework within which agricultural tenancies operate. A key change was to lengths of term. Prior to 1995, new tenancies could be let only for the lifetime of the tenant, whereas under the new legislation there was no minimum term. A major problem before 1995 was that landlords were reluctant to let farms, knowing that they would be let for a generation. As a result, the size of the tenanted sector was in decline. However, this legislation has allowed the pendulum to swing too far in the opposite direction and now the average length of term on new tenancies is, remarkably, under four years. This means that farm tenants cannot plan for the long term, either in relation to their agricultural activities or in their desire to take part in diversification and new agri-environment schemes such as the proposed ELM schemes.
The Tenant Farmers Association has long asserted that the best way to address this is through amendments to the taxation environment within which landlords make decisions about land use. To do this, it has proposed the following sensible changes to taxation: first, restricting the generous 100% relief from inheritance tax, currently available to all landlords regardless of the length of time they are prepared to let land, only to those prepared to let land for 10 years or more; secondly, restricting those landowners that use share farming, contract farming, share partnerships and grazing licences as thin facades of trading activity to gain tax advantage when in practice they take no risk, have no entrepreneurial input and lack any management control; thirdly, offering landlords who are prepared to let for 10 years or more the ability to declare their income as if it was trading income for taxation purposes; and finally, reforming stamp duty land tax to end the discrimination against longer tenancies. This is an area where there appears to be a consensus between those organisations representing landlords and those representing tenants. It seems odd that government policy is to encourage longer farm business tenancies on the one hand and then to penalise those long-term tenancies through the way that they are taxed through SDLT. I seek an assurance from the Government that this issue is reviewed. On taxation, while I appreciate that the Minister does not speak for Her Majesty’s Treasury, it would be instructive to hear whether his department supports these measures and whether he will discuss these matters with his Treasury colleagues.
I thank the Government for bringing into effect certain agricultural tenancy reforms through Schedule 3 to the Agriculture Act 2020. These changes followed a Defra consultation which covered a very much wider agenda of issues than were introduced. That consultation was a distillation of yet wider changes proposed by the Tenancy Reform Industry Group, TRIG, which provided very detailed reports covering AHA tenancies, 1995 tenancies, taxation, county council smallholdings and issues around new entrants and retirement.
In its briefing for this debate, the Country Land and Business Association states that
“tenancy reform must be developed through consensus within TRIG.”
I consider this to be too narrow, but it does give this Government the green light to bring forward a Bill encompassing the full array of changes which TRIG proposed in its reports to Defra in 2017. However, the Government must not find themselves completely unable to make progress on wider areas of tenancy reform when a consensus cannot be found within TRIG due to the competing interests represented within it. This group should of course be a place to which the Government go for expert advice, but it should not decide policy. It is for the Government to decide how best to promote resilience and sustainability within the tenanted sector. During the debates on the various stages of the then Agriculture Bill in your Lordships’ House, we heard from many noble Lords from all quarters that we needed a specific piece of legislation for agricultural tenancies. When might we see a government Bill which picks up the issues identified by TRIG and the department’s own consultation?
One of the welcome changes in the Agriculture Act was the expansion of the franchise of organisations that can be used for the appointment of arbitrators for dispute resolution beyond RICS. Now we have the Central Association of Agricultural Valuers and the Agricultural Law Association. This is good news, as RICS had too much of a monopoly in this area, and its own governance issues. However, we must go much further on reforms to arbitration.
Here, I have to admit to first-hand experience of what an archaic process arbitration can be. My family has recently had to go through a difficult, lengthy and expensive arbitration process for the review of our farm rent. It is not a process that I would welcome having to repeat, although, sadly, it is the principal mechanism for resolving disputes that cannot otherwise be settled by agreement. Arbitration was intended to be a relatively straightforward and inexpensive process for resolving disputes. I can attest to the fact that it is anything but. As a family, we were disappointed with the way in which our case was handled in a number of ways.
Being able to learn lessons from this process is massively hampered by the fact that arbitration awards are required to be kept confidential between the parties. I contend that they should be publicly available and open to scrutiny, so that arbitrators can be held to account for the way in which they resolve cases. At the moment, there is little precedent or case law in this area. In addition, parties are left with an incredibly short period of time within which to appeal. A period of only 28 days is insufficient, particularly where the appeal has to be mounted in the majority of cases by a tenant farmer who can be daunted by the prospect of having to take matters to court. Overturning bad arbitration decisions is difficult and expensive and I believe that the whole process of dispute resolution needs to be fundamentally reviewed.
The CLA calls for a balance in landlord-tenant relationships and I wholeheartedly endorse this. However, it is patently obvious to any informed observer of the landlord-tenant system in agriculture that it favours the landlord. Short lengths of agreement, restrictive tenancy terms and high rents provide maximum benefit and flexibility to landlords and place additional burdens on existing and prospective tenants. The system needs to be levelled up. With more individuals looking for opportunities to take on tenancies in comparison to those offering land, it is clear that there is a market failure, which the Government need to step in to correct, both by considering sensible changes to legislation and the beneficial taxation environment within which landlords operate. It is obvious that the financial incentives are driving perverse behaviours that are in direct conflict with the good intentions of current legislation.
Agricultural tenancies are crucial to our farming industry, our farmed environment and our farming future. Reforms are vital. A specific agricultural tenancy Bill is essential and I hope that the Minister will respond positively to that call.
I thank the noble Baroness, Lady Rock, for giving us this opportunity to debate this important issue. I began my working life on the fells of Cumbria and have maintained an interest in upland management ever since. The Government’s Agriculture Act 2020 potentially offers great opportunities for the upland, with public payment for public good—blending environmental, forestry and farming approaches —but there are challenges. In recent days, an issue has come to the fore in Cumbria that illustrates this.
For over a century, the Newton Rigg agricultural college has provided research, advice and education throughout the area, particularly in upland management as well as mixed dairy. Furthermore, it was the National School of Forestry for England—a highly respected college. About 10 years ago, Askham Bryan, a college in Yorkshire, acquired Newton Rigg for the token amount of, I believe, £1. Now, facing severe financial difficulties itself, it has put the assets of Newton Rigg up for sale. The tenants, Newton Rigg, obviously will lose their asset, which is their land. This is simply a piece of asset-stripping of the worst kind and it will remove a time-honoured source of advice to upland farmers in particular, when it is most needed. The move has caused great difficulties across Cumbria. Will the Minister heed our voices and, perhaps, help?
My Lords, I declare my interests as set out in the register. I own two tenanted farms in north Northumberland, in the Redesdale valley, both of which are governed under the 1986 Act. The farms are family-run businesses that have passed down through the generations and hopefully will do so in the future.
Upland hill farming at present does not make much money; incomes are low and therefore farm rents are not high. When the necessary and growing legal responsibilities of landlords are included, such as the recent electricity safety regulations, there is the real possibility that landlords can make a loss year on year. In my case, I calculated that if I rented out the farmhouses as holiday cottages, I would make far more than I do at present renting out the entire farm, although I should stress that I have no intention of doing this.
I raise this issue because upland farm incomes are moving from being based on traditional intensive stock rearing to environmental improvement schemes. While this is an important transition, understanding how these schemes will affect farm income in the long run will be vital, as many of the schemes, such as tree planting, will be funded in the short term, but there needs to be consideration and clarity on how this will be sustainable in the longer term when the schemes end. The Government’s target for tree planting, for capturing carbon, will require vast areas of woodland to be planted. I have planted thousands of trees, which is great for biodiversity, but it is taking land out of grazing and therefore income from the farms in the longer term.
Predicting future income sources when the entire funding of farming is changing is difficult and will cause many disputes between landlords and tenants. Any certainty that the Government can give in a post- CAP world, especially on the longer-term income from environmental stewardship schemes, will be vital for the take-up and sustainability of those schemes.
A final point is that, before any further reforms are brought forward in legislation, the implications of the operation of the Agriculture Act 2020 need to be given time to be evaluated. I should also say that the TRIG has done excellent work in the past.
My Lords, I declare my interests as listed in the register. Interestingly, they include having been both a landlord and a tenant, so I see both sides of this argument. I endorse a lot of what the noble Lord, Lord Redesdale, has just said, particularly about finding more ground to plant trees. We have to approach these changes carefully. Noble Lords may recall the 1986 Act, which was intended to help young farmers. It was one of the best examples ever of the law of unintended consequences, in that no new farm tenancies were issued, as far as I know. However, I believe passionately that we need to make it easier for young people to get into farming. Unless you are very rich or you come from a landowning family, there is no chance whatsoever.
Looking at the whole question from the landowner’s point of view, again I think that we have to tread carefully, because people can be encumbered with families who do not farm well. If we extend things too far, you cannot get land back that you might want to use for your own family.
I would like to make one final point, which may not be raised by the other speakers. I feel, especially as we are now going to move to a new subsidy system, that we need to look carefully at how this is regulated and what clarity is given to it. For example, I have seen agreements where the landlord takes a subsidy and the tenant should pay slightly less, but it does not always work out that way. There have been problems on both sides—I am not blaming one or the other—but it would be useful to have clarity on this. That would help to remove issues that can cause conflict.
My Lords, it is a pleasure to follow the noble Lord, Lord Berkeley of Knighton, and to hear his interesting points. I also thank my noble friend Lady Rock for introducing this debate and setting out the important case for acting to help tenanted farms.
I want to express some concern about 1986 Act tenancies—that is, those granted before 1 September 1995 and hence still governed by the Agricultural Holdings Act 1986. About one-third of agricultural land is let. I am not sure what percentage is actually subject to the 1986 Act, and I hope that my noble friend the Minister, who is so adept in these areas, will be able to give that figure and also, perhaps, the number of farms in the country that we are talking about. But if he does not have that to hand—and I appreciate that these are relatively detailed points—perhaps he could write afterwards.
There often exists a problem with regard to succession rights for tenants under the 1986 Act. How can older tenants, with no immediate successor to whom they can transfer a tenancy, be encouraged to retire? I know that the Government considered extending succession rights to nieces, nephews and grandchildren but did not take up that proposal. Could my noble friend relook at that with the Government, because it seems a perfectly sensible proposal? I raise that point as there are limited options available to hand over to a new tenant when there are no immediate obvious successors.
I welcome much of what was done in the Agriculture Act 2020. However, as my noble friend Lady Rock pointed out, there are now problems with rather short leases. What are we doing to encourage landlords to let for longer periods? That is the only other issue that I wish to raise.
My Lords, I declare my interests, as set out in the register. This debate enables the airing of some important considerations in relation to tenancies and taxation. However, with the huge number of uncertainties facing farming now that the Agriculture Act has been passed, the timing is not right for further legislation. The Government have succeeded in abolishing the old agricultural system but have not announced in any depth what is the replacement.
We have to stop for five minutes while a Division takes place in the House.
I apologise to noble Lords—can the noble Lord resume, please?
I was saying that the Government have not announced in any detail what happens next, so farmers are unable to plan. This could involve both tenancy and tax matters. For example, let us suppose that they want to enter a tree-planting scheme under the ELMS, and their tenancy excludes silviculture, or the ELM scheme that they enter has a 25-year life, whereas their tenancy is a 10-year FBT, and so on. Details of ELMS may be unavailable until 2024. Those are the real issues that must be resolved by the TRIG.
The introduction of ELMS may have adverse tax consequences, as current tax rules operate as a disincentive to diversification in how they treat investment and trading activities differently. Leaving aside that information gap, I congratulate the Government on the reform measures in the Act, which were agreed by the whole industry, rather than spending time on divisive old chestnuts such as reform of AHA succession provisions. These restrictive tenancies, designed for issues of a different age, do not satisfy either landowners or succeeding tenants, who want the flexibility of an FBT where consensual terms are agreed. Other mooted changes such as introducing reasonableness tests and minimum tenure FBTs are unlikely to secure widespread industry support. I urge all reform to be on a consensual basis.
Sitting suspended for a Division in the House.
My Lords, my noble friend Lady Rock gave a powerful speech in introducing this debate. I particularly support her comments on rogue landlords who are abusing the system and I hope that my noble friend the Minister and the Treasury will take note of that.
There are two different types of tenants. The Agricultural Holdings Act tenants, who farm about 1.3 million hectares, face the problem that most do not have any woodland in their tenancy—it was excluded when the tenancy was drawn up. What help will the Government give them with becoming more environmentally friendly, and with planting trees and understanding the possible difficulties?
The other group, the so-called farm business tenancies—they are not really tenancies, as my noble friend pointed out, because they are only about four years long—have a different problem. The dichotomy here is between the high rent demanded by landlords and the environmental obligations that the Government want all users of land to undertake. Landlords inevitably want the highest rent, but you cannot do that on a short tenancy. Furthermore, the farm business tenancies are having to plough up grassland and turn land over to maize for biodigestion in order to meet those high rents. Those landlords are irresponsible; they are not caring for the future of the land and are diminishing their assets. This will also thwart what the Government hope to achieve by the Agriculture Act that we have just passed. My noble friend must attack tenancies in two different ways, but what support—and what hope—can he give to make farm business tenancies more environmentally friendly?
My Lords, the noble Earl, Lord Caithness, has really hit the nail on the head, as one of the major problems we will face with ELMS is introducing it on farms that are tenanted. I add my congratulations to the noble Baroness, Lady Rock, for her excellent, comprehensive and succinct opening speech.
I thank the Tenant Farmers Association for its excellent briefing, which points out that short-term tenancies are holding back progression, investment and sustainable land use—which are exactly what will be needed in abundance if the environmental land management scheme is going to result in what we all want, particularly in the upland areas that the noble Lord, Lord Clark of Windermere, referred to. Whether people there are tenants or owners, they have to get an income from the farm. If a lot of that income comes in future from government grants and environmental schemes, the relationship between landlords, tenants and the grants will be crucial. Will the pilots and the national pilot devote sufficient attention to relatively small tenanted farms—or perhaps large farms with large amounts of grazing—in upland areas and how they will cope with doing everything that the Government want them to do?
My Lords, my interests are as recorded in the register. I am delighted that the noble Baroness, Lady Rock, has sponsored this debate and introduced it so eloquently, but regret that we have only two minutes to speak.
I have farmed as a tenant farmer all my professional life under a variety of arrangements, from Agricultural Holdings Act tenancies to FBTs to a range of share-farming arrangements. At one point, I had four different landowners and six different arrangements. The time is right to review tenancy arrangements and the relationship between landlord and tenant. I have the added benefit of being able to view the world from both sides of the fence, having been a board member of the Crown Estate and, for the past 10 years, a trustee of Clinton Devon Estates. We need much more flexible arrangements between landlords and tenants, so reviewing legislation to try to achieve that would be really helpful.
The relationship between landlord and tenant needs to be much more of a partnership, whatever the legal arrangement. If we are to deliver improvements in soil health, restore habitats, improve biodiversity, reduce diffuse pollution and so on, short-term FBTs with often disengaged landlords will not achieve this. Landlords and tenants will need to agree plans, particularly in tier 3 of ELMS. This will challenge traditional arrangements.
Landlords should also take the opportunity to look at restructuring, as some tenants will inevitably retire as a result of the change in policy. If possible, they should provide rural housing for retiring farm tenants. I also make a plea to landowners that farms that may become available through retirement be let to young, new tenants if possible, rather than taking the easy, default option of merging with existing farms. The reduction in the number of farm holdings is a real concern. Landlords should be willing to take the risk with a number of their farms within their land holding to encourage new blood. The Minister may be aware that I have had conversations with his officials on this matter and I hope that the changes will result in new entrants to our sector.
My Lords, I am delighted to follow the noble Lord and I congratulate my noble friend on securing this debate. I pay tribute to all farmers, who have worked tirelessly through this pandemic to put food on our plates in extreme weathers, in England and Wales especially, and I pay regard to the fact that tenant farmers account for 30% of those who farm in England and Wales and nearer 48% in North Yorkshire.
My main concern reflects that of other noble Lords: tenants who occupy the land under farm business tenancies. They account for up to half the tenanted sector of agriculture in England and Wales, and the tenancies are characterised by short-term lets and restrictive clauses. There is unfinished business from the Agriculture Act 2020 and I seek an assurance from the Minister today that these tenants, particularly FBT holders, will not be excluded from new government schemes replacing the CAP or indeed from any private arrangements for the better environmental management of the land. Will my noble friend therefore confirm that the beneficiaries of the new schemes will be the economic operators, those taking the entrepreneurial decisions and the tenant who actively farms, not the landlord, as that would be singularly inappropriate if they are not actively managing and farming the land?
My Lords, I declare an interest as a farmer, landlord and past tenant farmer.
In haste—if we want our agricultural productivity to compete with other nations’, we need fresh blood and, for agricultural tenancies to proliferate, to bring that fresh blood in we need to have a system that encourages both sides to get involved. Tenants need the incentive to invest in their soil and infrastructure. In my view, no tenancy should be for less than seven years and, if possible, it should be renewed for a further seven years unless there are good reasons not to, which could include, for instance, the landlord having a family who want to farm, or even wanting to sell the holding. However, a second term should be the norm.
Extending succession provisions of older tenancies to wider members of the family would not help. Interfering in existing contracts sends all the wrong messages to landlords and it would not open up our farms to all our best students, who do not happen to have a sitting tenant as a relative. Succession tenants are not necessarily the most able and, for our agriculture to catch up with others’, we must ensure that all of our very best can have their chance.
Equally, to encourage more lettings, HMRC needs to recognise the concept of the rural business unit, whereby you can have different enterprises operating on a holding but treated as one business for the purposes of tax. One of those permitted enterprises should be long-term agricultural tenancies. If that were to happen, long-term tenancies would flourish. Incidentally, agricultural tenancies themselves should be able to include a variety of enterprises, especially and including ELMS.
I stress again that, for agricultural tenancies to proliferate, the motivations of both landlords and tenants must be accommodated.
My Lords, I declare my landowning and farming interests and my other declarations in the register and join the noble Lord, Lord Clark of Windermere, as a fellow Cumbrian and chairman of the Cumbria LEP, in respect of his comments about Newton Rigg College.
The recent debates on the Agriculture Act 2020 in your Lordships’ House showed the interest in and the disagreements about the future of agriculture, otherwise known as rural England. Changes are afoot across the land. For the past two or three generations, buttressed by town and country planning legislation, the countryside has been almost exclusively a focus for farming and forestry. We need to be clear that upland and lowland farming and animal and arable farming are different. Indeed, in some ways, forestry is a form of arable farming. Living we do as in a country where the landlord and tenant system is prevalent in all kinds of different forms across all urban and rural Britain, how then should arrangements work, especially at a time of change?
Too much current discussion is focused on today and the existing legislation when a new look is required right across the piece. I believe that ad hoc tinkering is likely to lead to muddle and injustice. What is the role of contract and what is the role of legislation, be it hard or soft law? Everyone knows that change always costs money, but agriculture’s economics have been battered and the national finances are under the cosh. We have to be clear that working capital must be retained in the sector because, if it is not, constructive change will be paralysed. This is why, as the noble Lord, Lord Cameron, said, the long-standing ideas of the CLA about the rural business unit have found their time. It is completely self-evident that bringing about change needs a complementary tax regime that does not haemorrhage working capital from the sector.
My Lords, tenant farmers have more effect on lives than may be appreciated. My experience came from when I was a parliamentary candidate in Cornwall and had a home there for a number of years afterwards. The farmland was occupied by a tenant farmer whose three daughters almost matched my three daughters—the benefits to all six were remarkable. The Cornish girls took my girls down to the brooks, the milking shed and the wonderful spots and showed them a bit of what farm work was like. The three Cornish girls had new “virtual” lessons. As adults, the eldest married and went to South Africa, where she runs a successful hotel business, and the second went to Australia, where she holds a major office in the Queensland police, but the third one was the really big surprise. Everyone was worried because she had poor eyesight and thought that that would hold her back terribly, but she achieved a remarkable thing for a Cornish girl: she ran the patisserie in Harrods. I met her again there many times.
The farmer with a short lease needs to be supported, because why would you put in a huge effort for someone then to grab the land away from you? That would be very wrong. I am pleased to support the idea put forward by the agricultural people.
My Lords, I thank the noble Baroness, Lady Rock, for calling this key debate. I note my interests and the fact that I speak with modest experience as the co-chair of a local agricultural tenancies working group.
Given that tenants farm one-third of the agricultural land in England and Wales, tenancy reform will undoubtedly have a large impact, but that impact pales in comparison to that of the Agriculture Act and the introduction of ELMS. I therefore urge caution against a rush to further immediate reform and suggest that we need time to understand ELMS and farmers’ new role as environmental land managers before enacting further change. In an ideal world, TRIG would continue its excellent, consensus-driven work during the agricultural transition period before recommending a comprehensive reform that will complement ELMS and improve farming.
FBTs were introduced to increase new entrants and improve productivity, as we heard, yet the average age of farmers remains over 60 and productivity has flatlined. The fact that the average farm business tenancy lasts for only about three years is a complete failure. Such short-termism may be profitable, but it is a disaster for our soil. From personal experience, I know that it can take years and considerable cost to build organic matter in soil, so why would a tenant farmer do that with only a three-year tenure? Equally, how does a landlord implement a long-term stewardship vision for land without a long-term relationship with those who farm it? Can the Minister therefore explain how ELMS payments might work within the current agricultural tenancies structure, what payments will be the landlord’s and what will be the tenant’s, and whether that will vary with length of tenure? Finally, with the Environment Bill looming, can the Minister please explain how conservation covenants will work within the existing agricultural tenancies structure?
My Lords, I thank the Whips for organising my participation after an administrative snafu, and the noble Baroness, Lady Rock, for calling this debate. It is a pleasure to follow the noble Earl, Lord Devon. We share many concerns, although on this occasion my perspective is different.
I begin with the observation from Defra’s consultation feedback analysis report that tenancies reform is not adequate to tackle the many ills of our current system. It is treating the symptoms of a disease, not the disease itself, which is our acute concentration of land ownership. A lightning recap: half of the land is owned by 1% of the people; much land ownership is not recorded or publicly available; and the vast majority of people cannot get access to land to grow food. A handful of NGOs, including the Kindling Trust and the Biodynamic Land Trust, go to great lengths to get land for a small percentage of the huge numbers of people who would like to start businesses on it.
Your Lordships’ House is often accused of being medieval, as it sometimes can be, but the very nature of our proceedings demonstrates how fast a change is possible. We need an even larger-scale reform of land ownership and access to land to get us out of the medieval relic that is our 21st-century reality.
I have one specific question for the Minister and one suggestion. In the past, the Government have sought to use policy to achieve consolidation of land ownership. The clear view has been that the increasing size of farms is inevitable and even desirable. That has been hugely destructive to the environment, productivity and public health, with the focus being on grain and oil production rather than vegetables and fruit. It has also led to the hollowing out and ageing of rural communities. Have the Government abandoned this ideological position? Are they looking to increase the number of growers and farmers in the UK, and to reduce the average size of growing and farm businesses? My suggestion is for the Minister to read, or get one of his officials to read, a quite short book: Miraculous Abundance: One Quarter Acre, Two French Farmers, and Enough Food to Feed the World.
My Lords, these Benches support many of the proposals and share the concerns articulated this afternoon, particularly the idea that we now need some reforms as a matter of urgency. TRIG has done some great work in pointing the way to the most urgent of those. The fact is that the Agricultural Tenancies Act 1995 has not achieved what it set out to do to improve the land; nor has it brought in a new generation of farmers.
It is clear that landlords and tenants should be free to exercise a degree of reasonable flexibility where change can lead to more efficient and effective farming of the holding. It is essential for farmers to be able, within reason, to extend their activities to become more viable.
Many noble Lords have expressed concerns about the lack of information on how the new agriculture regime will play out in the relationship between tenants and landowners. Those concerns were set out by the noble Lord, Lord Carrington, the noble Baroness, Lady McIntosh, the noble Earl, Lord Caithness, and my noble friend Lord Greaves, and others. It is also clear that we need a more open, less confrontational and faster system of dispute resolution, ideally based on real understanding and collaboration between landlords and their tenants.
I disagree with the noble Earl, Lord Devon, about close relatives. We should give some consideration to extending this. It might be more likely that farmers will retire if they think someone close to them will take over the holding. We run the risk of missing chances to bring new people in.
We support the extension of the tenancies and hope that the Minister will respond positively to many of the suggestions that have come forward.
My Lords, I am grateful to the noble Baroness, Lady Rock, for tabling the debate and to all noble Lords who have spoken—far too many to mention individually. The overarching message has been the need to complete the unfinished business of agriculture tenancy reform. I pay tribute to the Tenant Farmers Association in particular for continuing to press this case.
As the Minister said during the passage of the Agriculture Bill, we all want a thriving tenanted sector and an environment in which all types of tenure run strong businesses. But to achieve this we need to address the critical issues that remain to be resolved. In particular, we need to ensure parity between tenants under the 1986 and the 1995 legislation to be able to object to a landlord’s refusal to enter a financial assistance scheme, along with new rights to invest in and improve the productivity of a holding.
I hope the Minister will agree that it is vital that all types of farming operation can participate in ELMS and make their contribution to environmentally sustainable agriculture. Could he also update the Committee on the Government’s plans to bring newer, younger entrants into the sector—those with the energy to drive forward the changes needed in this new era? A number of noble Lords raised that point.
Can the Minister update the Committee on progress since the Agriculture Bill received Royal Assent? Can he confirm that the regulations needed to implement the changes already agreed have now been laid? Are interim non-legislative measures being contemplated? When do the Government hope to bring forward a more substantial piece of primary legislation to address the outstanding issues?
My Lords, I start by declaring my farming interests as set out in the register. With agricultural tenancy matters being devolved, I speak from an English perspective. I express my gratitude, along with other noble Lords, to my noble friend Lady Rock for raising this matter for debate as we start the transition towards a new domestic agriculture policy—a transition that we believe will help our farmers to stay competitive and produce high-quality food, for which they are renowned, while protecting and enhancing the environment, on which a sustainable and productive future depends.
To put the importance of the debate in context, as has been said, a third of all farmland in England is tenanted, with 13% of farms wholly tenanted and 33% with a mixed tenure, both owning and renting land. This variety in land tenure and the ability to rent land flexibly is important, because it enables tenants and owners to expand, responding to market changes by renting out additional parcels of land. It also provides a route into farming for new entrants, bringing new skills and ideas into the sector.
I say to the noble Lord, Lord Clark, and my noble friend Lord Inglewood that I am fully seized of the points made about Newton Rigg. I am in dialogue with the Department for Education and I understand that feelings are running high in Cumbria.
The Government believe that a vibrant and flourishing tenant farming sector is vital. The legislative framework for agricultural tenancies must enable the development of successful farm businesses for tenants and an appropriate rental return for owners. This is how we will maintain confidence in the let sector and ensure ongoing opportunities for tenants and new entrants to land.
As many will recall, we discussed during the passage of the Agriculture Bill the importance of new entrants and the role that renting land through the county farm system has played in facilitating that. In the agricultural transition plan, the Government have set out plans for a new funding scheme to create lasting opportunities for new entrants to access land, infrastructure and support to establish successful and innovative businesses, working with county farm estates and other landowners. We have started work to develop this new entrants scheme through a co-design process, with the aim to provide further details by September and introduce the scheme in 2022.
My noble friend Lady Rock highlighted the role of the Tenancy Reform Industry Group. Defra has regular meetings with TRIG to discuss tenancy policy and legislation. I express my personal thanks to all TRIG members for their work over many years in providing expert insights and advice, but it is the responsibility of government to decide policy.
I hope everyone would agree that developing consensus is the best way forward. A number of points have been made on this. I think the noble Lord, Lord Curry, raised partnership. No contractual arrangement flourishes if one or both parties are unhappy. That is why having the confidence to let more land is key to the route to getting more entrants into the let farming sector. If confidence is undermined, what is to prevent owners withdrawing let land and reducing the opportunities we all dearly want for existing and future tenants to come into the sector?
The tenancy reforms the Government delivered through the Agriculture Act 2020 had widespread support from TRIG and other respondents to our 2019 public consultation. These reforms have helped to modernise and update the Agricultural Holdings Act 1986. They give tenants greater flexibility on when to apply for succession on retirement, modernise the suitability test for incoming tenants, and provide a balanced dispute process for tenants who would be unreasonably prevented from varying outdated, restrictive terms that might be a barrier to entering into future schemes.
The focus of these tenancy reforms is specifically on the older, 1986 legislation, not on the more modern farm business tenancies. This is because agreements under the 1986 Act were negotiated more than 30 to 40 years ago in a very different commercial and policy environment. My understanding is that, with 19,400 AHA holdings and 17,600 FBT holdings, we are seeing a reduction in AHA holdings and an increase in FBT holdings. Of course, we want modern commercial agreements, which the FBTs can provide, negotiated more recently with freedom of contract. They are reviewed more regularly, giving tenants the opportunity to renegotiate terms if that is deemed necessary. That is why the responses to our public consultation, in terms of reform of dispute provisions, for example, were very much concentrated on AHA holdings tenancies.
The Government are working with TRIG to develop the supporting regulations to implement the 1986 Act dispute reforms and to modernise the suitability test criteria for tenants who apply for succession. This will make sure that a fair dispute process is put in place that considers the interests of the tenant and the landlord and that incoming succession tenants show that they have the farming and business skills needed to build viable businesses in future. Following two recent constructive meetings with TRIG, we are making good progress with developing these regulations and, subject to parliamentary time, we intend to implement them later this year. When this focused work on the new tenancy regulations is completed, we will continue our engagement with TRIG to explore whether there is industry consensus on the need for further legislative reform and to consider whether non-legislative options might be effective.
I turn to taxation. One of the first things that I was told when I went on the Front Bench was, “Be very cautious if engaging in taxation matters and always say, ‘This is a matter for the Chancellor’”. I would say to noble Lords that, in my briefing for this debate, I was very pleased to be joined by, as well as my officials, Treasury officials. I will be passing back to the Treasury and assessing the points that have been made in this debate on taxation and I am grateful to all noble Lords for raising those matters. I recognise that the fiscal framework plays an essential role in owners’ decisions whether to let land and on the length of tenancy terms offered. However, I think that other factors are important, too, such as the size, quality and location of the land and personal motivations for owning it.
I am aware of the work that TRIG has done to investigate tax issues, suggesting that tax changes might help to incentivise the letting of agricultural land and encourage longer-term tenancies—for example, through limited income tax relief on farmland rents. The Government are committed to a fair and sustainable tax system and keep all taxes under review as a matter of course—that is the Treasury bit. The impact and potential unintended consequences of tax reform need careful analysis, as I hope everyone would agree.
For example, the proposal from the Tenant Farmers Association to limit the availability of agricultural property relief to owners who let land for 10 years or longer could result in owners instead using other ways—for instance, contract farming or taking the land back in hand—to retain the benefits of that relief. I am mindful of wanting to have the right climate for owners—I think particularly of smaller parcels of land. Unfortunately, there is a historical feeling that this is always about the big estates and small tenant farmers. I think that the opportunities for more land coming on to let will be from medium and smaller-size farmers who no longer want to farm and want to have someone, possibly a neighbour or a new entrant, coming into the industry. Relationships are again essential.
I understand the point made by many noble Lords about longer-term tenancies. It is recognised that they provide security for many tenants to invest and grow their businesses. It is also important to understand that shorter-term tenancies can sometimes be more suitable for businesses—I have heard that from certain quarters, including my noble friend Lord Taylor of Holbeach, who is engaged in a number of these matters. Short-term lets may be more appropriate for some new entrants looking to rent land on a short-term basis to gain experience without committing to long-term potential risks. Short-term lets can also be more suitable for some seasonal horticultural businesses. The flexibility over the length of tenancy and maintaining owners’ confidence in the let sector can only encourage more agricultural land into the let sector. However, I understand the points that have been made about longer tenancies and their dynamic.
Turning to ELM, raised by many noble Lords—my noble friends Lord Caithness and Lady McIntosh, the noble Lords, Lord Greaves and Lord Redesdale, and the noble Earl, Lord Devon, among others—what we are doing here is co-designing. It is essential that we work across the piece with tenant farmers and those working on common land. As part of our co-design process with industry, we are considering questions about the need for landlord consent to tenants entering schemes and the length of scheme agreements to ensure that our future schemes are broadly accessible, as well as providing the stability needed to support the delivery of public goods, such as environmental improvements. Indeed, one of the tests and trials includes six areas where landowners and tenants are working together. An example is an estate in County Durham and North Yorkshire covering an area of more than 7,000 acres. This is about a collaborative system of planning and delivering environmental management on land that encompasses a variety of farming systems and a tapestry of habitats. We want to ensure that the collaboration between tenants and owners can be supported and incentivised.
Many noble Lords asked about further legislation. I would not be straightforward with your Lordships if I did not say that the pressure on primary legislation at the moment across Whitehall is intense. Therefore, it would be wrong of me to make a promise to my noble friend Lady Rock on the timing of any further legislative proposals. We want to get through what we have said we will do with the Agriculture Act 2020 and see how that works. We want to work with TRIG and all interested parties to see how we can have a dynamic tenanted relationship and system. It would be wrong of me to say that I can promise primary legislation in the foreseeable future. I say that candidly because I simply do not have command of the legislative programme. We want to find ways to resolve the points that have been raised today so that there is a genuinely benign and dynamic relationship between owners and what I hope will be an increasing number of new entrants. That is why the work that we are doing with the county farms is so important.
A number of noble Lords raised the issue of trees. Obviously, we want to ensure, whether on owned or tenanted land, that it is the person engaged in the outcome of this, whether the tenant or the landlord, and the person who will be undertaking the work who should have the reward. Where tenants are undertaking that, of course they should be rewarded.
I am starting to get messages of concern from our gallant Whip about the time that I am taking. I assure all noble Lords that these matters are current and live. I am grateful to my noble friend for raising this important matter, as reflected by the considerable number of your Lordships who have participated in the debate, and I will follow it up with a letter in the usual manner to cover some of these important points in further detail.
As this debate has now concluded, the Grand Committee stands adjourned until 3.45 pm. I remind Members to ensure that they have sanitised their desks and chairs before leaving the Room.
British Armed Forces: Global Britain
Question for Short Debate
My Lords, I declare my interest as a member of the Army Reserve. On 19 November, the Prime Minister said:
“Everything we do in this country—every job, every business, even how we shop and what we eat—depends on a basic minimum of global security.”
Our people are sustained by
“a web of feed pipes, of oxygen pipes, that must be kept open: shipping lanes, a functioning internet, safe air corridors, reliable undersea cables, and tranquillity in distant straits.”—[Official Report, Commons, 19/11/20; col. 488.]
This, in a nutshell, sums up defence’s contribution to global Britain. But global Britain is also about reinvesting in our relationships, championing the rules-based international order and demonstrating that the UK is open, outward-looking and confident on the world stage. As we await the publication of the integrated review, a subject to which I will return in a moment, I want to start by highlighting just some of the contributions our Armed Forces have made in recent times.
Our Armed Forces are a force for good in the world, providing international security, coming to the aid of the most vulnerable, providing direct humanitarian assistance, delivering aid and peacekeeping. The UK has a proud track record of being on the front line of every major international humanitarian disaster of the last decade. But with a spate of emergencies in the Caribbean in recent years, our ability to respond has been helped by the fact that the Royal Navy maintains a forward presence in central America to ensure that we can always be on hand whenever disaster strikes, particularly in the hurricane season.
In November 2020, more than 80 personnel assisted Belize with disaster relief in the wake of Storm Eta by providing planning and medical advice, moving vulnerable people to safety, distributing food and water and building flood defences. The year before, RFA Mounts Bay delivered essential aid to the Bahamas, which had been devastated by Hurricane Dorian, and in 2017 more than 2,000 Armed Forces personnel provided humanitarian and disaster relief to the Caribbean islands left devasted by Hurricane Irma. They distributed 135 tonnes of aid, provided 10 million gallons of safe water and supplied 500,000 water purification tablets, as well as sharing skills and lending equipment to repair infrastructure.
But it is not just in the Caribbean that UK military forces have been providing support. In west Africa, since June 2020 we have transported vital supplies to communities struggling against Covid-19, through RAF transport flights. In particular, we delivered the components for a field hospital to Ghana to treat victims of Covid-19.
Our reputation in the region as a partner of choice has grown following our provision of long-term support on the ground during the Ebola outbreak in Sierra Leone, where we built new medical facilities and provided additional medical support. In the Mediterranean last summer, the UK deployed HMS “Enterprise” to Beirut to deliver supplies and provide vital survey data that allowed the port to return to normal operations after the explosion. We also provided supplies to house and feed up to 500 soldiers from the Lebanese Armed Forces who were working on the relief operation. Even further afield, in the last few years we have delivered support such as shelter kits, solar lanterns and water purifiers to Indonesia and Vanuatu in the South Pacific, following natural disasters, and deployed teams from the Queen’s Gurkha Engineers to help support their fellow nationals in Nepal in the aftermath of devastating earthquakes.
In 2021, as we become a truly global nation, I seek the Minister’s assurance that with such a strong track record of humanitarian support, we will continue to prioritise our defence assets to support the safety of communities around the world. Of course, the principal role of the military is to deliver security, and I am pleased that recent years have witnessed an increase in the UK contribution to international peacekeeping. I have been part of NATO missions in Bosnia, Kosovo and Afghanistan, so the subject is close to my heart.
I have been fortunate to visit two recent success stories. First was the deployment of personnel to support UN, African Union and EU peacekeeping missions to counter al-Shabaab in Somalia. Indeed, in March last year, the first 400 Somali National Army soldiers graduated from a new UK-supported training facility in Baidoa. The second was equally impressive: our contribution to the UN mission in South Sudan, where we have deployed a regiment of Royal Engineers and, for a period, a field hospital. UK service personnel also undertook a wide range of educational support to civilians, including English language and computer training, as well as practical skills such as carpentry and mechanics.
Bringing us completely up to date, the recent deployment of 300 UK military personnel to the UN peacekeeping mission in Mali, where they will help to promote peace and counter instability, is in addition to the three RAF Chinooks and their teams that have been supporting the French counterinsurgency operations in the region since 2018. As we look forward to an ever increasingly global Britain with trade at its heart, it is worth recognising that, since the 1980s, we have maintained a long-standing maritime presence in the Gulf and Indian Ocean, now known as Operation Kipion, to ensure the safe flow of trade and oil, while also promoting peace and stability in the region. While not wishing to be fixed in any particular mission, can my noble friend the Minister reassure us that the overall recent increase in support to UN missions will persist?
In addition to humanitarian relief and security, the other key element of defence’s potential contribution to delivering a global Britain will undoubtedly be our ability to assist our allies with training. Training support comes in two forms. Examples of international training are the UK’s ongoing contribution to peace in the Democratic Republic of the Congo, where we are providing training on human security, including gender advisory work to promote stabilisation, and in Iraq, where over 6,000 members of the Iraqi security forces have now been trained by UK soldiers. Training is also delivered here in the UK through a variety of courses for all ranks, from junior commanders to the world-famous Royal College of Defence Studies, aimed at nations’ future leaders. I highlight the MoD’s internationally renowned defence human security advisor course, which covers topics including women, peace and security and has trained 20 international personnel a year since November 2018. One often-overlooked fact, however, is that the extensive network of defence attachés and regional-based training teams means that the MoD has a larger international footprint that the Foreign, Commonwealth and Development Office.
I have always been deeply impressed by the MoD’s defence engagement strategy and am delighted that this is now firmly a mainstream career option for our service personnel. It is also a key component of the UK’s soft power along with, for example, the BBC World Service. Can the Minister tell us what plans there are to have a genuinely comprehensive cross-government approach to prioritising and delivering soft power influence?
Looking to the future, we await the publication next month of the integrated review, which should deliver, in the language of the grand strategic approach, the ends, ways and means of the Government’s future ambitions. However, it is worth noting that the MoD has already quietly published some of the detail of the ways, or how, it intends to operate, in the Integrated Operating Concept 2025—the IOpC—last September. This sets out a new approach to how we will use our armed forces in an era of persistent competition and the rapidly changing nature of warfare. Representing the most significant evolution of UK military thought in several generations, it will lead to a fundamental transformation not only of the UK military, but how we use it.
It articulates a clear distinction between operating and warfighting, and reasons that while ultimately we need a contingent capability for our military to defend the nation and fight a war, our military should also be out and about in the world, operating—namely doing useful things, helping to build alliances and responding to crisis—rather than simply training as a contingent force. This is good news, as it implies that the MoD will be encouraged to do even more of the sorts of tasks with partner nations that I have highlighted in support of global Britain. Can the Minister confirm that this will be the case?
The IOpC also makes clear that we must be prepared to be enduring in our commitment and forward deploy our Armed Forces. There is no better example of this than the recent forward deployment of HMS “Montrose” to Bahrain. I hope that in the coming years, further Royal Naval assets, including offshore patrol vessels, frigates and future commando elements, will also be persistently forward deployed. I was fortunate, as Minister for the Armed Forces, to travel to 58 partnering nations. The one consistent message that I received was that, while the training and support that we offered were viewed as some of the best in the world, we would be there one minute and gone the next, which is why this move to persistent engagement will be the key for defence’s contribution to global Britain.
I end by highlighting that, in May, a carrier strike group led by HMS “Queen Elizabeth” will undertake our most ambitious deployment for two decades, encompassing the Mediterranean, Indian Ocean and east Asia. If the security of our nation is where defence meets prosperity meets global influence, then this deployment, and those global deployments that will follow, will be flagship events for defence’s contribution to global Britain.
My Lords, I thank the noble Lord, Lord Lancaster, for securing this debate. There is of course a UK and NATO defence base on Gibraltar, with important facilities and which is strategically placed at the entrance to the Mediterranean, which I visited as a Minister in 2001. I therefore welcome the joint announcement on 31 December 2020 by the UK and Spain that they had reached agreement on a “political framework” to form the basis of a separate treaty between the UK and the EU regarding Gibraltar, under what Spain’s Europe Minister called “co-responsibility”.
The agreement eliminates any physical checks at the land border with Spain, bringing Gibraltar within the Schengen zone, the customs union and the single market. This seems a common-sense outcome that will secure UK defence and other interests, lift the shadow of historic Spanish restrictions over the rock and offer citizens of Gibraltar and Andalucia the basis for a positive stable relationship, based upon future co-operation rather than historic confrontation.
I too thank the noble Lord, Lord Lancaster, for introducing this debate, but I fear that much of the British public sees global Britain as involving the British Council rather than the British Army, and certainly not the intractable problem of Mali, currently the most dangerous of all United Nations peacekeeping missions. The humanitarian achievements of our armed services are legion and demonstrate in a very practical way their capacity for dealing with the unexpected, but if the Army is to be deployed on missions such as Mali, the criteria for doing so must be spelled out clearly in public, and must include the possibility of mission creep.
My Lords, all Members of this House recognise that the Armed Forces already convey an excellent image for the United Kingdom whenever and wherever they deploy, and that in so doing, they help the Government to meet their aspiration to be a global force for good. To paraphrase the Prime Minister, our Armed Forces are one pillar of the Government’s ambition to safeguard Britain’s interests and values by strengthening our global influence. This entails having a United Kingdom presence that can be seen and felt physically on a worldwide basis, capable of exerting soft or, if necessary, hard power, at any time, and wherever it might be needed on any continent or ocean.
A maritime strategy that involves forward deployment is fundamental to this, and such a strategy is in place today, embodied by the carrier strike group deployment later this year. It will be enhanced by the emphasis given to the importance of a strong Navy by the Prime Minister in his speech on defence in November, a sentiment that I commend to your Lordships.
My Lords, our International Relations and Defence Committee report on the UK and Afghanistan, published this month, demonstrates the important role that our Armed Forces play in supporting global Britain. We welcome the significant part that the UK has played in NATO’s resolute support mission. In particular, our establishment of the Afghan National Army Officer Academy in Qargha, colloquially known as “Sandhurst in the sand”, has trained and improved the leadership capability of a generation of Afghan national defence and security forces, which face the challenges of the Taliban insurgency. Several alumni occupy senior positions in the Afghan Government, which has helped to build closer ties between the UK and Afghanistan. The initial UK training agreement was for 10 years. Does my noble friend agree that this programme is valuable for the global Britain agenda and should continue to be funded?
My Lords, if the Armed Forces are to continue to promote global Britain, we must look after them and fulfil our obligations under the Armed Forces covenant. Research by the Royal British Legion and Poppyscotland points to the difficulties that veterans are encountering in getting benefits assessors to understand post-traumatic stress disorder when scoring health assessments for disability benefits. One stated that:
“I supplied a consultant psychiatrist’s letter stating all my mental health conditions. I scored zero. This is laughable”.
I agree. A government spokesman has said that the report would be given careful consideration, but consideration must be given both carefully and urgently if we are to continue to promote global Britain.
My Lords, we have a disgracefully short time in which to debate a vital topic. I agree with virtually everything that the noble Lord, Lord Lancaster, said in his introduction. My fear is that the promotion of global Britain gives us back the idea that we are somehow a global great power. We have to recognise that we are not. We should not go back to the decision to withdraw east of Suez that we took in 1968. We have plenty of interests in Europe and its neighbourhood, where we have to play a vital role, given the Balkan tinderbox, the dangers of Russian revanchism, tensions in the Mediterranean and the north African problems to which other noble Lords have referred. We must avoid overreach. I support a stronger defence budget, but we must not imagine that we are what we were.
My Lords, I congratulate the noble Lord, Lord Lancaster. I put down peacekeeping and training as the main thrust, or a very large part, of what any modern force should be doing. As the noble Lord has covered that, I limit myself to a couple of questions.
If the Army, Navy and Air Force are all going to be taking part in this, what will be the spending commitments and procurement process that place it on an even keel, with major battle-fighting capacity, compared with other nations of our status or bigger? Do these things feature in the planning? Defence spending has a habit of getting sucked into big projects, with egos involved. Are we going to take some steps against that? Are we going to include the police in any form of training going forward, as well as the Armed Forces?
My Lords, some might thing that the UK, in claiming for itself the title “global Britain”, was being more than a little pretentious. The challenge is to substantiate the claim, and the route to that substantiation is the gaining of influence in the world, a reasonable ambition in the post-Brexit era. The real influence comes through a combination of the UK’s hard and soft power, a true integration of the skills of our diplomats, the strength and versatility of our Armed Forces and the correct focusing of our international development budget.
While I applaud the recent and significant increase in our defence budget, a welcome addition to our hard power, I am utterly dismayed—along with former Prime Minister Theresa May, the most reverend Primate the Archbishop of Canterbury and others—by the decrease from 0.7% to 0.5% of GDP in our international development budget. In the overall context of the Chancellor’s fiscal challenge, this £4 billion saving is tiny, but the damage that it does to the global Britain aspiration and our international reputation is huge. Would the Minister like to comment on whether this truly awful decision will either be reversed shortly or maintained solely for one year?
My Lords, we must strive to be the foremost player in European defence by bolstering NATO and playing a constructive and key role in European security. Further afield, with China having proved willing to announce the new Hong Kong security law and the detention of Uighur Muslims, we see passions run strong. The careful meshing of foreign policy, trade and defence interests against a backlash in public opinion over relations with China will provide an early and stern test for the British Government’s definition of global Britain. A strong defence policy will have a key role to play in the recalibration of Britain’s influence in the world, best delivered through an integrated and synthesised approach to security, defence, development and foreign policy, with a growing role in peacekeeping and humanitarian work. The welcome defence spending increase over the next four years will provide a real opportunity for global Britain to deliver and influence outcomes. In such uncertain times, that should be welcomed.
My Lords, I must admit to fearing that our Armed Forces are currently too small to satisfy the Government’s aspirations for us to be global Britain after Brexit or the CDS’s vision of a more forward-deployed military. The Army certainly has no surplus after those required to help with the pandemic have been removed—plus its contributions to NATO’s enhanced forward presence and UN peacekeeping operations in Cyprus and Mali. The realisation of the Government’s aspirations is therefore very much resource related.
My Lords, global Britain will only progress in alliance with our key allies, be it the US, France and so on. Of course, I welcome the increased funding and the four-year settlement, but hard choices remain. We have to ask ourselves whether we, as a middle-sized country, can do everything across the spectrum with excellence, as the Defence Secretary claims. Can we be everywhere, in all the theatres, as the noble Lord, Lord Lancaster, implies? I reflect that the increase in funding and presence worldwide took place at a time when we were a member of the European Union. Nevertheless, we took important and sovereign decisions. Was EU membership in any way a constraint on our defence posture in terms of procurement or deployment?
My Lords, the Chief of the Defence Staff, General Sir Nick Carter, has repeatedly called for a multiyear defence settlement to enable the military to invest in constructing a modern defence capability. I echo that plea. If the military is to be able to deliver the integrated operating concept, a pivotal strategy for global Britain, with its emphasis on continuing cyberwar against authoritarian states, it needs long-term investment in technology.
Secondly, the noble Lord, Lord Campbell of Pittenweem, spoke of the horrors continuing in Mali. Some 220 UN peacekeepers have been killed there since 2013, eight of them in the last four weeks. Our UK mission there is under-resourced; it needs helicopters —absolutely essential for providing crucial casualty evacuation—and it does not have them. Would the Minister examine that situation?
The noble Baroness, Lady Warsi, has withdrawn, so the next speaker is the noble Baroness, Lady Coussins.
My Lords, our Armed Forces are a shining example of how to teach, learn and use foreign language skills. The Defence Centre for Languages and Culture teaches 40 different languages. Will the Minister confirm that its funding is secure? Local interpreters are vital, but lessons learned from Iraq and Afghanistan led to a step change in our own language training, essential also for peacekeeping, conflict prevention and humanitarian aid. Language skills are required for promotion, conform to NATO proficiency standards, and attract a financial reward. Will the Minister ensure that this best practice is more vigorously disseminated to promote more widespread cultural change under the banner of global Britain, including throughout the Civil Service? Our Armed Forces show that multilingualism is not just useful but valued—a really important part of what global Britain should look like.
My Lords, I am not terribly keen on the term “global Britain”, but some Members have already pointed out the necessity to join up our activities. Embassies need to ensure that they have economic as well as diplomatic and military representation, because it is entirely the bringing together and integration of these services that enables us to promote our interests and those of the wider security of the world. Our Armed Forces have been underfunded for many years, particularly our Navy. We also have to pay attention to Africa, which will be the great powerhouse of the future, with a growing population. We should be able to capitalise on our historical connections there, and I strongly urge the Minister to do so.
My Lords, like the noble Lord, Lord Lancaster, I will always remember the support of our Armed Forces for the people of Kosovo 20 years ago. Our soldiers did a lot of humanitarian work at that time; in fact, they acted as aid workers alongside the UN. The reverse is sometimes true as well—that aid workers have to defend themselves, and staff are casualties, often unreported. Those soldiers were carrying out a mission under the UN principle of R2P, responsibility to protect, and my question to the Minister is: does that principle still hold good in defence circles, because we seem to hear less about it? The Conflict, Stability and Security Fund combines the skills of DfID and the MoD. As we have heard, we have sent 300 Light Dragoons and others out to Mali, adding to 100 already taking part in the French-led Operation Barkhane. I know the region, and I can only wish our soldiers and aid workers well. As has been said, this is a dangerous area where men of violence occupy places where government fears to tread.
My Lords, I thank the noble Lord, Lord Lancaster, for introducing this short defence debate, so necessary in these perilous times. We have left the European Union but not Europe, and with the major new extra funding for our Armed Forces, together with transformation and innovation, we are by far the strongest member of NATO in Europe. President Biden will undoubtedly need help to inspire the democratic allies of the United States, of which we should be far the closest. Statecraft and networking has always been one of our special strengths; we are recognised as one of the best in the world at it. The Prime Minister and the Foreign Secretary will play key roles in helping and influencing the President accordingly, while developing our own urgently needed long-term foreign policy. Con Coughlin’s excellent article in yesterday’s Telegraph is a key geo-assessment of how dangerous the world has become, suggesting that Beijing, Moscow and Tehran represent by far the most dangerous totalitarian states. I totally agree.
My Lords, the UK has one of the strongest and most powerful combinations of hard and soft power in the world. Our Armed Forces are respected around the world as the best of the best; in fact, the noble Lord, Lord Lancaster, mentioned soft power in his opening speech. I am an honorary group captain in 601 Squadron of the Royal Air Force, and the announcement of the new Space Command is a major development given the increasing threat in space and the need to prioritise this capability and ramp it up at speed. Does the Minister agree that our Armed Forces should continue to build closer links, with joint exercises and exchanges of personnel, with other countries such as India? Our Armed Forces are truly a crucial and prominent part of global Britain.
My Lords, it is hugely welcome that the Government define global Britain as a commitment to uphold the international rules-based system. That is not a given, as it might have seemed only a decade ago. There are daunting and growing challenges on that front. The Armed Forces’ capability is vital, so all eyes are on the integrated review, particularly the ability to project a naval and cyber deterrent into the Indo-Asia-Pacific region in the decades ahead. What is important is not simply the Armed Forces’ capability, however; this is about the will to act. Recent episodes such as Syria have shown that, if that is not there from the United Kingdom, we can allow nations with far inferior capability to become dominant. Global Britain must be about being a committed, enduring global leader, right from the very top.
The increasing challenges that Britain and our friends face in the world are very real. While commercial shipping demand grows inexorably, climate change is opening up new trade routes. The challenges multiply. The need to influence, to project our values and, where necessary, to compete—all those factors are focused on the world’s oceans. We should look to support our friends and partners where appropriate and able. Britain’s forthcoming new investments in maritime defence assets is not unique. It is to be seen also in other navies such as Australia, Canada, Japan, India, France and the USA. I draw attention to the calibre of our people. Their dedication, professionalism and can-do spirit are truly remarkable. At a time of profound national challenge and change, they have a special power to inspire us all, at home and around the world—soft power.
My Lords, we all await the delayed integrated review. I too welcome the extra £24 billion for defence and our Armed Forces, but think it somewhat perverse to allocate the extra funds before working out the detailed strategy that they are meant to underpin. Should not Her Majesty’s Government work out the strategy first and then commit the necessary funds to achieve it? We need a coherent and comprehensive defence strategy if the funding is to be effective. Can the Minister confirm that, as part of the global Britain agenda, Her Majesty’s Government will strengthen their “east of Suez” strategy—for example, working with our regional allies to better protect freedom of navigation in the South China Sea in particular and the western Pacific in general?
My Lords, in my one minute, I make an impassioned plea for Britain to be less global in strutting its military might across the world. We already have a military presence on 145 sites in 45 countries. If other members of our so-called Security Council were to follow our example, our fragile world would become even more dangerously unstable. Does the Minister agree with the words of former Prime Minister Theresa May that we should stop acting as the world’s policeman?
My Lords, I pay tribute to our Armed Forces’ regulars and reserves for the work they do internationally and at home: dealing with Covid, the floods and now trying to play a key role in global Britain. The noble Lord, Lord Lancaster, urged the Minister to say that the Government would keep up the major humanitarian efforts, but he also noted that the problem is that the UK is seen as here today and gone tomorrow, or here one minute and gone the next. That reflects the danger of Prime Ministers—David Cameron did this quite often—and others going somewhere and making a commitment without necessarily a clear strategic objective. Could the Minister clarify what the strategy behind global Britain will be and reassure us that it will not cause overstretch, further damaging our Armed Forces’ morale?
Britain’s Armed Forces are renowned for their dedication, professionalism and excellence. Labour stands four-square behind them, their families and our veterans. Today Britain faces a diverse array of threats: adversaries investing heavily in their military, a global pandemic, economic uncertainty, autonomous weapons, and a climate emergency. But uncertain times provide an opportunity to outline a new vision of our place in the world, and the Armed Forces should have a key role in that.
We have been here before: after the Second World War, the leadership of Clem Attlee and Ernie Bevin was instrumental in setting up NATO, but the Government cannot say how the Armed Forces will contribute to global Britain if we still do not know what is going to happen with the integrated review. When will it be published? There is much ground to make up. Two defence reviews cut spending by £8 billion and reduced the forces by 40,000. The recently announced increase in capital spend was matched by a real-terms cut in revenue.
We need an ambitious strategy for our Armed Forces to develop new international relationships and protect our country against serious threats. We need a coherent vision of Britain as a moral force for good in the world, which places the Armed Forces squarely within that. When will this Government show some leadership? Are they capable of showing us a vision of a new global Britain, as Attlee and Bevin did all those years ago?
My Lords, I congratulate my noble friend Lord Lancaster on securing this valuable debate and thank your Lordships for a stimulating discussion. I know your Lordships felt constrained by time, and trying to listen to your excellent contributions was rather like listening to a constantly beating staccato drum—so, if I do not manage to include everyone in my remarks, I apologise.
My noble friend laid out very well the extraordinary contribution that our Armed Forces make to the security and influence of the UK, not least our support of humanitarian and peacekeeping work and training. Globally, the Armed Forces truly are ambassadors and defenders of the UK’s values, prosperity and security. Indeed, the noble Lord, Lord Bilimoria, both acknowledged and paid tribute to that, for which I thank him. Particularly, he asked that we build closer links with friends and allies. I agree and confirm that India is indeed a valued ally.
To illustrate the range of activity I can report that, over the festive period alone, more than 6,000 military personnel were deployed on 39 operations in 46 countries. That eloquently underpins the concept of global Britain. As global competition deepens, as the challenges of Covid-19 put strain on the international system, as nations seek to find an edge—through fair means and foul—we face an unprecedented and accelerating challenge. While the Armed Forces already make an indispensable contribution to our security, prosperity and values, and to global Britain, we can and will do more. We shall be more globally engaged: actively competing and collaborating to defeat and deter our adversaries, working ever more closely with allies old and new, extending our reach to new theatres and domains, and tackling global challenges to our safety and prosperity. That is why the Prime Minister announced more than £24 billion for next-generation military capability, cementing our place as a leader in NATO, defending our people from new and evolving threats, operating globally, protecting the world’s most vulnerable, and bringing jobs and prosperity to every part of the United Kingdom. That is something of which we can all be proud; it means that global Britain is not some empty piece of rhetoric but a very solid concept. The MoD and our Armed Forces are certainly demonstrating —dramatically—just how solid a concept that is and how valuable it is to the rest of the world.
My noble friend Lord Lancaster raised a number of important issues that were echoed by the noble and gallant Lord, Lord Boyce, the noble Lord, Lord Liddle, and many others. I can reassure my noble friend and the noble Baroness, Lady Smith of Newnham, that humanitarian response and United Nation peacekeeping will continue to be an important component of the MoD’s engagement activity. As my noble friend is right to point out, the integrated review proposes a transformation in the Armed Forces to increase our presence and engagement across the world. Two important components of this will be agility and persistence. It is vital that the Armed Forces are flexibly deployed into the situations where they can deliver the greatest value, whether this be supporting United Nations peacekeeping and French counterterrorism operations in Mali, or delivering humanitarian aid to the Caribbean. The Armed Forces will do more to deliver this Government’s integrated approach to foreign policy and soft power, a point that my noble friend specifically mentioned, as did the noble Lord, Lord Mountevans.
The noble Lord, Lord Hain, in connection with current and recent issues, raised the very important matter of Gibraltar—a key defence base that occupies a special place in our affections. As he pointed out, it is of huge strategic importance. Around 440 military personnel, from all three services, are supporting Gibraltar. We are pleased that they can look to the future with greater certainty as a consequence of the outlined agreement.
The noble Lord, Lord Campbell of Pittenweem, raised Mali and mission creep. I seek to reassure him that the terms of deployment are clearly defined and they are over a specific time. Mission creep is not something that we would ever want. He is right to raise that prospect because there have been painful lessons in the past, but we are very cognisant of how these deployments must be closely described, defined and monitored. Indeed, in Africa, some 300 British troops and RAF Chinook helicopters are working alongside French and United Nations colleagues to support counterterrorism operations and a United Nations peacekeeping mission. In Somalia, 65 British service personnel support peacekeeping and training missions with Somali forces. As my noble friend Lord Lancaster said, that is another indication of the dimension and the broad spectrum of the support we can give.
The noble Baroness, Lady Coussins, raised languages. I totally agree with her: it is an essential support that we value. I did not make a detailed note of the point she raised, but I will look at Hansard and endeavour to respond to her.
Many of your Lordships raised the broader questions of international security, international influence, how we deploy our resources and what our objectives are. In among all that, the noble Lord, Lord Dannatt, raised international aid. As I said, the Government are committed to our aid and support role, and our Armed Forces play an important role in the discharge of that obligation.
The noble Earl, Lord Sandwich, and other noble Lords raised the issue of activities and influence, the noble Lord, Lord Truscott, mentioned south-east Asia, and the noble Baroness, Lady Smith, asked about coherent activity. The best illustration of that is possibly the carrier strike group, which I feel illustrates the point well. The United Kingdom reached a major milestone in December, when it declared that its carrier strike programme had achieved initial operating capability. The Defence Secretary, Ben Wallace, and the US acting Secretary of Defense, Christopher C Miller, co-signed the UK-US joint declaration for the carrier strike group 2021 deployment. This declaration paves the way for a successful inaugural operational deployment of the UK carrier strike group alongside its allies. The joint declaration supports the UK carrier strike group, led by the UK’s aircraft carrier HMS “Queen Elizabeth” on its inaugural deployment later this year.
This deployment embodies the strength of our bilateral ties and reflects the depth and breadth of this vital defence security partnership. It will include the Indo-Pacific region working together with allies to send a clear signal of our commitment to the region. But this will not be a flash-in-the-pan activity, as some of your Lordships, particularly the noble Baroness, Lady Smith, were concerned about; it is all part of a coherent approach. The deployment supports the UK’s deep and enduring defence relationships, such as the vital Five Eyes partnership, our ongoing commitment to supporting United Nations operations in the region and our desire to advance bilateral security co-operation with ASEAN nations.
My noble friend Lady Anelay of St Johns raised the important matter of Afghanistan, as did a number of your Lordships, and I will just cover the points that she raised. She referred to her committee’s work on the recent publication of the International Relations and Defence Committee report, The UK and Afghanistan. I pay tribute to my noble friend and her committee for a very useful report. It seemed a most comprehensive review of everything that has happened, with some very useful pointers as to where we ought to be looking. I reassure her that we remain committed to supporting Afghanistan in its journey towards lasting stability and security. The United Kingdom is the third-largest troop contributor to the Resolute Support Mission, with around 850 personnel deployed. We remain committed to building Afghanistan’s stability and security, committing £70 million in military funding and £155 million in development funding for 2021. Again, that is a useful indicator of the Government’s intention relating to their overseas responsibilities.
Our valued contributions make us well placed to influence our NATO allies and our partners, including the new United States Administration. We look forward to engaging with President Biden and his Administration. It is already clear that the United Kingdom and United States have much in common on a range of issues. I reassure my noble friend that we will seek that engagement at the earliest opportunity to reiterate our continued commitment to Afghanistan.
A number of your Lordships, including the noble Lords, Lord Touhig, Lord Anderson of Swansea and Lord Truscott, and the noble Baroness, Lady Wheatcroft, raised the integrated review and the issue of defence spending and budget. We are increasing defence spending by an additional £16.5 billion over the next four years—the biggest investment in the UK’s Armed Forces since the end of the Cold War. That marks the first outcome of the integrated review. It will enable modernisation of the UK Armed Forces, with at least £6.6 billion for research and development. The full conclusion of the integrated review will be announced in the coming months.
The right reverend Prelate the Bishop of Portsmouth raised the matter of our veterans—a matter dear to the hearts of us all. We offer support and advice across a range of areas through the Office of Veterans Affairs and our support for veterans’ charities. The case that he referred to was troubling and, if he wishes to provide me with more information, I shall investigate.
This has been an excellent debate. It has highlighted the broad contributions of the Armed Forces to global Britain. The value of the defence contribution to global Britain, as I have already said, cannot be overstated. This year will be a turning point: not only will it see the inaugural deployment of the carrier strike group, to which I referred; it will be a demonstration of the United Kingdom’s technological and industrial prowess, and a sign of our enduring commitment to allies across the world. It will also see the publication of the integrated review—a very important development, setting in motion the transformation of the reach and impact of our Armed Forces across the world and delivering a global Armed Forces ready for a global Britain.
I thank my noble friend for calling this debate and all noble Lords for their very interesting and thought-provoking contributions.
The Grand Committee stands adjourned until 5 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering, except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit is one hour.
Anti-Semitism: University Campus Incidents
Question for Short Debate
To ask Her Majesty’s Government what assessment they have made of the report by the Community Security Trust Campus Antisemitism in Britain 2018–2020, published on 17 December, and in particular, the finding that the number of anti-Semitic incidents in universities has increased.
My Lords, I am particularly pleased to welcome the noble Lord, Lord Wolfson of Tredegar, to his new post in the Ministry of Justice. The noble Lord comes to us garlanded with the highest praises that the Bar can bestow. Like other well-known public figures, he was once a prolific Twitterer, and showed a great sense of humour and a rare knack for conciliating different points of view. All those qualities will stand him in good stead here. We wish him well and look forward to meeting in person.
I have spoken about campus anti-Semitism on previous occasions and sadly there is a great deal more to report. It is equally sad that an organisation such as the Community Security Trust, whose report we are debating, should have to exist at all. It is a charity that protects British Jews from anti-Semitism and provides security. How regrettable it is that every Jewish building and every Jewish gathering has to be protected by CST guards. I take this opportunity to thank the Government for the funding they provide to help the CST to continue to provide safeguards for the Jewish community.
The CST report uncovered the highest number of university anti-Semitic incidents ever recorded, notably online. Shockingly, they included anti-Semitic action by university staff—the very people who should be teaching students to reason and tolerate. Nothing leaves a Jewish student more unprotected than to find that the anti-Semitism he or she faces is from his or her lecturer, and that the panel set up by the authorities to investigate it is peopled by colleagues and devoid of Jewish members.
The treatment meted out, the failure to discipline and the reaction would not be tolerated for a moment by other ethnic minorities. But somehow racist and religious prejudice against Jews is given short shrift, and its specific nature glossed over. Just as Jeremy Corbyn’s response to allegations of anti-Semitism was that he was anti-racist, ergo could not be guilty, so the university authorities and Universities UK are trying to disguise this prejudice by folding it up into other racisms. In November, UUK put out a report on anti-racism in universities, but relegated anti-Semitism to a passing mention in a footnote.
The situation is not all bad. There is light at the end of the tunnel, as under the exceptional leadership of the noble Lord, Lord Mann, more universities—about 51—are adopting the IHRA definition of anti-Semitism, which has the effect of concentrating minds on its expression as well as its definition. But first I will give noble Lords just a very few examples of the sort of behaviour taking place in our universities. These are the young people who will be our leaders in due course.
At Warwick University a student complained about a lecturer who dismissed the notion that the Labour Party could be anti-Semitic as an attempt to discredit it by the so-called Israel lobby. That lecturer emailed the whole class to suggest that claims of anti-Semitism against Labour are orchestrated. Amazingly, it was the student who was then investigated by the university at length. Although that came to nothing, what a deterrent effect that will have on any other Jewish student thinking of complaining. It was the victim who was put on the stand.
The School of Oriental and African Studies maintains its poisonous reputation for Jewish students. A Canadian student was forced to abandon his studies there because of the toxic atmosphere. He was branded a Nazi supremacist for disclosing his support for Israel and was refunded his £15,000 fees. At SOAS, others complained, being Jewish means you are called fascist. The Malaysian Prime Minister was invited to speak at both the Oxford and Cambridge Unions, was openly anti-Semitic and was greeted with laughter.
Lecturers have spontaneously called the Holocaust “too Jewish” or indulged in the old slander of over-powerful conspiring Zionists. How ironic that the practice of no-platforming is so acceptable in universities but not when it comes to anti-Semitic speech. What an indictment of the failure to deal with the problem, that some Jewish students choose a university not by the course content or the quality of teaching but by the extent of anti-Semitism that they might encounter. Some academic staff have been shown to work together to foster an atmosphere inimical to Jewish students and teach and supervise others handing on the same antagonism to the next generation.
The International Holocaust Remembrance Alliance definition of anti-Semitism helpfully draws the distinction between legitimate criticism of the Israeli Government, like any other Government, and anti-Semitic calls for Israel to be destroyed or compared to a Nazi regime. Legitimate criticism of Israel is to anti-Zionism what literary criticism is to book burning. I mention the Israel element because of the wise observations of the late Lord Sacks. Antisemitism, he said, mutates like a virus. It used to manifest itself as religious discrimination, then it was racial, and now it focuses on attacking the self-determination of the Jews in their only, tiny, state.
The IHRA definition is not intended to be legally binding but to help perception and eradication of anti-Semitic activity. Why then is it not more widely adopted and why have some academics pushed back at it in a way that undermines their students’ protection? Notable among those is University College London. An academic board was set up there to try to reverse the college’s adoption of the definition which did not even include a Jewish student; can one imagine today a panel about campus racism without a black student? It argued against protection of Jewish students by saying that to define anti-Semitism is exceptionalism and blocks free speech. But anti-Semitism is exceptional in its length and breadth. As for blocking free speech about Israel, there are no examples ever of the definition having resulted in any reduction in academic freedom or research. Hardly any other country is so widely discussed. The definition is unequivocal about free speech. The irony is that the rejectionists are the ones seeking to stop Israel-connected speakers and to block academic research co-operation. What is to be done about this?
Holocaust education, which is compulsory for schoolchildren, sadly has not worked. How is it possible that an entire generation who has studied the holocaust can arrive at university and behave in the ways I have outlined? It is because they have studied the Holocaust in a vacuum, as an example of generalised hate, and have resigned it to history. They have learned nothing about the contribution of Jews to civilisation, about the millennia of persecution, and how that, and religious teaching, led to genocide; they have not learned of the overwhelming need for a safe haven and how Jewish self-determination in Israel is the best protection against genocide in the modern world. All they learn is that Jews were killed in their millions and all they see is pictures of death camps and bodies. It is not surprising that the brute reaction of some is to replicate Nazi slogans when they vent their hatred at universities. There is a need to widen Holocaust education into education about Jewish history. That is why the planned Holocaust memorial in Victoria Tower Gardens, at a cost of over £100 million and a destroyed park, is such a wasted effort. It will present the Holocaust again as something in the past, something over there, not here. It will enable alleged anti-Semites to continue to pay their respects to 6 million dead Jews, badge themselves as anti-racist and then carry on attacking Jews of today and their only state, Israel. How much easier it is to mourn the lost generation than to respect the living Jews of today. It will give the impression of “job done”.
So will the Minister take steps to ensure that more universities adopt the IHRA definition and incorporate it in their codes of conduct? Will he also promote a complete overhaul of Holocaust education so that students learn about Jewish history, why Jews were persecuted and how unwarranted are attacks on today’s community?
My Lords, alarming levels of anti-Semitism on campus are not new. It has been a profound problem since the mid-1970s. When I was a student in the 1980s, Jewish societies were being banned, at the instigation of those who saw themselves as progressive and liberal. These things—and many of the same people—played a central role more recently when my own party, the Labour Party, went through its shameful period. The problem on campus is more pronounced and, as the report attests, illustrates that for too long too little has been done to tackle students being radicalised and recruited to extremist ideas and politics with anti-Semitism at their centre, and the increasing role that academics play in propagation and denial of the problem. We need a more profound focus on the roots of such extremism and a more comprehensive view on how we tackle it. Will the Minister, whom I welcome and whose maiden speech I look forward to, consider asking the Commission for Countering Extremism to look into this, with a view to developing effective tools and techniques to guarantee the safety of Jewish students and stop a new generation of anti-Semites graduating from our colleges and universities?
I remind noble Lords that all Back-Bench speeches are limited to one minute.
My Lords, I am pleased to take part in this discussion. I congratulate the noble Baroness, Lady Deech, on getting the debate. All forms of discrimination on the basis of identity are wrong. Some have greater resonance than others; quite clearly, for all the historical and present-day reasons we know, anti-Semitism is up there with the worst of them. However, it is simply one of the evils we have in today’s world as a result of the increasing manifestation of politics of identity which are outward-looking and hostile towards individuals and groups. It results in people being disrespected, discriminated against and attacked. It must be wiped out.
I pay tribute to the noble Baroness, Lady Deech, for securing this debate and to Gerald Ronson, the founder, driving force and inspiration of the Community Security Trust. I welcome my noble friend Lord Wolfson to the House and to the Front Bench. We both attended King David High School in Liverpool, where we learned tolerance and understanding. I am sure that he will be pleased to note that, along with other clubs, our beloved Liverpool Football Club has adopted the IHRA definition of anti-Semitism.
Jewish students up and down the country need our support because, in the words of the late Lord Sacks:
“A society … that tolerates anti-Semitism—that tolerates any hate—has forfeited all moral credibility.”—[Official Report, 20/6/19; col. 868.]
This certainly applies to universities in particular; I support the call of the noble Baroness, Lady Deech, for all institutes of higher education to adopt the IHRA definition. I am certain that Jewish students up and down the country will take some comfort from today’s debate—although I am unsure how a one-minute contribution from the noble Baroness, Lady Tonge, will be sufficient to put right a career of repeating old, medieval tropes.
The noble Lord, Lord Woolley of Woodford, has withdrawn, so I call the noble Baroness, Lady Warwick of Undercliffe.
My Lords, there is no doubt that this report has been a wake-up call to universities. The CST acknowledges, quite fairly, that its drive to encourage greater reporting among Jewish students has helped to increase reported incidents, but the fact is that there has been a substantial increase. Much work has already been done in institutions on different forms of harassment and discrimination but Universities UK, representing all universities, accepts that more can always be done and that institutions should act swiftly on any reports of anti-Semitism. UUK’s Changing the Culture and Tackling Racial Harassment aim to galvanise the whole sector into thinking differently—less defensively and more proactively—about its approaches and policies that need to change. I am on the board of Nottingham Trent; I declare that interest. We have adopted IHRA’s definition of anti-Semitism, but I hope that we can go beyond debates about words and focus on the excellent work that UUK is encouraging through empowering Jewish students and creating an environment where they feel confident to come forward. What are the Government are doing to encourage reporting of any harassment?
My Lords, I declare my interests as in the register and warmly welcome my noble friend Lord Wolfson to his ministerial role. I congratulate the noble Baroness, Lady Deech, on securing the debate and the CST on the report we are debating. I highlight the excellent work of the CST, the Jewish Leadership Council and the Union of Jewish Students in their constructive engagement with universities on anti-Semitism.
In my one minute, I will focus on the need to improve university complaints procedures, which too often discourage students from reporting racism. Does my noble friend share my support for the CST report’s recommendations, such as the need for independent oversight of complaints of discrimination so that experts involved in this area can be brought in, for complaints to be responded to in a reasonable timeframe, and to ask universities to permit third parties such as the UJS or CST to submit complaints on behalf of students?
I too add my very warm welcome to the noble Lord, Lord Wolfson. I commend the Community Security Trust for the great work it does year in, year out and for this report in particular. It is very disturbing that we find ourselves in 2021 with the number of anti-Semitic incidents recorded in our universities higher than ever before. I am particularly concerned about reports of anti-Semitic incidents perpetrated by academic staff, as has been mentioned, as well as by student union officers or student societies. Every student, regardless of background, is entitled to a rich and fulfilling university experience. It is vital that universities are made to act on the report’s findings and recommendations. University complaints processes must be made fit for purpose as soon as possible so that incidents are dealt with appropriately, swiftly and in a way that instils confidence in, and gives proper redress to, those making the complaints.
My Lords, I am pleased to see the growing number of universities that have adopted the IHRA definition of modern anti-Semitism. I pay tribute to the noble Lord, Lord Mann, for his encouragement of this endeavour. As the UK head of delegation to IHRA who persuaded the Prime Minister to adopt the definition, I am concerned that this non-legally-binding definition should be maliciously misrepresented as a constraint on either academic freedom or free speech. The definition expressly states that criticism of Israel is not anti-Semitic. If academics cannot find a way to criticise the Israeli Government without having to resort to anti-Semitic tropes, it speaks volumes to both their paucity of language and their real motivation.
My Lords, I thank the noble Baroness, Lady Deech, for this debate, and the CST, along with the Union of Jewish Students, for preparing this important and distressing report. It is intolerable that students—or, of course, any Jewish person—should be subjected to anti-Semitic abuse. One of the issues highlighted is the flaws and lack of consistency in some universities’ complaints procedures. Some have given strong support, but others have not investigated or adjudicated complaints promptly, thoroughly or fairly. In that context, it is disappointing that only around 40 or 50 of over 130 universities have adopted the full IHRA definition and examples. Only if they do so can they recognise anti-Semitic discrimination, prejudice or abuse based on an appropriate, complete standard that is commonly accepted. I am sorry to see my alma mater, the LSE, missing from the list I saw. What are the results of the Minister’s department’s engagement with universities on adoption of the IHRA definition and best practice complaint procedures? I look forward to hearing his response and I welcome him to the Dispatch Box.
My Lords, I am chair of the Equality and Human Rights Commission, but I make it clear that I speak in a personal capacity.
I and the noble Lord, Lord Mitchell, set up something called the Coexistence Trust some dozen years ago to combat anti-Semitism and anti-Muslim sentiment at universities, and I deeply regret that the curse of this is still ongoing. However, I am afraid that I do not support the call for an IHRA definition: it is extremely poorly worded and probably unactionable in law. The noble Lord, Lord Pickles, has just said that it is not meant to be legally enforceable. It directly conflicts with the duty on universities to protect free speech. But there is a further danger in this: when universities adopt this definition, the pressure on them increases also to adopt the All-Party Parliamentary Group on Islamophobia’s extremely badly worded definition of Islamophobia. The end route, if we go down this road, is that there is no space left where students may learn to disagree with each other respectfully, something that I am sure no noble Lord would want.
My Lords, I thank the Community Security Trust for producing this timely report and for its ongoing efforts to tackle anti-Semitism. As a former lecturer, I am concerned at the findings, which revealed a steady rise of reported acts of anti-Semitism at universities. I find the CST’s recommendations reasonable and support suggestions of an independent process for reporting alleged anti-Semitism and recognising the IHRA definition.
As the approach for tackling this issue is so varied across institutions, has Her Majesty’s Government had discussions with Universities UK about developing overarching guidance for its members? I strongly believe in building interfaith harmony, which is why I successfully took action when I was accused of anti-Semitism by Associated Newspapers last year. Discrimination against one group of people should be viewed as an attack on our community as a whole. We must all stand together to combat any form of racism.
My Lords, I must adjourn the Committee for the next five minutes, as there is a Division.
Sitting suspended for a Division in the House.
My Lords, we will now resume. The noble Lord, Lord Dubs, has withdrawn, so I call the next speaker, the noble Lord, Lord Mann.
My Lords, the Council of Europe, the European Union, the British police for the last nine years, Chelsea Football Club for the last two years, and universities, some for three years, have not just thought about the IHRA definition; they have used it. There are no examples of it restricting free speech in any way. Every one of the examples cited by some maverick academics is an embellished falsehood, but do not take my word for it. This week, the Palestine Solidarity Campaign, in its training document, stated that there are no such examples.
The IHRA creates a framework for democratic debate. We are the ones in favour of democratic debate and academic research, not those who are against it. Jewish students have a right to be themselves on a university campus. That is what the IHRA gives us. I look forward to more information and announcements next week, as this spreads worldwide. I call on the Government to give it maximum support, not least in allowing me and others to have proper dialogue with the new Biden Administration, to ensure that they are at the heart of getting this success into American universities.
My Lords, I, too, congratulate the noble Baroness, Lady Deech, on securing time for this debate. I also look forward very much to the maiden speech of my noble friend the Minister, whom I hope to meet in person soon.
We have all been sent some excellent material for this debate, full of interesting suggestions about how to tackle anti-Semitism on UK campuses. I want to focus not on ways of tackling anti-Semitism on campus but on ways of helping Jewish students to live with it. I want to do this because I believe that, as our late colleague Lord Sacks used to say, anti-Semitism is a virus which has been around for thousands of years and is unlikely to disappear any time soon, whether from our universities or elsewhere. That is why I believe that we must do whatever we can to make Jewish students in the UK feel secure and respected, so that when they graduate they will want to devote their talents and energy to making this country more prosperous and civilised.
The University Jewish Chaplaincy has been doing precisely this for over 50 years. I urge the Government to support this charity so that it can continue to do its work effectively for at least another half century.
I thank the noble Baroness, Lady Deech, for drawing our attention to this report. To have 123 incidents—and increasing—in two years is serious, and I must say I was shocked when I read the nature of the abuse.
What is missing, however, is any investigation into why these incidents are increasing. The graph in the report is very interesting, because it shows a sharp increase after the deadly attacks on Gaza in 2008-09 and 2014. Since then, with increasing violence in the West Bank and Gaza, the expansion of settlements and the occupation of east Jerusalem, anti-Semitic incidents have continued to rise.
Whenever I suggest a connection between the two, I am told this is “victim blame”, which it is not. The victims are innocent Jewish people—students, in this case. They are victims because of the illegal actions of the Israeli Government. Please will our Government investigate the connection?
My Lords, one of the most egregious aspects of the indisputable rise of anti-Semitism on campus has been the way that elements of the left have exploited the well-meaning, progressive and radical instincts of so many students to deploy anti-Semitic myths. Whether it is the crass critique of capitalist injustice, with its gross, caricatured cabals of big bankers or, more pertinently, in the name of protecting oppressed groups, censorship is used to de-platform and disrupt Israeli speakers, to argue for academic boycotts or even, through the prism of identity politics, to treat all Jewish students as an undifferentiated blob representing privileged oppressors to be silenced.
Can the noble Lord, Lord Wolfson, who I of course welcome, assure us that when tackling this urgent matter, there will be no attempt at mirroring this censorious cancel-culture approach by, for example, no-platforming external speakers or clamping down on student societies, however unpalatably anti-Semitic their views? As Deborah Lipstadt reminds us in her brilliant book, Anti-Semitism: Here and Now, we need to strike a balance between warning and overreacting. It can backfire if we ourselves become intolerant. Free speech is an ally in fighting campus anti-Semitism, and shining a light on prejudice and bigotry, even in this House, is far more effective than bans.
I congratulate both the noble Baroness, Lady Deech, on securing this debate and the noble Lord, Lord Wolfson, on joining your Lordships’ House and look forward to his maiden speech.
If university leaders truly want to stamp out anti-Semitism, they must take ownership of the problem. The tone from the top is key, but there must be actions, not just words. First, leaders must adopt the IHRA definition, now universally accepted, of antisemitism. Next, they must ensure that clear rules are in place which are enforced through a strong disciplinary process, and those breaching the rules must be disciplined—whether students or members of faculty. Importantly, disciplinary decisions must be promulgated widely as an example to others, making it clear that anti-Semitic acts will not be tolerated. Finally, there must be a safe environment for students to come forward and report problems, knowing that there is no risk of retribution for so doing.
I refer your Lordships to my register of interests. I was especially interested to hear what the noble Baroness, Lady Tonge, would have to say in this debate, given her form on anti-Semitism. I have to say that it was predictable.
Criticism of Israel is usually healthy, especially in Israel itself. But there is a distinction between fair criticism and criticism that crosses that shocking line into race hate. Those across campuses who repeatedly voice their contempt for Israel and all it stands for reveal their prejudice by refusing ever to acknowledge any context.
Israel is the only fully-fledged democracy in the Middle East. The country itself is threatened daily by Hezbollah, Hamas and Iranian-sponsored terrorism—never mentioned. Israel’s regard for constitutional and civil human rights—never mentioned. Israel has many times been poised to conclude a two-state peace treaty with the Palestinians only to be thwarted by the extremists who prefer terror to peace—never mentioned. Criticism that ignores this context is nothing but a thin veil to hide deep seated and ill-disguised hatred of the Jewish state and all Jews. Anti-Semitism has no place anywhere in Britain, but most especially in places of learning.
My Lords, I pay tribute to the CST for its crucial work in combating anti-Semitism. Its report’s most worrying aspect is staff making allegedly anti-Semitic comments, the impact on students they teach and on students who are too scared to complain. I would like the Government to consider five specific questions. First, what will the Minister do to prevent academics spreading conspiracy theories and ensure that publicly funded universities recognised this problem and deal with it? Secondly, will they look at the contents of the report about Professor Miller and take this up with Bristol? What assessment has been made of how universities handle complaints, such as Warwick, and what discussions will they have with the vice-chancellor about it? What will they do about the obsession on campuses about Israel and the so-called Israel apartheid week, which is an insult not just to the Middle East’s only democracy but to black South Africans who suffered under apartheid? Finally, it is completely wrong for the noble Baroness, Lady Tonge, to blame racism against Jewish people in Britain not on the racists responsible but on Israel.
My Lords, I warmly welcome my noble friend Lord Wolfson to our House and look forward to his maiden speech. I declare my interests as I hold a number of positions in the Jewish community and that I have two daughters at university right now. How depressing to learn that they are facing anti-Semitism as I did 40 years ago; in those days, all the talk was about “Perdition” and, of course, anti-Israel rhetoric.
I welcome the CST report, but we have to recognise that it covers only reported anti-Semitism, not the huge amount of non-reported anti-Semitism, much of it online and some of it well away from campus, but which still affects the mental health of Jewish students, with torrents of vile extreme right and left-wing material. Does the Minister agree that we must ensure that higher education does not follow where the Labour Party went and even some parliamentarians seem to be going, of attacking Israel as a proxy for anti-Semitism?
My Lords, I thank the noble Baroness, Lady Deech, for initiating this very much-needed debate. Perhaps I speak for everybody in saying that it should have been a three-hour debate. I compliment the CST on the work it does; I should declare that I am on its advisory board.
In this minute I shall comment on some of the speeches. For the noble Baroness, Lady Tonge, there are no excuses for anti-Semitism. My noble friend Lady Ludford is right to ask the Minister about the lack of consistency in universities, and my noble friend Lord Greaves made an overriding comment about the evils in the world today. However, I must also comment, and I am shocked, that the noble Baroness, Lady Falkner, says that she is against the IHRA definition. I trust that that is not the view of the body that she chairs.
In the seconds available to me, I will revert back to comments made by the noble Baroness, Lady Deech. Few Jews today attend SOAS University of London because they know they would face a hostile environment where anti-Zionism often tips over into anti-Semitism. It is shameful that anyone should experience this in a UK university.
My Lords, I thank the noble Baroness, Lady Deech, for bringing forward the debate and the CST for its report. The vital issues the debate has raised are the welfare of Jewish students, the need for accessible, responsive reporting mechanisms online and in person, and the need to recognise this as part of a broader social problem.
With my minute, I ask the Minister: are universities that demonstrate best practice in dealing with complaints being encouraged to share that best practice? I think they should.
I welcome the work the Labour leadership is doing to rebuild the trust of the Jewish community and tackle anti-Semitism after the quite shameful findings of the ECHR report. As a party, we look forward to working with others to tackle this problem in our universities and across civic life, using the influence and insight which we have in tackling discrimination, injustice and hate crimes.
Finally, like all other colleagues, I congratulate the Minister on his appointment and give him the very best regards for his maiden speech, which I, and everyone else who has taken part in this debate, look forward to hearing.
It gives me pleasure now to welcome the Minister, Lord Wolfson of Tredegar, for his maiden speech.
My Lords, it is an honour to make my maiden speech. It is a privilege to do so from this somewhat virtual Front Bench. I am grateful to the noble Baroness for initiating this short but important debate.
I begin with a series of thank yous. While traditional, they are no less heartfelt. I thank Black Rod and the Clerk of the Parliaments for their help and advice, and the doorkeepers, who, in the short time since my introduction, have helped me find my way when I was lost, and my iPad when it was lost. I am also grateful to my introducers: my noble friend Lord Faulks, a previous holder of my ministerial position; and my noble friend Lord Greenhalgh, who, since I first met him at university, has devoted his talents to the governance of this magnificent city—and now also the country.
As this is my maiden speech, I hope noble Lords will permit me to speak to the question a little more personally than might otherwise be expected. Four generations ago, my family came to this country, seeking refuge from hatred abroad and the hope of a better life. Like many families, then and now, education and, in particular, going to university and getting a degree was my family’s way out of an economic if not physical ghetto.
We were fortunate to come to a genuinely tolerant and welcoming country. The late Lord Sacks of blessed memory, already invoked by several speakers, would surely have contributed his wisdom to this debate as he enhanced so many deliberations of your Lordships’ House. He used to say that this country is, in the traditional phrase, a “malkhut shel chessed”: a kingdom of kindness. I hope that my deviation from English in that sentence complied with the rule found in paragraph 4.39 of the Companion, being both, if a Minister is still permitted to use this phrase, limited and specific.
The importance of ensuring that our universities are free, so far as possible, from the scourge of anti-Semitism is something to which the Government give, as any Government must, the highest importance. I said “so far as possible” deliberately, because I recognise that, as we fight against all forms of discrimination, the battle against anti-Semitism may never be finally won.
While this country is indeed a kingdom of kindness and of tolerance, we must be on our guard against anti-Semitism. That especially applies to universities, which play such a crucial role in our cultural and intellectual life. Universities should be at the forefront of tackling anti-Semitism, which manifests itself both as religious hatred and as racism. Their duty is to ensure that higher education is a genuinely fulfilling and welcoming experience for all.
The fight against racism, against antisemitism, is reflected in my own family’s history and in my choice of Tredegar. In the latter part of the 19th century and the first couple of decades of the 20th, Jewish immigrants were drawn to south Wales and Tredegar by a thriving economy based on coal and generally found there a tolerant and welcoming society—a shared love of, we might say, the Hebrew Bible. The fact that both the largely Methodist local community and the Jewish immigrants were, in the terminology of the day, nonconformists. But shortly before midnight on 19 August 1911, a mob began to roam the streets of Tredegar. Over the ensuing hours, what started small turned into an anti-Jewish riot, resurrecting a racism most had thought long dead. In the middle of the riot, my great Uncle Jack was born and became the first in the family to gain a title. He was also known as Jack the riot baby. My family remembers that riot precisely because it was so unusual. Tredegar was overwhelmingly a community that gave immigrants a home, so much so that my paternal grandfather grew up trilingual—a remarkable combination of English, Yiddish and Welsh.
I am a Minister in the Ministry of Justice. This debate, and the characteristically thoughtful contributions of many noble Lords, highlights three important features of what justice means and ultimately what a just society is. To illustrate those three qualities and, although I sit in your Lordships’ House as a Lord temporal and not a Lord spiritual, I again turn to the writings of Lord Sacks. Lord Sacks recounted the first recorded conversation between the Almighty and one of the patriarchs. It is a famous bargaining session between God and Abraham. God is determined to destroy the cities of Sodom and Gomorrah. Abraham is equally determined to save them. Like any good lawyer, he bargains God down, from his opening bid that the presence of 50 righteous people would justify mercy. Eventually God agrees that if there are even 10 righteous people living in those cities, then the cities will be spared. I take three points from that story. First, as Lord Sacks explained, justice is the supreme virtue. Abraham’s question to the Almighty, to which there was no answer because there is no answer, was this: shall the Lord of all the earth not do justice? That question had no answer because justice is at the heart of a civilised society. Justice and the rule of law enable people of all backgrounds, and of different beliefs and of none, to live together under the law and in harmony.
The simple reason why antisemitism is wrong—and this goes for all forms of racism—is because it is unjust. That is why this Government expects higher education providers and their leaders to take a zero-tolerance approach to antisemitism. Providers must have procedures in place to ensure that they comply with the law. Where providers have failed in their duty to investigate and adjudicate complaints about antisemitism fairly and consistently, as my noble friend Lady Altmann and the noble Baroness, Lady Ludford, have mentioned, that is unacceptable. Universities and other higher education providers are independent and autonomous, but their independence and autonomy does not mean they are unaccountable. It means that they are responsible for the management of their own affairs and for meeting their duties under the law—including those relating to freedom of expression and equalities. It has been extremely disappointing to hear that some providers have failed in their duty to have robust policies and procedures in place. This is unacceptable and must cease; it is simply unjust, and justice is the supreme virtue. That is the first point I take from the story.
The second point is this: when it comes to the hard work of creating a society based on justice, all can contribute. The Almighty was prepared to have a debate with a mere mortal about what justice required. We, then, can surely find it within ourselves to debate with each other. So, in my work as a Minister in your Lordships’ House, my door will always be open to everyone. Debate with others, with whom you might disagree, is not only good manners. Thoughtful and tolerant debate is the way to achieve the most just society that we can.
Racism is the antithesis of debate. An anti-Semite does not want to hear what you say; when anti-Semitism goes unchecked at a university, it means a young person’s voice is silenced. I therefore welcome the report’s recommendation that providers adopt the working definition of anti-Semitism set out by the International Holocaust Remembrance Alliance. Indeed, when I was at the Bar I authored a legal opinion commending that definition. This Government have taken decisive action in encouraging its adoption; since October, when the Secretary of State for Education wrote to all providers in England to encourage them to adopt it, at least 27 additional institutions have done so.
I shall make two other points. First, in urging providers to adopt this definition, as my noble friend Lord Pickles explained, the Government are not impinging on their autonomy; it is their decision how to fulfil their duties under the law. However, if institutions do not demonstrate that they are taking their responsibilities seriously, we will consider going further to ensure that all providers are tackling anti-Semitism. Secondly, this Government support free speech. The right to discuss all kinds of issues, including those that might be uncomfortable or even offensive to some, is an integral part of higher education. I agree with the noble Baroness, Lady Falkner of Margravine, to that extent. However, freedom of speech protections can never justify a lack of action from providers in confronting racism and anti-Semitism on campus. That is my second point from this story: the importance of debate.
The third point is an insight from my father. The people whose presence might save the cities are not described in the biblical text as being merely “righteous”; they are referred to as righteous people “living in the city”. Living a good life is not just being a good citizen; it means playing your part in society and in the life of the nation, as my family has always sought to do. More than this, a just society is one which makes room for all. A society built on justice is an inclusive society. As a Justice Minister, I will seek to play my part in building a society based on justice and the rule of law, because that is a society to which everyone can contribute. Universities are the place where young women and men start to make their own independent way into society. Racism of any kind will not be tolerated anywhere in society; it is especially important that it is drummed out of our universities. That is my third and final point: a just society is an inclusive society—a society in which anti-Semitism has no place.
I again congratulate the noble Baroness on raising this important question and will write to noble Lords, with a copy placed in the Library, on those contributions which the time allotted for my maiden speech did not allow me specifically to respond to. I welcome the findings of the CST’s report. Many institutions have provided strong support to Jewish students, who also benefit, as has been mentioned, from the sterling work of the University Jewish Chaplaincy. However, the report demonstrates that, despite all our efforts over many years, anti-Semitism persists in our higher education system. The number of anti-Semitic incidents in our universities has become a real cause for concern. Therefore, we again call on leaders across the sector to do more to ensure a zero-tolerance approach is now taken.
I know from my family’s history, with its roots in Tredegar, that universities have great potential to change lives for the better. I feel sure that universities are serious in their commitment to tackling racism, which includes anti-Semitism, but much work remains to be done.
I apologise for my original pronunciation of Tredegar—that is one mistake I will not make again.
Arrangement of Business
My Lords, the hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear face coverings, except when seated at their desks, to speak sitting down, and to wipe their desks, chairs and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit is one hour.
Tax: Church Action for Tax Justice Reports
Question for Short Debate
My Lords, I thank all those speaking in this evening’s debate. I am no expert on tax, but it does not take an expert to see that there are some deeply entrenched tax inequalities. This 2019 report by Church Action for Tax Justice, and its 2021 report, Fair Tax Now, are more relevant than ever, not least with the financial impacts of the Covid-19 pandemic being felt in all parts of society, and with Her Majesty’s Government’s commitment to “levelling up”.
The proposals laid out by Church Action for Tax Justice seek not to harm wealth generation, but to level the playing field and facilitate a fairer tax system that ensures that those with the deepest pockets do their duty to the societies that provided the context in which they were able to amass their wealth. This is a vast topic, so I will make a couple of preliminary comments and then suggest four of the most important areas that must be addressed.
Democracies rely on the population accepting that taxes are broadly equitable, yet there is now a consensus that, for example, many international online companies are not paying their fair share of taxes in this country. At the same time, there is a delicate balance between encouraging the generation of wealth and ensuring that the burden of social costs is shared as equitably as possible.
Of the four most important areas to be addressed, the first is tax havens. For the United Kingdom, tax avoidance remains a major problem, with the annual tax gap estimated at £31 billion per annum. However, even more damaging is the infrastructure enabled by the UK that allows tax avoidance on a global scale. The presence of tax havens, whether they be British Overseas Territories or Crown dependencies, combined with their close connection to the financial might of the City of London, facilitates an international network that syphons money out of nations and into these jurisdictions, with their low tax, weak legislation and easily exploitable loopholes. Noble Lords may recall that the British Virgin Islands was the most popular tax haven mentioned in the Panama papers.
While I am pleased that the British Overseas Territories and Crown dependencies have all committed to publish public registers of beneficial ownership by 2023, these territories will remain lucrative places to those seeking to avoid paying tax. According to the 2019 corporate tax haven index, four of the top 10 havens globally were UK associated territories: the British Virgin Islands, Bermuda, the Cayman Islands and Jersey. The 2023 changes may go some way towards reducing their use, but the reality is that the City of London and the UK’s associated territories will continue to be at the centre of a network for international tax avoidance. Furthermore, should the Government choose to move ahead with free ports, and essentially create onshore tax havens within the UK, a corporate tax rate race to the bottom may be unleashed.
Secondly, I have some comments about income tax and national insurance. Domestically, we face structural problems in our tax system. It simply cannot be right that, when all tax is taken into account, the bottom 10% of people pay 42% of their income while the top 10% pay just 34.3%. Without doubt, part of the problem is that we have a progressive tax in income tax, along with a regressive tax in national insurance. Rolling up both of those into a single standardised progressive income tax would reduce bureaucracy and contribute towards rebalancing the percentage of income paid in tax. That would only partially solve the issue; it is the lower rates of capital gains tax, most beneficial to those with assets, that reduce the overall tax rate of the wealthiest. Whether by the incorporation of capital gains tax into a single progressive tax or by making capital gains more progressive and in line with general income tax, the current system requires reform to equalise the tax across wealth brackets.
Thirdly, there is council tax, which also fails accurately to account for the financial conditions of those who pay it. I think that a tax based on property valuations from 1991 is parochial and antiquated. The highest tax band, for properties worth £320,000 or more in 1991, fails to take into account changes to regional house prices since then and creates no differentiation between any properties worth more than £320,000: a property now worth £3 million pays equal council tax to a property worth £350,000. Furthermore, it is again designed as a regressive tax that results in the poorest paying a higher proportion of their income on council tax than those who are wealthier. Those on the highest incomes pay just 1% of their income on council tax; the lowest decile, conversely, pays 9%. According to Citizens Advice, it is the most common debt problem faced by families in the UK. At a minimum, it needs updating to reflect modern house prices, alongside the addition of a new higher bracket. Ideally, though, it should go further to better account for income disparities and to equalise contributions.
Lastly, I will say a word about corporation tax and VAT. Over the past 30 years the taxes that impact the poorest have steadily increased, such as VAT or council tax, while those that impact the wealthiest have gone down—for example, corporation tax and capital gains tax. Between 1975 and 2020 the relationship between VAT and corporation tax has virtually inversely correlated, with VAT going up and corporation tax going down. Although the EU set a base standard rate of 15% VAT, the UK has had 20% VAT since 2011, while continually reducing corporation tax during the same period. Now that we are no longer subject to the EU’s VAT requirements, perhaps the Government might consider slightly rebalancing corporation tax and VAT to deliver a fairer settlement to citizens and business alike.
I hope I have laid out quite clearly that, far from being some radically redistributionist document, the proposals from Church Action for Tax Justice seek only to induce fairness in the tax system and prevent the heaviest burden falling on the poorest. Much is said about the future now that we have left the EU. Some of us fear that it may give licence to people to change in ways that further divide our country in terms of people’s wealth. My hope is that we will take a lead in our world to think how we can use this opportunity creatively, so that everyone in our society has fair responsibilities and fair rewards for all that they do.
I call the next speaker, the noble Lord, Lord McKenzie of Luton. Lord McKenzie? No? We will move on to the next speaker, and if we can reconnect with the noble Lord, Lord McKenzie, we will bring him back in after the right reverend Prelate the Bishop of Portsmouth. I call the noble Lord, Lord Holmes of Richmond.
My Lords, tax, a temporary aberration, has proven more than somewhat sticky. Of itself, this is neither positive nor negative. I welcome the opportunity to take part in this debate, congratulate the right reverend Prelate on securing it, and welcome the two reports from Church Action for Tax Justice. Indeed, tax for the common good has to be what we are aiming at.
The Covid crisis has affected the relationship between citizen and state—taxpayer and tax collector—as with so much else in society and our economy, with HMRC being an effective means of financial support for many people. There is a real opportunity here to reimagine tax: real time, data-based, embedded far more in our daily experience, rather than something mysterious and distant, with the constant fear of the crown-embossed envelope landing on the doormat.
Many of us are used to dealing and interacting with our banks and grocers digitally, often via apps—why not similarly deal with the tax man? In saying this, I am in no sense undermining the significance of the pernicious forces of digital and financial exclusion, which need to be urgently addressed. But imagine a trader coming out of Covid. If HMRC reverses too quickly from financial support to debt collector, what should she do when faced with her VAT and other bills or paying the electric? As with any other debt, it should start with an effective relationship and connection, maybe via an app, with understanding and flexibility on both sides.
All the data already exists in our current banking and payment system to be able to operate a taxation system in real time for the benefit of all. It is encouraging that the Chancellor of Exchequer has nodded his support towards stablecoins and, indeed, central bank digital currency. Imagine central bank digital currency which could carry with it its taxation status, effortlessly operating an efficient, effective tax system for the whole UK. We could potentially have an effortless domestic and international, cross-border taxation system. When added to smart ledgers and DLT, the opportunity is extraordinary. Would my noble friend the Minister agree that, when it comes to tax transformation and tax for the common good, we not only have the technology but that tax in this new, transformed, technology-driven world does not need to be taxing?
I will try the noble Lord, Lord McKenzie of Luton, again. Lord McKenzie?
My Lords, we are asked to join a big conversation on tax, focusing on the unfairness of much of our current system. We have heard about some of that, including some of the international dimensions. Our starting point at this juncture is that taxation is, or should be, about a common good—not a necessary evil. Judgments about fairness are not just about tax rates; they are about accessibility of the benefits in the tax system and for whom they were designed. The Low Incomes Tax Reform Group has just published its practical steps, which note that tax and associated social security systems could be made to work better for those on low incomes.
The church reports are right to identify as unfair the benefits for those who can, depending on the circumstances, organise their income in such a way as to take advantage of a capital gains regime or, indeed, a more favourable income regime, with deferral in appropriate circumstances. In introducing this debate, the right reverend Prelate focused on council tax, and I agree entirely about the nature of its unfairness. I wonder whether the hangover from the poll tax is an inhibiting factor in addressing it more rigorously.
Inheritance tax has become virtually voluntary. At a time when the national finances have been laid bare by the pandemic, with an expected deficit of something like £400 billion, surely it is time to consider a wealth tax, about which we have now heard from the Wealth Tax Commission, the governing body.
The Tax Justice Network Briefing describes circumstances in which, through technicalities, taxpayers are able to minimise and lower taxation charges that operate internationally and in overseas jurisdictions. It is suggested that the benefits of doing so could amount to something like $500 billion, although that seems a somewhat simplistic figure. This can involve the use, as described, of tax haven jurisdictions, taking advantage of financial secrecy and helping to mask the true ownership of funds. We are told—we have heard it again this evening—that the Crown dependencies and overseas territories are up to their necks in these activities and are central to tax avoidance and evasion. I think that the Minister has committed to making some changes—
My Lords, I am immensely grateful to the right reverend Prelate for securing this debate—it could not be better timed—and for the work that Church Action for Tax Justice has done and for the way it is establishing a new agenda here. However, to be reminded that we have three minutes rather puts me in mind of Dr Johnson—I mean Dr Johnson and not our current Prime Minister—saying that to be hung in the morning concentrates the mind wonderfully.
I have three points to make, besides endorsing all the comments, bar one, of the right reverend Prelate. Might I please caution not to easily roll up national insurance with income tax? National insurance needs to be reformed. It needs to be made progressive, along the lines that the right reverend Prelate spoke of, but it is a means by which people can feel that they contribute to their welfare state. It gives them a sense of ownership, which crediting people does not.
I turn to the three issues that I would like to raise. One reinforces the point that I have already made: it could not be a better time for this debate. At the last election, where I fought to be returned again in Birkenhead, I quietly said to myself—and rejoiced—that the Government’s main driving force would be the levelling-up programme. But that cannot be taken seriously unless we look at all, or practically all, of the Government’s domestic programme. I think that the job of the Government—and if not them, then us—is to bring together a comprehensive programme of reform for levelling up, but that cannot be done without considering taxation, both direct and indirect.
Secondly, I make a plea for gaining flexibility to vary tax rates. When I was part of the Blair Government —for that short but happy period of time—the Government took powers to allow them to experiment with welfare reforms. They did not have to be national; they could be regional or local. I say that merely to remind the Government that that might well be an approach that they would wish to see in the areas that they are most anxious to level up.
In doing that, immediate things come to mind. Would variations in various tax rates encourage employers to take on more people? The question should be: how do we gain that? Thirdly, what are the general tax principles we might bring to bear on this subject matter? I suggest two. One is to ask: is it proper, fair and just to levy direct taxation on incomes below the level that the Government believe is the minimum necessary to keep body and soul together? The second is to ask, as the right reverend Prelate did: how do we make sure that indirect taxation does not wipe out any other good that Governments try to do?
I am grateful to be able to contribute to this debate, but I hope very much that it is the first of a whole series.
My Lords, I am delighted that my good friend and close colleague the right reverend Prelate the Bishop of St Albans secured this debate. I congratulate him on bringing these reports from Church Action for Tax Justice to wider attention. I urge the Government to assess and act on them.
I particularly endorse the right reverend Prelate’s drawing attention to the often pernicious interaction of income tax and national insurance so-called contributions. The reality is that such “contributions” are no such thing. These are two direct tax systems working alongside each other, but crucially not together, and often unfairly. This is exacerbated when the impact of other taxes, such as council tax, is factored in.
I cannot claim now, as my time as an economist is long past, anything other than an amateur understanding of the economic impact of direct taxation. However, it is abundantly clear that, whatever the very modest merits claimed by the noble Lord, Lord Field, the interaction of these taxes—some progressive and others regressive, with varying conditions—causes a confusing and inequitable impact on the take-home earnings of those on low and modest incomes. This is an impact on those who can least afford it and are least able to absorb it.
The report Fair Tax Now illustrates this by powerfully comparing how the average tax on income borne by an NHS nurse and a person earning £10 million a year favours the multi-millionaire. However, there is also very significant unfairness in the tax treatment of those on low and very modest incomes, particularly in the marginal tax rates they face. No payments of national insurance and income taxes are paid on earnings up to £9,500 a year, so then a 12% national insurance rate kicks in. Income tax at the basic rate of 20% is added above £12,500 a year, giving a marginal tax rate of 32%. If you are fortunate enough to earn more than £50,000 then income tax rises to 40%, but the national insurance component of direct tax on income falls to 2%. The marginal tax rate on income of 50% and above is not an extra 20% as popularly claimed, but only an extra 10%. There are many other injustices and there is not nearly enough clarity. We need less inequality and injustice. I urge the Government to address this urgently.
I congratulate the right reverend Prelate the Bishop of St Albans on securing this debate. I wholeheartedly endorse the reports Tax for the Common Good and Fair Tax Now. If we are to rebuild a sustainable and just economy and end the blight of inequality, the evil of tax-dodging by powerful corporations, facilitated by accountants and lawyers, must be ended. For the reasons set out in those reports and by other noble Members in this debate, we need to make taxes of all kinds less regressive and to tax wealth, property and inherited income properly. We need to work internationally to prevent national competition on low taxation and end the blight of tax havens.
One thing that Covid-19 has shown those of us who, unlike the right reverend Prelate the Bishop of Portsmouth, are not economists is that Governments are not dependent on tax income to balance public expenditure in a notional account book. It is now clear that they have other sources of spending for the public good, especially in times of low inflation. But tax has functions beyond simply raising revenue for the Government. Most particularly, it is a means to reduce inequality—the most appalling blight on our society, as the reports make clear. The consequences of economic inequality on every aspect of life were drawn to our attention a decade ago in the work of Wilkinson and Pickett, and are strikingly reiterated in the latest of the reviews by Sir Michael Marmot and his team, Build Back Fairer: The COVID-19 Marmot Review. The adverse impact of inequality on the economies of the world has been pointed out time and again by the OECD and the International Labour Organization.
In the UK, the share of national income going to workers has been relentlessly declining for 40 years, as company profits and dividends to shareholders increase at the expense of wages and salaries. In 1976, 65.1% of gross domestic product went to wage earners; by 2019, wage share had slumped to 49.2%. After a year of lockdown, we can be sure that the scales have tipped yet further against—[Inaudible.]
I think we had some interference on the noble Lord, Lord Hendy.
My Lords, I congratulate the right reverend Prelate on his excellent opening speech. Most people recognise that a system of incentives is both inevitable and right. If a person works hard, they should be rewarded for that work. If they work over many years to obtain qualifications, it should be reflected in their salary. Most people also recognise that there is an element of sheer luck in human life which cannot be eliminated. But what people deeply resent at the moment is not inequality as such, but the gross and growing inequality that is such a sharp feature of the modern world.
When someone gets a bonus that is more than an average person’s lifetime earnings; when they get that bonus even when their company has failed; when they employ a battery of lawyers to find a way of not paying their taxes; when they quickly switch their money from one tax haven to another, people feel that there is something fundamentally wrong and unfair. Over 80% of the British public believe that legal tax avoidance is morally wrong. I shall put it in a sentence: it undermines social solidarity. Let us be clear: a tax system that works depends on that sense of solidarity.
The amount of money hidden away is absolutely enormous. Between $8 trillion and $35 trillion sits offshore, enabling its wealthy owners to avoid paying tax. Developing countries, which face problems from Covid-19 on a scale unimaginable in the richer nations, are deprived of up to $200 billion every year by tax avoidance. The Danish, Polish and French Governments have refused corporate bailouts for corporations registered in tax havens. Could the Minister say whether Her Majesty’s Government have taken, or are contemplating, any similar steps?
Following on from that, will the Government commit themselves, working with the new US Government, to prioritise low-income countries in the base erosion and profit shifting, or BEPS, initiative of the OECD/G20 countries to reform global tax rules? At the moment, low-income countries are the biggest losers of tax revenue as a result of profit shifting by multinational corporations, losing 9% of total revenue as opposed to only 3% for high and middle-income countries. Will the Government commit themselves to a stance at the BEPS discussions which would prioritise low-income countries and encourage the new US Administration to do so? To that end, would they be prepared to offer technical assistance to those low-income countries in the analysis of their income and tax data to explore approaches that might best help them? I know that the Tax Justice Network stands ready to undertake such work if commissioned to do so. Would the Minister at least be prepared to look at what it proposes?
My Lords, I congratulate the right reverend Prelate the Bishop of St Albans on securing this important debate.
There is absolutely no doubt that there are major tax and welfare inequalities. If the Government are serious about their levelling-up agenda, to minimise and eliminate those inequalities they need urgently to look at tax reform, to ensure that it is less regressive and more progressive, and at welfare reform, to ensure that the current inequalities are eliminated, with a particular focus on universal credit.
I also commend the campaign organisation Church Action for Tax Justice, which published two reports containing proposals on creating a fairer tax system, many of which I find myself in total agreement with.
This debate is very apposite at the moment, in that the whole Covid pandemic has compounded the situation, with rising levels of poverty, the growing use of food banks and many people out of work, and the uncertainty of whether that work will exist several months down the road, whenever we are on the other side of the vaccination implementation programme and, we hope, the pandemic withers away. However, there is absolutely no doubt that those inequalities have to be addressed through reform of the taxation system and of welfare. Both go hand in hand.
Other organisations as well as Church Action for Tax Justice have referred to these issues. Only last week, in its most recent report, the Commons Public Accounts Committee stated that
“Quirks in the tax system”
have meant that groups of workers, including freelancers and self-employed people who recently moved on to company payrolls or who work on a series of short-term employment contracts with gaps in between, have been ineligible for furlough payments, and thus that needs to be looked at as well. The chair of the committee, Meg Hillier, asserts that
“out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support.”
In conclusion, can the Minister advise us when the Government will hold the consultation on tax evasion measures this year, which was promised by the Financial Secretary to the Treasury in July 2020?
My Lords, I refer to my interests in the register. I congratulate the right reverend Prelate the Bishop of St Albans for initiating this debate. I support the reports by Church Action for Tax Justice.
Curbing tax avoidance and evasion is vital for building a just society. The Government talk about it, but have delivered far too little. HMRC has stated that, during the last decade, it failed to collect around £350 billion in taxes because of avoidance, evasion and errors. Other models of the tax gap estimate the amount to be between £58.6 billion and £122 billion a year—that is around £1 trillion over a decade.
One explanation is that the Government are too soft on the tax avoidance industry. On numerous occasions, courts have adjudged tax avoidance schemes, manufactured by big accounting firms, to be unlawful. For example, the Supreme Court, in the case of HMRC v Pendragon plc, considered a KPMG mass-marketed avoidance scheme as “an abuse of law”. Despite strong judgments, no big accounting firm has been investigated, fined or prosecuted, although they are awarded plenty of taxpayer-funded contracts. Can the Minister tell us why these firms continue to be indulged? Can she name even one instance where the Government have fined or prosecuted any big accounting firm for peddling unlawful tax avoidance schemes?
There is little transparency in tax avoidance. Company accounts are often opaque and there are no disclosures about the use of avoidance schemes to artificially reduce tax obligations, even though this harms stakeholders. For more than a century, Companies Acts have been used to redraw the boundaries between public and private information. Not so long ago, turnover, gross profit, reserves, director remuneration, audit reports, fees paid to auditors for non-audit work—and much more—were considered secret.
Despite opposition from big business, legislators sought to curb darker practices through transparency. However, this logic has not been applied to tax avoidance. Large companies should be required to file their tax returns and related documents at Companies House. The cleansing effect of public sunlight can curb some of the darker practices and empower citizens to take action and selectively boycott businesses engaged in rapacious practices. Surely the Minister is not going to oppose transparency—or is she?
My Lords, Church Action for Tax Justice campaigns for taxation reforms. In its 2019 report, Tax for the Common Good, it argued that the current tax system was not being used to its full potential as a tool to improve fairness in society. It also argued tax should be perceived as a public benefit rather than as a burden on taxpayers, saying that:
“Growing levels of inequality and the threat of climate change are among the greatest challenges faced by today’s world, while the UK still lives with austerity measures which have seen living standards plummet and undermined trust in our economic system. Responding to these crises requires public spending … and it requires that we rethink our use of natural resources.
Yet in rich and poor countries alike, it is still too easy for large companies and wealthy individuals to avoid paying their fair share of tax. And too often, tax is seen as negative: a burden to be minimised. We can tell a different story about tax: that it allows us to contribute to services and infrastructure shared by all, and that paying it is not just a duty but a privilege.”
The report proposes several reforms of the tax system, including increasing taxes on wealth and reforms to inheritance tax. It also argues that the Government should consider replacing council tax and business rates based on the value of property with a new tax based on the value of the land the property is built on; changing the way businesses are taxed through increasing corporation tax; creating a financial transaction tax; creating a new tax targeted at the providers of digital services, such as Amazon; and using taxation as a means of addressing climate change, such as through new taxes targeting carbon consumption. The report also suggested the introduction of taxes on other resources, such as plastics used in packaging.
The report also recommended that the UK should co-operate with other countries on the issue of tax avoidance, including through establishing an automatic information exchange to enable tax authorities in different countries to better share information on income-generating assets held by foreign citizens holding companies within their jurisdiction. There should be country-by-country reporting of financial information, requiring companies to state where their economic activity occurs, and public registers of beneficial ownership for all jurisdictions, including the UK Crown dependencies. The report argues that this would ensure that the ultimate owners of shell companies are identified and required to pay the right amount of tax. The United Nations should get global taxation rules so that all nations are involved in decisions—
My Lords, Tax for the Common Good is a great analysis of the nature of taxes in the UK, and if it does not prick consciences, it should. Time restricts me to two areas in which I have been active. On page 4, we are reminded that tax is to provide revenue which funds quality public services and infrastructure for everyone.
We have been through a time of austerity that has cut deeply and unfairly into social funding, and we do not have the quality of services we should. I do not underestimate the terror that Treasury folk faced at the time of the financial crisis—I was looking into the abyss, too, so I know how it feels now as well—but we cannot forget the poorest people because they have less voice. And, although welcome, it is regrettable that universal credit seemed to get a temporary boost only when new, better-off cohorts of people became reliant on it because of the pandemic. It is the unanimous conclusion of the Lords Economic Affairs Committee report into universal credit—not a soft-touch committee —that cuts went too far. The biggest shame is how we can ever say that the future is being taken care of when one-third of children live in poverty: it is cruel, short-sighted and not the path to prosperity.
My second point is that we should stop hiding corporate activity and wealth. Page 7 reminds us about automatic information exchange, country-by-country reporting, public registers of beneficial owners and OECD rules, including BEPS. These are measures I have fought over many years to get this far, first in the EU and recently in your Lordships’ House, and I am bitterly disappointed that further steps are always delayed or thwarted, with corporate interests rallying threats about how disasters will befall if information is made available—almost always without real evidence. It is not evidence just because someone says it in a consultation reply, or bends the ear of Ministers or Commissioners. I took on corporate excuses in the final negotiations to get country-by-country reporting for banks into EU legislation, forcing through a sunrise clause that took effect unless harm was proven by a certain date—and harm was not demonstrated.
So, as these issues come around again, call the bluff, switch the burdens of proof and let us make progress. Will the Government do that?
My Lords, I thank the right reverend Prelate the Bishop of St Albans for opening this debate so well and noble Lords for some cracking short speeches. I thank Church Action for Tax Justice for both reports. As an Anglican priest, the first report got me at the introduction by referring to the hard time that tax collectors get in the Bible. To be fair, in New Testament times tax collectors were more like a cross between gangsters and wartime collaborators.
It is now time to rehabilitate those who collect tax, and to make the case for taxation as a mark and means of our shared common life and our willingness to be responsible, one for another. Rehabilitation depends on taxation being fair and being seen to be fair. I cannot do domestic taxation in three minutes, so I will say two quick things. Levelling up has to address income and wealth, and you cannot look at personal tax without also looking at social security.
I will make four quick points from the reports. First, we need to be willing to call out unscrupulous corporate tax practices. The 2021 report calls for:
“The implementation of the provisions in the 2016 Finance Act that would enable public country by country reporting, plus the UK no longer blocking the OECD from publishing aggregate country by country data”.
Can the Minister respond to that, please?
Secondly, the tax system needs to be fair to all types of trader. The UK now has a digital services tax, but big firms are simply passing on the extra charges to customers, such as advertisers or marketplace sellers. Ministers see the DST as a stopgap measure until the OECD agrees a global solution, but that is not happening tomorrow. When do the Government plan to review the DST and will they commit to closing the loopholes that have been found?
Thirdly, there needs to be action on environmental taxes. These can be key to tackling the climate emergency. What work has been done in government to assess the different options? Is this something that is likely to feature on the agendas of our G7 and COP meetings later this year?
Finally, there is the matter of international tax rules and how and where they should be agreed. My noble friend Lord Collins of Highbury is leading a review of the UK’s policy in and towards the UN and its committees and subsidiaries. However, even without major reform, the UK could wield huge influence on international tax co-operation and many other issues. We were a founding member of the OECD, have a leading role at the UN and have some of the highest allocation of voting powers of the financial institutions. Despite that global Britain mantra, too often the UK is absent from the world stage at the moment. What steps will the Government take to seek better and swifter action on international tax co-operation? I look forward to the Minister’s reply.
My Lords, I congratulate the right reverend Prelate the Bishop of St Albans on securing this important debate and thank noble Lords who have spoken for their thoughtful contributions. From listening to those contributions it is clear that many noble Lords agree that resilient, fair and responsive taxation is an essential public good. I am glad to have this opportunity to update the Committee on the Government’s work to ensure that our tax system continues fully to serve society.
However, I will start by saying a few words on the impact of Covid-19. The pandemic has affected tax revenues, but it has also highlighted the agility of our tax system to cope with unprecedented circumstances. Businesses in sectors worst affected by the crisis have benefited from VAT cuts and a business rates holiday, while our time to pay system has given financially distressed individuals the opportunity to postpone tax deadlines. The Chancellor will, in due course, take a decision on any role tax may play in returning the public finances to a sustainable footing at the Budget on 3 March. I hope, therefore, that noble Lords will understand that I cannot speak any further on that today.
However, I will say a few words about the philosophy that underpins our wider tax policy. At last year’s Budget the Chancellor reaffirmed the Government’s ambition to build an even fairer and more sustainable tax system that helps people and families with the cost of living, funds the first-class public services they expect and creates an environment for business to succeed. However, when designing future tax policy we need to remember that the UK economy of tomorrow will be different from that of today. That is why, over the course of this Parliament, the Government are also focused on creating a tax system that is better prepared to meet the challenges and opportunities of the 21st century.
I will talk briefly about the Government’s work on this front, particularly in relation to areas covered by the Tax for the Common Good report. First, I turn to tax avoidance, which was raised by many noble Lords. This is an issue that is quite rightly highlighted in this document, and it is a scourge on our society, which is why we are taking significant action to ensure that companies pay the right amount of tax on their UK profits. In fact, noble Lords may recall that, at last year’s Budget, we announced a new strategy to tackle unscrupulous promoters of tax avoidance schemes. I remind noble Lords that, at 4.7%, the tax gap in the UK is at its lowest ever recorded rate, falling from 7.5% since 2005-06.
However, we also recognise that tax avoidance is a global problem, with global implications. As a result, the UK has also been helping to lead international efforts to address gaps and mismatches in the global tax system. This includes our work at the forefront of the Organisation for Economic Co-operation and Development’s base erosion and profit shifting project, which seeks to prevent company profits being transferred to low- or no-tax locations. I reassure the noble and right reverend Lord, Lord Harries of Pentregarth, that a key part of that work is ensuring that low- and middle-income countries benefit from the steps taken, not just OECD members.
I will correct a concern of the right reverend Prelate about free ports: rather than a race to the bottom, the tax offer that has been designed for them will drive growth and investment, advancing the levelling-up agenda across all four nations of the UK that noble Lords will have heard the Government talk so much about.
I will respond to the issue, raised by the right reverend Prelate, of overseas territories and Crown dependencies, which have full control over their own fiscal matters. They have the right to set their own policy to support their economies within international standards, and they have the right to determine their own tax rates. However, all Crown dependencies and overseas territories with a financial centre have made commitments to implement global standards on tax transparency.
There is no doubt that digitisation is a tax challenge for every nation. We are working hard to find a global solution through the adoption of many of the BEPS recommendations, such as corporation interest restriction rules, which raise approximately £1 billion a year, and hybrid mismatch rules, which are expected to raise £900 million between 2016-17 and 2020-21. At home, we are examining how we can ensure that high street businesses are not left at an unfair disadvantage by the switch to online payments through a review of the business rates system. On digitisation in relation to operating our own tax system, as raised by my noble friend Lord Holmes of Richmond, I totally agree with him. In our recently published 10-year tax administration strategy, we set out our plans to make a fully digital tax system that operates in as close to real time as possible.
We have heard from a number of noble Lords about the role of taxes on earnings, such as income tax and national insurance, and taxes on wealth, such as capital gains tax, as well as the interaction between those different systems. Noble Lords are correct that individuals can be subject to different tax treatments depending on whether they are employed, self-employed or working through a company structure. The OBR has noted the implications of these differences in tax treatments for individuals, who can pay very different amounts of tax while doing similar work. The Government have already taken action to reduce this disparity of treatment; for example, by reforming the taxation of dividend income, including by reducing the dividend allowance to £2,000 from £5,000. Furthermore, corporation tax has remained at 19%, rather than being reduced to 17% from April 2020, as had previously been planned.
Our approach to taxing income, earnings and wealth is an incredibly important question that we will continue to consider. The noble Lord, Lord Field, made an important point on the wider role that different taxes can play and the link between contributions and public services, as well as the public’s view of that wider link. I disagree with the noble Lord, Lord Hendy, who said that tax is not an important part of funding our public services; I think it remains an essential part of that part of government.
The Government are committed to a fair tax system in which those with the most contribute the most. That is why the income tax system consists of three progressive rates of tax, which sit above an internationally high personal allowance. The income tax system is highly progressive: the top 1% of taxpayers are projected to pay over 29% of all income tax in 2019-20.
The Government are also proud of their record of reducing tax for working people. The personal allowance has increased by more than 90% in less than a decade, which means that a typical, basic-rate taxpayer pays over £1,200 less in income tax compared to 2010-11. As with all aspects of the tax system, the Government will keep income tax policy under review and any decisions on future changes will be taken as part of the annual budget process, in the context of the wider public finances.
Further, on the point of the progressivity of the system, in 2020-21, households in the lowest income decile will receive more than £4 in public spending for every £1 they pay in tax on average. In addition to the above changes, in April 2020 the Government increased the national insurance contribution primary threshold and lower-profits limit to £9,500, which will benefit 31 million individuals. The combined impact of income tax and NICs changes between 2010-11 and 2021 means that a typical basic-rate employee is over £1,600 better off, as I have said.
Noble Lords also touched on the issue of climate change. As the noble Baroness, Lady Sherlock, will be aware, the Treasury is carrying out a review into the transition to a net-zero economy. As a part of this work, we are exploring how we can harness the taxation system in the fight against global warming. In December, we published an interim report exploring the fiscal implications of the switch to net zero. This analysis will inform the final review document, which is due to be published later this year.
I hope that I have communicated some of this Government’s work to create a fairer and more sustainable tax system. It was a wide-ranging debate, covering work at home and internationally. We are committed to a tax system that helps people and families with the cost of living, funds first-class public services, and creates an environment for businesses to thrive. I am sure noble Lords will agree that these are laudable goals, and we are making strong progress towards them.
I finish by reassuring the right reverend Prelate on his fears on our path having left the EU. I think those fears are unfounded, and instead I endorse some of the hopes that he expressed for our path in coming years. Having left the EU, this Government’s core agenda is about levelling up across the UK. A well-functioning, fair tax system will be a key part of that.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the room.
Committee adjourned at 7.13 pm.