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Lords Chamber

Volume 836: debated on Wednesday 21 February 2024

House of Lords

Wednesday 21 February 2024

Prayers—read by the Lord Bishop of Chichester.

Hate Crimes


Asked by

To ask His Majesty’s Government what assessment they have made of any increase in the number incidents of race and faith-based hate crimes, and whether they intend to introduce a new hate crime action plan.

My Lords, hate crimes recorded by the police decreased by 5% last year. This reflects the crime survey statistics, which show a decline in hate crime reported over the last 15 years. Since 7 October, British Jews and Muslims have reported incidents in increased numbers. This is unacceptable, and we continue to work closely with communities. We are not intending to publish a hate crime strategy. We remain committed to cutting crime and protecting all communities.

My Lords, I thank the Minister for that response, but, as she said, hate crime has spiked very recently, and we know that hate crimes are chronically underreported in the UK and that many victims feel disempowered by existing reporting services. In the Government’s last hate crime action plan of 2016, they pledged to increase the reporting of hate crimes and encourage more people from under- reported groups to come forward. What is happening about that? Can the Minister tell the House whether this work has been reviewed in the last eight years and whether reporting and prosecutions have indeed improved? Will the Government introduce a comprehensive strategy to ensure vulnerable groups feel protected and supported in law?

My Lords, we have seen an increase in reporting and recording of hate crime over the last decade or so. There has been a small decrease in the last year, but, overall, that is partly reflective of the fact that we have put additional efforts into encouraging people to come forward. That includes through supporting charities such as the Community Security Trust but also Tell MAMA, which we fund, which is an organisation that focuses on anti-Muslim hatred and provides a different route by which people can report crimes and incidents and then get the appropriate support.

My Lords, I refer to my entry in the register of interests, which discloses that I am president of Westminster Synagogue. This Saturday, we had 20 policemen and four vans to protect us as a demonstration went past Knightsbridge. Does my noble friend agree that these demonstrations, with anti-Semitic slogans and rhetoric calling for genocide against the State of Israel, need to be controlled and curtailed so that British Jews can once again feel safe and secure in the streets of London?

My Lords, I think my noble friend’s experience bears out the statistics that we saw announced by the Community Security Trust last week, showing the highest number of reported anti-Semitic incidents on record in 2023, with the majority of these being reported from 7 October. There is no place on British streets for demonstrations, convoys or flag-waving that glorify terrorism or harass the Jewish community, and we will work closely with the police, who we urge to step up patrols and use all available powers to enforce the law.

My Lords, the current practice of giving government funding to more vocal communities to collect figures to show that they are more hated than others is a waste of that funding. Does the Minister agree that a better approach would be to tackle the underlying ignorance on which prejudice thrives by stressing, in the teaching of RE in schools and elsewhere, the large number of important ethical commonalities between different faiths to show that the superficial differences are very insignificant?

My Lords, the Government committed to break down the recording of hate crime first by religion and then more recently by race. That provides us with an important insight into the experiences of different communities, which can be quite different across the country. Where I agree with the noble Lord is that part of the solution to some of these issues is focusing on where we have more in common than what divides us. We should emphasise that, particularly in our schools.

My Lords, this is an extremely difficult time, in which we hear profoundly disturbing reports of the rise in race and faith-based hate crimes. Tomorrow, the board of the UK’s Inter Faith Network will meet to confirm its closure following the withdrawal of funding by the Department for Levelling Up, Housing and Communities. This comes at a time when we urgently need to promote interfaith dialogue and the expansion of religious literacy in schools, as has been mentioned, and elsewhere. What assessment have His Majesty’s Government made of the impact of the closure of the Inter Faith Network, and what will replace it?

My Lords, the Government fund a number of organisations to work in the space. On the Inter Faith Network specifically, the Secretary of State decided to withdraw the offer of funding for this year due to the appointment of a member of the Muslim Council of Britain to the board of trustees of the IFN. Successive Governments have had a long-standing policy of non-engagement with the MCB. Therefore, the appointment of an MCB member to the core governance structure of a government-funded organisation informed that decision.

My Lords, following the previous question, would it not be helpful if the leadership of the Muslim, Jewish, and Christian communities made a joint statement about how abhorrent racial hatred really is?

I know of many efforts across the country, locally and nationally, to bring leaders of different faiths together and make statements of unity. That is something the Government continue to support.

My Lords, the noble Lord, Lord Mann, issued a report on anti-Semitism not long ago which made very useful recommendations, including teaching about anti-Semitism and Jewish history in school. Would that not be a far better approach than focusing entirely on Holocaust education, which places everything in the past, far away, nothing to do with us today?

My Lords, one of the most recent announcements from the Government in this area is indeed additional funding through the Department for Education to schools to increase education around this area. That is something the DfE is taking forward.

My Lords, when the Government look at their hate crime strategy, how much of it do they think they can achieve in a top-down way from central government, and how much can they achieve in working with local community organisations, so that it is a bottom-up approach to tackling hate crimes?

My noble friend is absolutely right that working at a local level is key to giving people more confidence in reporting, but it is also really important in thinking about solutions to these issues. One of the things that my department has been doing, in particular since 7 October, is regular engagement with local authorities to understand what is going on in their area, examples of best practice we can help share, and any particular issues that they are aware of that we can provide more support on.

My Lords, news reports this week of a baby’s passport application being returned from the Home Office to its parents with its birthplace, Israel, scribbled out and the application torn, and a statue of Amy Winehouse being defaced with a Palestinian flag sticker placed over her Star of David, are more evidence of the increase in anti-Semitic incidents reported by the CST. The Government’s downgrading of recording of non-crime hate incidents limits the police’s ability to monitor and prevent escalation within communities. Can the Minister tell the House whether the Government will support Labour’s plan to reinstate full collection details for all hate incidents?

My Lords, I have not had the same feedback as the noble Baroness. As I say, it was this Government that brought in the disaggregation of hate crimes by different religions to help provide insight into the experience of different communities. We provide ongoing support and funding to the CST in its work, and we have regular engagement with the police to understand what the picture is in local areas. I will look at the issue the noble Baroness raises, and also understand from the feedback and conversations we have what impact that has.

My Lords, will the Minister acknowledge that there are real problems in terms of legislating against hate as a crime, because it can be used to silence opposition? One of our fellow Peers has recently been accused of, and in fact punished for, bigotry, when bad-faith activists wilfully labelled a tweet against Islamists—that is Hamas—as Islamophobic. Conversely, while I consider that the virulent rhetoric and abuse directed at Zionism is often—usually—thinly disguised anti-Semitism, the same legitimate criticism of Israel is being curtailed. Should we avoid using the law, and instead argue back and condemn loudly?

My Lords, we have both systems in place. We fully support lawful freedom of speech; it generates rigorous debate and is incredibly important to our society. But it is not an absolute right, and does not include the right to harass others or incite them to violence or terrorism. It is possible to both have in place laws against hate crime while protecting and respecting freedom of speech. Sometimes the implementation of that is a carefully balanced judgment, and that is something we all need to take care with.

National Minimum Wage


Asked by

To ask His Majesty’s Government what assessment they have made of the case for increasing the national minimum wage to £15 per hour for workers across all age groups.

My Lords, I thank the noble Lord for his Question. The Government are increasing the national living wage by a record 10% in April this year to £11.44 per hour. This increase will end low pay for those aged 21 and over, and meets the target threshold of two-thirds of median hourly pay. Any further increases in the national living wage will need to be carefully considered, regarding the economic impact, balancing the cost to business and benefit to workers. The Government will continue to base these decisions on increases on robust evidence and recommendations from the Low Pay Commission.

I thank the Minister for that Answer. I think it is interesting that none of us knows how you can live on £10 an hour and run a family and pay your rent. The minimum wage is not very near the living wage, so we have to find a way of morphing the minimum wage towards the living wage. I ask this rather strange question: what happens if you take a third of what is on the books at the moment and increase by a third the minimum wage? The reason I ask it is: will the Government change the situation where we keep producing low-paid jobs and low investment so we have an enormous number of people who cannot earn a decent wage? That means that we have to increase the way that we trade. We have to push up prosperity, and that is the job of the Minister’s department.

I thank the noble Lord for that reminder. I think all of us in this place and the other place can be very proud of what has happened over the past 25 years on the minimum wage. This wage increase will benefit 3 million workers. Remember, we have 33 million people working in the UK, out of 66 million, so those in the bottom 10% are getting a 10% increase. That has a knock-on effect for a further four million. This is a big impact. If we look at the past eight years, since it came in in 2016, the national living wage has gone up by 60% versus inflation at 30%, so there has been a real increase in wages for those at the lower end of the wage scale.

My Lords, I think the noble Lord, Lord Bird, would agree that there are too many working people who have to rely on the minimum wage in this country and that those at the bottom of the wage cycle are the ones who suffer most when there is low growth. A key statistic, if the Minister wants to trade statistics, is GDP per capita, which is falling. Our productivity is falling because there is insufficient investment in skills and capital machinery. The reason there is insufficient investment is because businesses do not have stability or confidence going forward. Does the Minister agree that this Government do not have a plan and are not providing the facility that can deliver the growth that will help the people the noble Lord, Lord Bird, is talking about?

I thank the noble Lord for that. We have record levels of employment in this country, with 33 million out of 66 million people working. Average public sector pay is £19 an hour and in the private sector it is £16. We are now taking the minimum wage up to £11.44. The noble Lord is quite right to indicate that if we want to ask businesses to invest more money, perhaps we should be asking them to invest in more productivity per employee rather than just more wage per employee, and perhaps more inclusion and diversity, along the lines of John Lewis and Timpson.

My Lords, there is no justification for discriminating against young people under any circumstances. People can join the Army at 16, they can be on the front line at 18 putting their lives at risk for King and country, but they cannot receive the full national minimum wage until they are 21. This cannot possibly be right. Does the Minister agree?

I thank the noble Lord for that. There is a wage scale, as he will well know. For those aged 18-20, it is £8.60 an hour and for those under 18 it is £6.40 an hour, an apprentice rate. The point of this is a scale. We all start work on lower wages and increase our wages as our skill levels increase. We must not be in a situation where we, in effect, lock young people out of the market. We must ensure that young people get into the market earning wages and then increase their skills and their wages. The noble Lord will know well that many studies have been done on the wage scar, which blights young people if they do not get into a job early and get training. We want young people in a job early, trained up, so they can increase their wages.

My Lords, has my noble friend the Minister’s department made any assessment of whether these increases in the minimum wage, which go well above and beyond average wage increases, have impacted the ability of companies to take on interns, which is normally the main route into employment; whether they have had an impact on speeding the adoption of automation and assimilating the upfront costs; whether employers respond by cutting in-work benefits, discounted meals and so on, to compensate; and, not least, what the impact is on the price rise of the finished product, because often people on minimum wages are also consumers of minimum wage products? If, for example, fast food becomes much more expensive, it is not going to be hedge fund managers who pay.

I thank my noble friend for that. The cost to business is a consideration that we must consider. The cost of this particular increase will be £3 billion over six years and I emphasise that it will fall largely on the SME community. Some 99% of our companies are SMEs, with 2.5 million VAT-registered companies. Setting aside the 10,000 companies that employ 30% of the workforce, 60% of the workforce are employed in SMEs and they are bearing the brunt of exactly these wage increases. We survey employers and they want to pay higher wages. We want a good, well-paid workforce but we must do so in a way that balances the needs of business and workers.

My Lords, I thank the noble Lord, Lord Bird, for his tireless campaigning to tackle homelessness and poverty. Even at my advanced age, I enjoy celebrating birthdays, but I have never believed that my hourly work increases by 50% simply by ageing a year—yet that is implied by the national minimum wage banding between 17 and 18 year-olds. These days it is a real struggle to survive on the full national minimum wage. Does the Minister agree that lower rates represent unfair age-based discrimination and send the wrong message to young people at the start of their working life?

I thank the noble Lord for that. I think I have already addressed that question. We have to set the national minimum wage as high as possible for young people without damaging their prospects. We have to encourage them into the workplace. We have to avoid the longer-term scarring effects from long spells of unemployment that I have talked about. That is what this metric achieves.

My Lords, does the Minister agree that it is shocking that social care workers—who perform incredibly skilled and precious work for all of us but the majority of whom are paid less than the real living wage of £12 an hour outside London—are paid so little, and that a quarter of them are on zero-hours contracts? How much do his Government believe a social care worker is worth?

I think everyone on all sides of the House agrees with the noble Baroness that we owe a great deal of gratitude to those who work in the social care sector. It is a fact that a lot of them are on lower wages and we would like them to be paid more, but at the end of the day we now have 10% of the workforce on a national living wage that underpins their prospects, and it is now the responsibility of businesses and employers to increase the training and skills of our workforce so that they can earn more in the market.

My Lords, my question follows on from the Minister’s answer to the noble Lords, Lord Woodley and Lord Leong. The Minister spoke about young people being scarred by periods of unemployment, but just imagine trying to live on £6.40 an hour for an under-18, which is what it is going up to in April, or £8.60 an hour for 16 to 20-year-olds. Does the Minister not think that young people are being scarred by the inability to afford healthy food or decent accommodation, or indeed to live any kind of life, while struggling to survive? Their costs are no lower than anyone else’s. Surely they should be paid enough money to live on.

I thank the noble Baroness for that. The ambition that we should all share is for everyone to have rising wages as they improve their skill levels and for our young people to get meaningful jobs out of school that allow them to be trained and earn more as they progress in their career.

Pavement Parking


Asked by

To ask His Majesty’s Government what plans they have to introduce legislation to prevent pavement parking in England and over what timescale.

My Lords, the Department for Transport received over 15,000 responses to its consultation on this matter. The Government want to take the right step for communities and ensure that local authorities have the appropriate and effective tools at their disposal. We are working through the options and the opportunities for delivering them and, as soon as those matters are certain, we will publish our formal response and announce the way forward.

My Lords, cars on the pavement force pedestrians into the carriageway. That means blind people, wheelchair users and parents with pushchairs—in fact, all pedestrians—are taken off the pavement and put on a very different path: into that of oncoming traffic. In London, there has been a ban on pavement parking for years. If it is good enough for the capital, why not the rest of the country?

My noble friend makes an important point, and I cannot help but agree with him. Pavement parking is a widespread problem and a complex issue. We must ensure that whatever approach is taken works for all road users in the community. We know that our streets belong to us all and understand that parking on the pavements damages them and exposes pedestrians to risk. We have empathy for those members of our society for whom pavement parking poses particular difficulties—those who have sight and mobility impairments, wheelchair users and those with prams and buggies—but we must get this consultation right.

I commend the noble Lord, Lord Holmes, for his Question. There is a major challenge; he and I are fortunate enough to have a degree of assistance in navigating cars and motorcycles on pavements, but others do not. There is an additional hazard as well, which is the new fashion of using electric bikes on pavements. Those are a real danger to all the same cohorts that the noble Lord spelled out. Is it not time to do this now? It would not cost much and might get the Government some popularity.

Again, the noble Lord makes a valid point, which I cannot disagree with. E-scooters are allowed on public roads only as part of the e-scooter rental trials, and private e-scooters can be used only on private land. The use of any e-scooters on the pavement is illegal under current legislation and the Government have no current plans to change this. But at the end of the day, these things have to be enforced and it is a matter, particularly in London, for the Metropolitan Police. It is also for councils to look at and I cannot help but agree with the noble Lord.

My Lords, the Minister looked surprised at the idea of government popularity. Can I encourage him to seize the day, because this is not just about people being forced into the road? It is also about uneven pavements that are left behind after lots of vehicles have parked on them. That is a danger to everyone who walks along the pavement. Does the Minister agree that it should be part of the rights of pedestrians in the 21st century to be able to walk safely down the pavement, and that since the Government’s consultation took place in November 2020, it is high time they got on and did something?

As I pointed out in my first Answer, the department received over 15,000 responses to its consultation, covering tens of thousands of open comments. Every one of these has to be considered fully, giving due regard to the wide range of opinions expressed. Pavement parking is an extremely complex issue. All the options which are recommendations of the Transport Select Committee have supporters and detractors, and significant challenges in their deliverability and effectiveness. Yes, it is time and I am hopeful that in the not-too-distant future we will come out with a report on this.

My Lords, all of us have enormous sympathy with the points the noble Lords, Lord Holmes and Lord Blunkett, have made. Can the Minister just disclose a little more about the options the Government are considering for better enforcement of the law? Will he tell us what they are, so that we might contribute better to this debate?

I cannot disclose them at the moment, but as I said, I am very hopeful that in the not-too-distant future we will be able to come forward with suggestions.

My Lords, one of the reasons for parking on pavements is that cars have got wider. Do the Government have any plans to discriminate between 4x4s—which are wide, long and heavy, and thus also damage pavements—and smaller cars, and encourage the use of the latter in urban areas?

I understand the point the noble Lord makes, but we have no plans to discriminate against 4x4s or wider vehicles at the moment.

My Lords, I remind my noble friend that the government consultation on banning parking on pavements across England ended three years ago. Last month, local authorities, supported by the LGA, again called upon the Government to extend the powers currently held in London to the rest of England, in order to prevent parking on pavements. Does my noble friend accept that, if all councils across England had the same powers as London, that would enable the Government to meet their active travel plans much quicker?

To a certain extent, I accept that. As I have said, the department has received over 15,000 responses, and it takes time. Yes, three years is a long time, and I am very conscious of that.

In fairness, I have only just joined the department. I assure noble Lords that I am taking this very seriously and will do all I can to get a response out as soon as possible.

My Lords, in London I jump for my life from bicycles on the pavement. Can the Minister add bicycles to the list when he is looking at enforcement?

I, too, jump out of the way of bicycles. I take the noble and learned Baroness’s point; it is a serious issue, and enforcement should be more rigorous.

My Lords, we are told in so many areas that we are awaiting the results of consultations and that we do not have the resources to undertake them more speedily. Are the Government exploring the possibility of using AI to do a quick analysis of many of these responses and get the results faster?

I am not sure it is a question of resources; it is a question of analysing the 15,000 responses to the consultation. As for AI, I am afraid I am not an expert in that matter.

My Lords, has my noble friend has a chance to look at the Bill in my name on Road Traffic Act offences involving e-bikes, e-scooters and pedal bikes, which has received its First Reading? In particular, will he look at the provision whereby there should be a review of illegally operated scooters to prevent further accidents and casualties?

I have not yet had the opportunity to look at my noble friend’s proposed legislation, but as soon as I leave here I will go straight back to the department and do so.

My Lords, is it not about time that the Government grasped the nettle and said that roads are for things with big wheels, such as cars, bikes and scooters, and that pavements are for people who are trying to walk? It does not take three years to make a decision like that.

I think I have covered the point the noble Lord raises. I agree that three years is a long time but, in fairness, it takes time to analyse all of this. I undertake to move as fast as I possibly can on this issue.

My Lords, it has been a lot longer than three years. I raised this question at least five years ago with the Minister’s predecessor, and I got a completely anodyne answer. It reflects badly on the Government when a simple situation is called complex that really is not complex at all.

I cannot answer for my predecessor. All I can say is that I am very aware of the issue and undertake to move as quickly as I can.

Right to Roam


Asked by

To ask His Majesty’s Government, in the light of reported plans for mass trespass on Dartmoor on 24 February, what assessment they have made of the case for the right to roam.

My Lords, I declare my farming interests, as set out in the register. The Government have not undertaken any assessment of the case for the right to roam. The Countryside and Rights of Way Act 2000 already provides a right of access to large areas of mountain, moor, heath, down, registered common land and coastal margin in England. In our environmental improvement plan, we committed that everyone should live within a 15-minute walk of a green or blue space and to work to reduce barriers that prevent people accessing such spaces.

I tabled this Question because there will be a mass trespass, and the reason for it is that there are places that people are allowed to access but cannot get to because they have to trespass to access them. I understand that it is a difficult problem when half the country is owned by less than 1% of the population, but, quite honestly, the first duty of this Government—of any Government—is the health of the people, and being able to get out into nature is part of that. Will the Minister look at updating this and at having a logical right to roam Act?

The noble Baroness raises a good point regarding connecting to lost land and open spaces. The Government are aware that in the original mapping of open access land, some areas were identified to which there is no legal route. We are committed to undertaking a review of this position, and legislation to facilitate this review was recently passed into law in the Levelling-up and Regeneration Act.

My Lords, we all welcome the Minister’s answer about open access land, and I am encouraged by it. The previous Government proposed that it be mountains, moorland, heath, et cetera. In addition to that, the Forestry Commission decided it would open up its forests wherever possible. Can the Minister give me an assurance that there will be no pressure at all on the Forestry Commission to weaken its provision of access for the people?

My Lords, public access is already available to over 1 million hectares of England’s open access land, including areas of coast, heath, moor and mountains, as I said, as well as 258,000 hectares of public forest estate. That commitment remains.

My Lords, like me, my noble friend will know that there is a right to roam in Scotland, so he will also be aware that, with the right to roam, comes responsibilities. Can he give the House an assurance that, if the Government are minded to look at any right to roam, the aspect of responsibilities—such as keeping dogs on leads, particularly in farming areas, and the setting of fires—will be given due consideration?

My noble friend raises a good point. There are issues around responsible access, such as illegal parking, livestock worrying, disrupting wildlife, damage and littering—a favourite topic of mine. The issues in Scotland are obviously devolved to the Scottish Government, but, if the Westminster Government were ever minded to look at this again, establishing a proper code of conduct for accessing the outdoors, and linking that to a proper consultation and a proper plan for education on this issue, would be absolutely critical.

My Lords, it was over 20 years ago that we last had this reviewed, under the Countryside and Rights of Way Act, so I am pleased that that will happen. We have to end this piecemeal approach, which causes completely unnecessary divisions between landowners and people who want to walk. Will the review look at existing footpaths? I can think of a number of footpaths in Cumbria that are completely impassable now. It is really important that we keep existing routes clear and open for people to use.

The noble Baroness makes a good point. Maintaining access to all these routes is at the forefront of the Government’s agenda at the moment. I will certainly take away her specific point regarding Cumbria and see whether we can do something about that.

My Lords, I am a small farmer, and just as the last ministerial Answer said that it was very difficult to make decisions about parking on pavements, this is also a very difficult area, and it is not helped by slogans. There is a difficult issue around balancing the demands in the countryside, and many of us have noticed that, particularly during the flooded periods when the land is extremely vulnerable. Will the Minister make sure that he gets the balance right between those of us who produce the food and those who want to use the land for roaming?

As a small farmer as well, I sympathise with my noble friend. Getting the balance right between responsible access and the other legitimate uses of that land is critical. In future, I hope that we can strike that balance correctly.

My Lords, a recent survey showed that there were 32,000 blockages on our public footpaths. Further to the points already raised, it is extremely important that our footpaths are clear and accessible. Will the Government therefore consider providing long-term funding to local councils, which have the legal responsibility but not the resources to keep our public footpath networks open?

The noble Lord is quite right that local authorities have that responsibility. I can certainly take away his suggestion that we provide additional funding for that, but it is not part of the programme at the moment.

My Lords, given what we know about the parlous state of the mental health of children and young people, and what we know about the restorative properties of spending time in green space and open countryside, does the Minister agree that getting on with this should be done expeditiously and urgently?

I completely agree with the noble Baroness on the restorative qualities of access to nature, for not just young people but people of any age. The Government have spent considerable amounts of money on improving access for the public to not just our urban spaces but wider spaces, with the creation of new national parks and other areas. I completely agree with the noble Baroness on her point.

My Lords, will the Minister find time today to look at the damage being done to various tracks and byways open to all traffic—so-called BOATs—where, quite often, off-roaders are not just causing damage to the local environment but disturbing walkers, riders and other people who want to enjoy the countryside?

It seems like a similar issue to bikes on pavements—bikes on paths in the countryside. This is a really difficult area, and one I come across a lot in my private life, with people accessing the countryside in inappropriate ways. Paths are narrow, and it is often quite dangerous when someone on a mountain bike, or a group of people on mountain bikes, is coming down that path. It is intimidating, and it is very challenging to find a safe place and a safe way to make those two meet. I sympathise with my noble friend.

My Lords, traditionally, people in Scotland have been allowed freely to access the outdoors. I am 71 years of age, and all my life I have known that I was free to walk anywhere, as long as I did not do any damage. This was codified in the Land Reform (Scotland) Act 2003, which set out the conditions that you must observe if you do so. Can we not just adopt the same here and let people enjoy this? it does not cause any problems.

As a resident in Scotland, I would not necessarily agree with everything that the noble Lord has said. It is a devolved issue, and Scotland is entitled to make its own decisions on this.

My Lords, as a young boy, walking in the countryside and coming across a sign saying, “Trespassers Will Be Prosecuted”, my father assured me that it was a bluff. There is no law against trespass in this country, as long as you do not do damage to crops, livestock or property. That was why Mr Fagan, when he climbed over the wall into Buckingham Palace and got into the Queen’s bedroom, could not be sued for trespass but had to be convicted of stealing half a bottle of wine.

I am not entirely sure what the question was, but if my noble friend wants me to agree with him about Mr Fagan, I am very happy to do that.

Offshore Petroleum Licensing Bill

First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

East Midlands Combined County Authority Regulations 2024

Motion to Approve

Moved by

That the draft Regulations laid before the House on 18 December 2023 be approved.

Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 19 February.

Motion agreed.

Water Industry Act 1991 (Amendment) Order 2024

Water Industry (Special Administration) Regulations 2024

Motions to Approve

Moved by

That the draft Order and the draft Regulations laid before the House on 15 January be approved. Considered in Grand Committee on 19 February.

Motions agreed.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2024

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2024

Pneumoconiosis etc. (Workers’ Compensation) (Specified Diseases and Prescribed Occupations) (Amendment) Regulations 2024

Motions to Approve

Moved by

That the draft Regulations laid before the House on 14 December 2023 and 11 January be approved. Considered in Grand Committee on 19 February.

Motions agreed.

Animal Welfare (Livestock Exports) Bill

Second Reading

Scottish and Welsh Legislative Consent sought.

Moved by

My Lords, I beg to move that the Bill be now read a second time. I declare my interests as set out in the register, in particular my livestock farming and land management interests.

We are here to consider the Animal Welfare (Livestock Exports) Bill, which will fulfil the Government’s commitment to end excessively long journeys for slaughter. The Bill will ban the export of cattle, sheep, goats, pigs and horses for slaughter and fattening from Great Britain, stopping the unnecessary stress, exhaustion and injury caused by this trade. I think noble Lords will agree that, from a welfare perspective, animals should be transported only when necessary. This Bill will prevent unnecessarily long export journeys by ensuring that livestock are transported on shorter and less stressful journeys for slaughter domestically.

The Government recognise that we are a nation of animal lovers, with some of the highest animal welfare standards in the world. Indeed, we were the first country in the world to pass legislation to protect animals, and we are now building on that tradition by continuing to strengthen our animal welfare standards even further.

On farm animal welfare in particular, the Government have launched the animal health and welfare pathway, providing financial support for farmers to help them improve the health and welfare of their livestock. We have made available £30 million in capital grants to co-fund investment in equipment, technology and infrastructure projects. We have introduced a £4 million smaller abattoir fund, which will improve animal health and welfare and help to sustain our network of smaller abattoirs. This support will help to maintain short journey times for livestock to slaughter.

This brings us to today’s consideration of the Animal Welfare (Livestock Exports) Bill. In the 1990s, a vast number of animals were exported for slaughter each year. This period saw several unsuccessful attempts to ban live animal exports through legal challenges by local and port authorities. At that time, we were bound by EU free trade rules that prevented any such prohibition on live exports.

The RSPCA and Compassion in World Farming have taken up the cause of live animal exports and have campaigned for a ban on exports for slaughter for over 50 years. World Horse Welfare was founded in 1927 with the aim of stopping the export of horses for slaughter. I am grateful to these, and many other animal welfare organisations, for their support of the Bill.

I also recognise the long-standing interest of many noble Lords in banning live exports. I particularly acknowledge the work of the noble Baroness, Lady Fookes —who I believe is 21 again today—the noble Baronesses, Lady Hodgson of Abinger and Lady Jones of Moulsecoomb, and the noble Lord, Lord Randall of Uxbridge. I am grateful for their efforts in championing these causes.

We have seen the number of live animal exports decrease significantly over recent decades. Since 2020, there have been no recorded exports for slaughter or fattening from Great Britain to the EU. However, the demand from Europe’s slaughterhouses for British livestock, especially sheep, remains. The Bill will ensure that this trade cannot resume.

There is a clear rationale for the Bill. The shortest direct-to-slaughter export journey from Great Britain to continental Europe in 2018 took 18 hours. Most domestic journeys to slaughter in the UK are significantly shorter. Journeys of unweaned calves from Great Britain for fattening in Spain were found to last on average 60 hours.

The UK Government and the Scottish and Welsh Governments commissioned the Farm Animal Welfare Committee to examine animal welfare during the transport of livestock. Its 2018 report identified several aspects of transport that have a detrimental effect on animal welfare and recommended that animals should be transported only when necessary. Following the committee’s report, we undertook a public consultation with the Welsh Government in 2020 on banning live exports. We received over 11,000 responses, and 87% of respondents agreed that livestock and horses should not be exported for slaughter or fattening.

The ban on live exports must be GB-wide to be effective, and I am grateful to colleagues in Scotland and Wales for their valuable contributions to the Bill. While the Bill does not extend to Northern Ireland— I will come on to why shortly—I also thank the Department of Agriculture, Environment and Rural Affairs for its work alongside my officials in the development of our policies.

I now turn to the detail of the Bill’s provisions. The core provision prohibits the export of relevant livestock from Great Britain for slaughter and makes it an offence to do so. The Bill is focused on banning live exports where major animal welfare concerns have been identified. Accordingly, it legislates to end all exports from, and transit journeys through, Great Britain of cattle, sheep, pigs, goats and horses for fattening and slaughter.

Prior discussions in the other place explored whether the scope of the ban should be extended to cover a wider list of species. When we carried out our consultation in 2020, we were clear about the species we were seeking to apply the ban to. We received no evidence then—and have received none since—that a ban on any other species was necessary.

It is also important to be clear about what is not prohibited. The Bill still allows for exports of livestock and horses for other purposes, such as breeding, shows and competitions. Animals exported for breeding are transported in very good conditions, so that they can live a full and healthy life once they arrive at their destination. The Bill does not apply to journeys within the United Kingdom, the Channel Islands and the Isle of Man.

I return to the reason the Bill does not extend to Northern Ireland. To ensure that farmers in Northern Ireland have unfettered access to both the UK and Republic of Ireland markets, the Bill will not apply to Northern Ireland. As part of the new Windsor Framework constitutional arrangements, a Minister in charge of a Bill must make certain written statements if the Bill contains provisions that would affect trade between Northern Ireland and other parts of the United Kingdom. Since this Bill does not apply to livestock and horse movements within the UK, it is my view that there will be no such impact and that no such statement is therefore required.

Recent discussions in the other place highlighted the importance of protecting the access that Northern Irish farmers have to the Republic of Ireland. Farmers in Northern Ireland routinely move animals to the Republic of Ireland for slaughter and fattening. It is critical that we protect the Northern Irish agricultural sector and wider economy, and that is why the Bill’s territorial extent is drafted as it is.

The Bill contains a delegated power to provide for regulations about the enforcement of the ban. It empowers the appropriate national authorities to make enforcement regulations and sets out their possible scope. That power will enable the department to work closely with the Scottish and Welsh Governments to provide an effective and proportionate suite of measures to enforce the ban. We intend to bring the ban and its associated enforcement regulations into force as soon as possible. The Bill also repeals Sections 40 to 49 of the Animal Health Act 1981. Those provisions were intended to prevent the export of horses and ponies for slaughter, particularly by setting minimum value standards. Now that we are banning all live exports of horses and ponies for slaughter, those provisions are unnecessary.

I know that there is considerable support for this ban both in Parliament and among the public. I hope that Members of your Lordships’ House will agree on the importance of working to enhance this country’s proud record on animal welfare. The Bill marks another significant milestone in our progress towards delivering better animal welfare across the nation. In 2016, the EU referendum brought renewed public interest in finally ending live exports for slaughter. Now that we have that long-awaited opportunity, I hope that your Lordships will support the Bill and ensure that our exports take place on the hook, rather than on the hoof.

My Lords, I declare my interests as chair of the Royal Veterinary College and the owner of two opinionated dressage horses, who have informed me that there is no way that they are getting on a boat, unless it is to travel to the Olympics.

This may be the Minister’s first full Bill in this House, so I welcome him to the joys of Second Readings. As he said, there is widespread support for this provision, so I hope that it will be an easy one for him to cut his teeth on. I thank him and the Government for progressing the Bill to prohibit the live export of specified British livestock for slaughter or fattening abroad. Live exports see animals crowded into vehicles—often the first time they are away from their mothers—on long, stressful journeys, causing them to suffer from exhaustion, dehydration and even death. As the Minister pointed out, those journeys can be very long; they go to Spain —a 60-hour journey—Bulgaria or Hungary. In some cases, journeys from the Republic of Ireland possibly go onwards to Middle Eastern destinations —although that is difficult to establish—where of course very different welfare standards exist. There is a strong case for banning the trade.

In the most recent year in which live exports occurred, between 25,000 and 50,000 sheep and calves alone were exported from Great Britain. The Bill will stop that inhumane practice. Although there have been no live animal exports from GB to the European Union since 2020, that is not due to any lack of wish for the trade to continue; it is mainly due to a lack of suitable post-Brexit border control posts in French and Belgian ports.

New border control posts are now being created or existing posts upgraded, and this could open the door to the resumption of the trade were the Bill not to be passed. The Secretary of State for Defra at Second Reading in another place confirmed that, given the demand from Europe’s slaughterhouses for livestock, and especially British sheep, as the Minister said, there is no reason to think that this trade would not resume at the first opportunity.

I therefore urge the Minister and indeed the House to progress the Bill swiftly to get it through all its stages before the election, whenever that might be. The Bill was introduced in the other place in December 2023 and has got to our House within two months. Let us keep up the pace that has already been set. This legislation was a 2019 Conservative manifesto commitment and a Labour 2019 animal welfare manifesto commitment. It has support from the Liberal Democrats and the Greens, and even the Scottish National Party put it into its manifesto in 2021. The public support it overwhelmingly, so let us get it done—oh dear; I am beginning to sound like a Conservative.

The Bill, however, could shine even more, and, at the risk of being seen to go against what I just said about the need for speed, the Government ought to be pressed to consider a very small and simple amendment to take secondary legislation enabling powers to allow Ministers to add other types of livestock to the list as defined in the Bill, should that need arise. It is a pretty rare event for me to urge Ministers to take additional delegated powers, but things happen. We have to recognise that the trends in exports have been volatile. In a 10-year period, for example, pig exports went from 30,000 to 600,000. We are seeing an increasing amount of alpacas and deer farmed; those might well be other species that we need to take swift action on, and it would prevent Ministers having to come forward with primary legislation. Giving Ministers the power to add other livestock breeds to the list would future-proof the Bill. Secondary legislation is much quicker; primary legislation would always be behind the curve if numbers of exports were rising. Therefore I ask the Minister to press on, but with that small and simple amendment.

There are of course other associated animal welfare issues surrounding animal transport standards, some of which need attention, but we must leave those to another Bill. I thank the British Veterinary Association and the National Farmers’ Union for briefings on these welfare issues. The European Union is beginning to increase and enhance its standards; let us not be left behind. As the Minister said, we have always had a strong pride in our high standards of animal welfare and we really do not want to fall behind Europe—but that is for another day.

There is huge support for the Bill, as I said, except from the National Farmers’ Union, the Farmers’ Union of Wales and the National Sheep Association. However, we should listen and respond to the points being made, particularly by the NFU, that it is vital that the Government, when pursuing trade negotiations with countries that export large numbers of animals for fattening and slaughter, ensure that British farmers are not undercut by imports that do not meet the higher standards achieved within the UK. Let us get this done so we can be even more proud of our humane approaches and standards, and end live animal exports for fattening and slaughter for ever.

My Lords, I draw attention to my interests as in the register. I begin by welcoming the Bill. It has been a Conservative manifesto commitment since 2017 and was one component of the now withdrawn kept animals Bill, and it bans the export of live animals for fattening and slaughter from GB to anywhere outside the British Islands. As such, it will prevent the export of livestock for fattening and slaughter to continental Europe; historically, as has already been mentioned, those animals may have subsequently undergone extremely long-distance travel, with consequent risks to their welfare. It thus fulfils a welfare aspiration of slaughtering livestock as near as possible to their point of rearing and ensures that the exports are on the hook, not on the hoof, as the Minister said.

Before I comment on some specifics of the Bill, I will say that, because of the loss of many abattoirs, the distances many animals now have to travel for slaughter within the United Kingdom can be substantial. I welcome the recently promised support from His Majesty’s Government for small abattoirs, but emphasise the importance of ensuring the sustainable provision of an adequate network of abattoirs within the UK for all species as an essential animal welfare provision and an important underpinning for the rural economy.

Turning to specifics, the Bill extends to England, Wales and Scotland. I am delighted that the Scottish Government lodged a legislative consent memorandum in December last year. Horses are included in the Bill, which I welcome, as does the charity World Horse Welfare. This should put an end to the possibility of any long-distance journeys to slaughter for horses, as we saw in the past. The Bill exempts exports of live animals for breeding and all exports of poultry, although there are extremely low numbers, if any, of exports of live adult poultry. These exemptions are justified, given the importance of the high quality and global significance of UK livestock breeding and genetics. The relatively low number but high value of breeding animals ensures the high quality of care afforded to them in transport. This is especially so for poultry, where the export of day-old chicks of high-value foundation breeding stock originating in the UK provides the progenitors for a very high proportion of the total global populations of commercial meat and egg-layer poultry. These chicks are air freighted with great care, since some are worth as much as £3,000 each.

An important exemption from the Bill, though, is Northern Ireland. I recognise the complex political and pragmatic reasons for that, which are associated with the Windsor Framework and the land border on the island of Ireland between the UK and the EU. But I suggest there are two loopholes associated with this. There is a legal loophole, whereby animals could be born and reared in Northern Ireland and exported legally to the Irish Republic, after which they could legally be transported anywhere in the EU or beyond, subject to EU rules of movement. While legal, this is not in the spirit of the legislation. It would also be possible for unscrupulous persons to export from GB to Northern Ireland and then arrange further export from Northern Ireland, with or without the mandatory 30-day waiting period required. That of course would be illegal, but it is a possibility.

We should note the number of livestock moved from Northern Ireland into the EU. In 2022, 337,000 sheep were exported from Northern Ireland to the Republic for fattening and slaughter. Therefore, it would be very difficult to monitor illegal activities. So will we be carefully monitoring movements in and out of Northern Ireland that might indicate whether there is any organised systemic attempt to circumvent the good intentions of this Bill, which otherwise I warmly welcome?

My Lords, I first declare an interest as president of a branch of the RSPCA and as having had in the past various other close connections with that organisation.

I am most grateful to my noble friend the Minister for his kind birthday congratulations. I have to say that I could not have a better birthday present than this Bill—but it is a bit late coming. I was trying to get this done 50-odd years ago as a young MP—yes, I was young once—in the House of Commons.

My noble friend Lord Norton of Louth has done some research on those Conservative MPs in the early 1970s who had voted against the Government, and he dug up for me a particular occasion where I wanted to see the withdrawal of licences so that animals could not be exported. The Government of the day put in a wrecking amendment, so I voted against it, and on that occasion, we won; animal exports stopped. But of course, as we all know, there has been a history since and I, along with others who share my view, have been spectacularly unsuccessful in getting the ban.

In 1974—50 years ago almost to the day—I asked the Minister for a permanent ban on the export of live animals. He did a bit of waffling about the need to consult, which is the usual thing when they do not want to take action, and I said:

“I recognise the Minister’s need to consult, but will he bear in mind that any attempt to resume these exports will be met with my implacable hostility”.—[Official Report, Commons, 11/4/74; col. 12.]

I have maintained implacable hostility for the 50 years since; but why was I so opposed? Because I heard first-hand accounts at that time from RSPCA inspectors who had gone undercover—the proper government inspectorate did not seem to be working, so they did it themselves—and followed particular consignments right the way through from where they started to where they ended at abattoirs: and it was heartbreaking.

Over the years, millions of animals have suffered in this way. Very often, the vehicles used to transport were quite unsuitable. Sound animals and injured animals were allowed to go together, and some sound animals became injured anyway through the conditions in which they were travelling. Sometimes food and water were missing. The hours, as the noble Baroness, Lady Young, pointed out, were extremely long; and, more often than not, the conditions in which the animals were slaughtered, eventually, were horrifying in themselves. This is why I felt so deeply and strongly and, although conditions may have improved slightly, it is not enough for my concerns. I share the mantra of the British Veterinary Association from years ago that slaughter should take place as near the point of production as possible.

I turn now to the Bill itself, which I warmly welcome. I do see one small weakness: I know my noble friend has indicated that we are covering all the main animals and I accept that entirely, but there could come a time when other animals that are not now exported could be, and they would not be covered. I share the wish to have an amendment put in so that we could have a regulation that permits this to happen. I have looked carefully at all the regulations that we have already, but it does not seem that any of them would cover it. It is actually unusual for me to want regulations; when I was chairman of the committee that looked at these things, I was forever railing against the unsuitable extensive use of regulations. But here I make an exception. I hope that my noble friend might consider this—without, of course, allowing the Bill to fall by the wayside, which is always a concern and a worry at this time.

Others have also mentioned—and I will do so briefly—a concern that animals within the country have better regulations. I would like an assurance from my noble friend that the regulations in place are being enforced. It does not matter how good they are; if they are not enforced, it is as though they are not there at all.

I would also like to see those regulations improved. Unless I am much mistaken, we are still operating on the 2005 regulations from the European Union, which have been transferred into British law and now have some other fancy title that I forget. Anyway, I would like to see them improved because quite a lot of hours are allowed; I think it is 19 hours for calves and more for others. That is far too long. I support the arrangement for small abattoirs to be encouraged so that we can get animals off transport at great length and into abattoirs where we can ensure that the conditions are humane.

I hope my noble friend can give some reassurances on these matters. That said, I have waited a long time for this—and it could not have come at a better time than on my birthday.

My Lords, it is a great pleasure to follow the noble Baroness, Lady Fookes. I pay tribute to her and other noble Members of this House who have done so much to bring us to the point where we are today.

The reputation of this country as a country of animal lovers is well earned and well deserved. It is to the enormous credit of the United Kingdom that we have some of the toughest animal welfare legislation on the statute book anywhere. I congratulate the Government on the work they have done in recent years to introduce legislation to strengthen even further the protection for animals in the United Kingdom, in particular the Animal Welfare (Sentencing) Act 2021.

The legislation before us has been heralded by the Government as bringing an end to unnecessary journeys abroad of live animals for slaughter. In the other place, the Secretary of State, introducing the Bill at Second Reading, said:

“Taking advantage of Brexit freedoms, we can now legislate to end this trade, which we were unable to do for so many years due to European Union trade rules”.—[Official Report, Commons, 18/12/23; col. 1172.]

I have to say in passing that it has taken the Government a long time to bring the legislation to this point, given that the pledge was made during the Brexit campaign and has been referenced in various manifesto commitments from all parties.

However, my more fundamental criticism of the Bill has already been referenced by both the Minister and other speakers in this debate: it applies only to Great Britain and not to the entirety of the United Kingdom. Why is this? In no way do I criticise the Minister who is here presenting the Bill; these issues are way beyond the remit of the department in which he serves and, as I say, I congratulate him on bringing the Bill to the House. However, the Government have said, in the other place and today at the Dispatch Box, that it is because they want to ensure that Northern Ireland has unfettered access to the United Kingdom and to the Irish Republic. That makes it sound like this is a wonderful proactive measure and that the Government have thought about the situation, developed their policy and proactively decided to omit Northern Ireland for the best of reasons—that they had a choice as to what to do.

The reality is very different. It is important that we have proper transparency and openness in all these matters. As we have had in relation to trade Bills and others, the arguments put forward from the Dispatch Box do not always tell the full story of why things are being done—because of the Windsor Framework. The Bill does not apply to Northern Ireland because it cannot. This is not a policy decision or a desire of the Government. It cannot apply because the Windsor Framework and the Northern Ireland protocol prevent it being applied to Northern Ireland; European law takes precedence and has supremacy over Northern Ireland in this whole area.

As I say, the pattern of seeking to spin and hide the reality of the extent to which Northern Ireland is forced—it is not out of choice—to adopt different laws and rules across hundreds of areas of law applicable to large parts of our economy needs to be continually exposed. We are seeing it in the area of Parliamentary Questions. I raise this matter because I recently tabled a Question on the supply of veterinary medicines to Northern Ireland, which is very important for animal welfare, with wider human health implications. The Minister’s reply to the Question as to whether there were current negotiations with the European Union on the supply of veterinary medicines to Northern Ireland, which everybody accepts needs to continue, consisted of three sentences. Not one of them even referenced an answer to the Question. I would be grateful if the Minister could take away that matter and write to me on, or even explain in his answer when he comes to speak, whether there are current negotiations with the European Union about getting veterinary medicines into Northern Ireland. That would be useful to know.

I return to the Bill. The reason Northern Ireland is excluded from these provisions is because the Government have had to exclude it at the behest of the EU, which has sovereignty over Northern Ireland in this area. They simply have no choice in the matter. Many people will have different views on the merits of the substance of the Bill and what it does. Whatever your view—whether you are for or against the ban on live exports—it should be a decision for lawmakers in the United Kingdom or representatives of the people of Northern Ireland. That is the point of principle in this. In this case, the law is already decided by a foreign political entity, in which they have no say and are not represented, and the decision of which is final. This is another example of the Irish Sea border in action. There is nothing in the Government’s new Command Paper 1021 or the deal recently done that removes this; otherwise, we would not have this legislation before us today, or we would have legislation which did encompass the whole of the United Kingdom, created an exception for the Irish Republic, and would have put an end to journeys going further into the European Union, to Spain and elsewhere, which the Minister has rightly painted as being unacceptable in this day and age.

Noble Lords do not have to take my word for this. The Government’s own impact assessment on live animal exports states in paragraph 13 that the option of banning live exports of animals for slaughter

“cannot be implemented in Northern Ireland”.

I emphasise “cannot”. It says:

“Northern Ireland will continue to follow EU legislation on animal welfare in transport for as long as the Northern Ireland Protocol”—

or Windsor Framework—“is in place”. That is under Article 5 of the protocol, in conjunction with paragraph 40 of Annex 2.

The question of principle here is that the Bill does not and cannot extend to Northern Ireland, not because of any policy decision made by legislators or government but because European law demands that it cannot apply. Frankly, that is not an acceptable position in the United Kingdom in 2024. As I say, there are strong arguments in favour of the Bill, and these have been well described: the conditions under which some animals have had to travel for slaughter over long distances have been clearly highlighted. When I was the Member for North Belfast in the other place, I received countless representations on this issue. However, there are people in Northern Ireland and the farming community who point to the fact that large numbers of sheep are exported to the Irish Republic: the noble Lord, Lord Trees, made reference to the very large numbers sent from Northern Ireland to the Irish Republic for slaughter; and a significant number of dairy bred calves are exported to Spain. They point to the advantages of competition in the market for livestock and the fact that there have been major improvements in standards. These arguments are well rehearsed in Northern Ireland.

However, whichever side of the argument you are on, one thing should be clear and accepted: it should be for us as legislators, either in Northern Ireland or in this place, to make that decision, rather than having it imposed on us, with UK Ministers going around trying to gild the lily or portray it as a choice. It is not a choice: their own documents admit that they cannot apply it to Northern Ireland. Why not be honest, open and transparent about the fact that we are not sovereign and cannot make our own animal welfare decisions for the whole of the country?

Once again, the territorial integrity of the United Kingdom, the right of UK lawmakers to make democratic decisions, and the sovereignty of our country in this area have been set to one side. That is unacceptable. The fight will go on to highlight the denial of equal citizenship to the people of Northern Ireland as a result of these inequitable arrangements.

My Lords, I thank my noble friend the Minister for his excellent introduction to this much-awaited Bill. I warmly welcome him to his new ministerial role. I hope the Bill will progress quickly through this House, based on the cross-party support it received in the other place and the broad number of animal welfare organisations that have welcomed it. I recognise that many noble Lords in this Chamber have a deep knowledge of agriculture and animal welfare, but I declare my interests as director of a company that owns a little farming land, and as a member of the Rural Economy Select Committee in 2019, and of the Farm Animal Welfare Council some time ago.

It will come as no surprise to the Minister that I support the Bill, following the amendments I tabled to the Agriculture Bill on this exact topic back in 2020. I argued then that we have a moral responsibility, be it as farmers or end-user consumers, to recognise that animals are sentient beings. We should seek to encourage and support the industry in raising and slaughtering them in the kindest, most humane way possible.

I do not propose to run through all the reasons why the Bill is much needed—others have done that—but we should remember that not all countries in Europe have the same attention to detail on welfare provisions as we do. I understand that some animals are even being re-exported to the Middle East. The long journeys caused intolerable stress, injury and exhaustion, and the case studies we heard were harrowing. Once animals leave our shores, there is no control over how they are kept or slaughtered. Thus, it is important that we stop this practice once and for all.

Although I understand that almost no animals go abroad for slaughter at present, we should not forget that in 2019 around 35,000 sheep and calves were being exported to the EU from the UK. Although this trade has stopped, there is no guarantee that there will not be future demand. Therefore, it is important to get the Bill on to the statute book. It is another step alongside a raft of other measures that are part of the reason why, under a Conservative Government, the UK is joint top of the animal protection index.

While we are considering journey times, I hope your Lordships will forgive me if I also raise slaughterhouses in this context, as the noble Lord, Lord Trees, has done. I hope we all agree that, in welfare terms, animals need to be slaughtered at the nearest point to production, as my noble friend Lady Fookes stated. I am pleased that the Bill will help ensure that our animals are slaughtered domestically to our higher welfare standards.

However, EU regulations caused many small slaughter- houses to close. Numbers fell from around 1,000 in 1985 to 285 by 2006, with around 10 large companies slaughtering the majority of animals. This has caused longer travel times for the animals regionally. I ask my noble friend the Minister to take this opportunity to update us on the work of the small abattoirs working group, and the trials of the mobile abattoir project to test the use of a compact system for on-farm slaughter of livestock, which started in 2021, as referenced in the government response to the EFRA Select Committee report Moving Animals Across Borders. Of course, small abattoirs must be commercially viable businesses as well as custodians of the highest welfare standards. I await the Minister’s comments with interest.

As a party, we have previously made manifesto commitments not to compromise our food, environmental and animal welfare standards as part of any future trade deals. Allowing in food not raised to the standards we demand in the UK not only undercuts our farmers but encourages poor animal welfare standards in other countries. Last year, my noble friend Lord Benyon stated that imports to the UK for slaughter and fattening were low. Will the Minister undertake to keep this number under review in case we need to address this issue in the future? I do not propose that we hold up the Bill by seeking to add in this issue, but I insist that it is part of the continued wider conversation and aspiration to address.

In short, I welcome and support this Bill and remind your Lordships that “agriculture is a fundamental source of national prosperity”, not to mention food security, in a time when the world seems so increasingly volatile.

My Lords, I too welcome the Minister to his first Bill. I assure him that this is the easiest Bill he will ever touch, so getting it through quite fast would be a good idea. I also thank him for the briefing he gave. I did slightly resent his team not answering my question about where the flaws were; they suggested that that was my job, and I had to look for myself. I am not sure there has ever been a Bill since I arrived in your Lordships’ House—that was 10 years ago—that has not had at least one flaw, if not thousands, because this Government are so good at bad legislation. We see some really awful things here. I thought I might deserve a finder’s fee for spotting a “Brexit benefit”, but others had already made that joke—including, I think, the Minister himself.

The figures I have seen on live exports are absolutely horrendous. I cannot believe that people actually thought it was okay to treat animals like this—subjected to journeys of over 2,000 miles, lasting 70 hours. As other noble Lords have said, if we do not get this Bill enacted, it could start again.

I support the noble Baronesses, Lady Young and Lady Fookes, on the issue of other species being allowed to be brought in by the Secretary of State. I too have fought against such measures, but here I think it is appropriate. Of course, it is incredibly important that the regulation is not only tough but overseen properly. Obviously, the Minister will have implacable hostility from several noble Baronesses if that does not happen.

I do support this Bill and I think the harshest thing I can say about it is: about time.

My Lords, I too welcome this Bill and its Second Reading. It has many admirable aims, which I fully support. I declare my interest as a farmer, including sheep farming, as set out in the register. I am also a member of the NFU, which has circulated a focused briefing on the issues, with which I largely concur. Like others, I am also delighted that this is the first Bill to be led by the Minister.

I fully support the overall objective of the Bill, and of other welfare legislation granted Royal Assent in recent years. This makes our country a world leader in the treatment of animals and is something to be rightly proud of. While the overall purpose of the Bill is very good, I have concerns about its unintended side-effects, which will directly hit farmers. They are already facing the perfect storm of reduced farm payments, inflation affecting inputs, and adapting to the most monumental changes brought about by farming policy since the Agriculture Act 1947. Their export markets and the flexibility of their businesses going forward will also be adversely affected. That needs to be noted.

The trade of exporting store sheep to the continent for fattening and slaughter, while never making up the majority of UK sheep exports, was still a valuable avenue for a number of farmers, particularly in the south-east of the country, accounting at its peak for around 10% of sheep exports.

One of the main points given in support of the Bill is that since December 2020 there have been no live exports from the UK. However, this is not because farmers have simply stopped doing it, but because of the lack of proper border control posts, as mentioned by the noble Baroness, Lady Young, to administer all the post-Brexit checks. Reopening the store market for live export is not welcomed by the Government—nor by me—but export for breeding is encouraged. Therefore, will the Minister say what additional investment the Government are putting in to make certain that the shortage of border control posts with live animal facilities is addressed?

Surely having sufficient border control points in place and encouraging the export of animals bred and transported to a high welfare level will address the likely pernicious side-effect of this legislation if the border control posts are not in place. If they are not, there will be an increase in animals being exported to our erstwhile markets of France, Belgium and the Netherlands from east European and Australasian countries, which have a much weaker animal welfare protection system in place. Our priority should be overall animal welfare, which can be achieved by better investment in border control facilities, transport infrastructure and the exploration of welfare assurance schemes, as recommended by the NFU.

My final point is that a key reason why some farmers have in the past sent non-breeding exports across the channel is that those 31 miles are closer than the nearest abattoir in the UK, due to the number of abattoir closures, which has already been highlighted by the noble Baronesses, Lady Fookes and Lady Hodgson, and my noble friend Lord Trees. It is estimated that number has reduced by one-third since 2014, including McIntyre Meats last week in the Prime Minister’s constituency. The unfortunate consequence is that some farmers undertake 200-mile journeys to abattoirs in the UK. While the Government’s smaller abattoir fund with £4 million available is a step in the right direction, it is unfortunately not enough, as was eloquently put by the honourable Member for Westmorland and Lonsdale when he said that it would

“not even touch the sides”—[Official Report, Commons, 18/12/23; col. 1187.]

of his constituency, let alone the country as a whole.

With each closure of an abattoir, farmers must travel further afield, adding to journey times, stress and the cost of production, which is making some livestock businesses unviable. Also, most importantly, it has a negative impact on animal welfare, as the affected animals have to undergo these long journeys. That completely negates what the Government are trying to achieve, particularly, as mentioned in the Government’s manifesto commitment, to end excessively long journeys for fattening and slaughter by enabling shorter and less stressful journeys. I will be interested to hear from the Minister what additional support the Government propose to prevent the closure of abattoirs and to keep the sector viable. In particular, are the Government considering creating a working group to look at the 5% rule which governs the number of animals slaughtered without a vet being present, as recommended by the Environment, Food and Rural Affairs Committee in 2021? Are the Government continuing support for the mobile abattoir pilot?

My Lords, I have a vivid memory of speaking at a meeting during the referendum campaign back in 2016. All sorts of speeches were made and grand ideas put forward, and then right at the end of the meeting a lady got up and said, “I don’t care about any of this. The only reason I’m voting to leave the EU is so that we can get rid of live animal exports for slaughter”—although I do not think she actually used the word “slaughter”. It was a vivid example of how people saw specific things in the referendum campaign that they knew the EU was doing that they wanted to change, and that was one.

I am disappointed in the way that the Government have taken so long to get this relatively simple Bill to come back. It is like a number of other issues on which the idea of taking back control seems to have frightened civil servants and Ministers, so it has taken a lot longer to get these things done.

I pay tribute to the noble Baroness, Lady Fookes, and the many Peers and Members of the other place who have campaigned on this issue for a long time and kept it in the public domain. I remember clearly that in 2012-13 there were lots of demonstrations in Ramsgate and Dover, when a lot of the public saw for the first time the horror of what was going on in some of those lorries, with sheep packed in them for the long journeys ahead. It is that kind of campaigning that has got us to this stage, and that is where the noble Baroness has played such a huge role.

Of course I will support the Bill but, as others have said, there are changes that could be made, and I would certainly like it to go much further. It is not acceptable, here in the House of Lords in the United Kingdom Parliament, that the Bill is not going to apply to Northern Ireland. I thank the Minister for reaching out after I had asked a question about this and having an interesting and useful meeting. I am not sure it was particularly useful in terms of changing things, but I accept that he has done his best in his role to listen to those of us who feel strongly that animal welfare should be a UK-wide matter and that ways could be found even at a late stage, in Committee, to ensure that the Bill applied to the whole country as a whole.

There is no good reason why the Bill could not have applied to Northern Ireland with an amendment clause making it clear that, when animals are exported to the Republic, a final destination must be stated when they cross over the border from Northern Ireland. The aim is to stop animals from being taken for long journeys in terrible suffering, but that will not have been achieved for the thousands of animals that will in future still be able to be transported from Northern Ireland, through the Republic and onwards into the continent of Europe and perhaps even to north Africa—much longer journeys than are happening at the moment.

As Sammy Wilson, the Member for East Antrim, said in the other place, it is a bit like Pontius Pilate; as long as the animals do not go through Great Britain, morally we can all sit back here and say, “Great, we’ve done it”, when in fact we have not changed the situation. As we all know and has been said, hardly anything has been exported over the last couple of years from Great Britain, but in all that time animals have been exported from Northern Ireland through the Republic of Ireland. It is a bit hypocritical, not from the Minister but overall from the Government, that they have tried to emphasise that Northern Ireland has been left out because of the Government’s deep concern about farmers not being able to take their cattle over the border to be fattened or to abattoirs.

On abattoirs, I absolutely agree that the ruination of small abattoirs by EU rules is also something that we should be able to act on. The £4 million sum is really very little, and that needs to be looked at.

This is not to do with protecting Northern Ireland agriculture or farmers. The truth is that, as the noble Lord, Lord Dodds, has said, as in so many other areas of legislation now—we are going to keep hearing this—European Union law overrules UK law in Northern Ireland. The Windsor Framework/protocol is making sure that Northern Ireland is once again being treated differently from the rest of the UK. There was a manifesto commitment from the Government, and yet, again, we have seen that the Government have to kowtow to European Union rules.

Another area in which it has just been confirmed we are going to have differences—again, an animal welfare issue—came after assurances from the Secretary of State that pets travelling from England, Scotland or Wales to Northern Ireland would no longer have any administrative bureaucracy. We now discover specifically that they are going to have to be treated differently, and will have to apply for pet documents.

The Government need to accept that, if they really wanted to, they could change the Bill to make it apply to the whole of Northern Ireland. The Minister did not mention the WTO, but I am sure he will say in his wind-up that we could not make special exceptions for the Republic of Ireland and the cross-border trade, which is important and needs to continue, because the WTO would rule that it was not possible under the favoured nations treaty.

However, there is an exemption in the General Agreement on Tariffs and Trade of 1994, which clearly says that one of its exceptions enables states to take measures

“necessary to protect human, animal or plant life or health”.

There has been some legal opinion published which holds that Article XX, which enables states to act “to protect public morals”, is an even stronger basis for justifying trade restrictions based on animal welfare concerns. This has been used before, including in challenges in Canada, and it is set out clearly in the Explanatory Memorandum. So there is a way of doing it. It is not even as if we have to ask permission to do it. We can do it, and then if somebody wants to complain, we can take it up with the WTO if it tries to stop it.

I do not want in any way to hold this Bill up— I know that I would not be able to ever have a cup of coffee with the noble Baroness, Lady Fookes, again if that happened—but there are one or two minor but very important amendments that we could debate in Committee and that the Government could accept, if they had the will. If this is not changed, and Northern Ireland cannot be brought into it, I hope that all those noble Lords who are so supportive of the European Union and think it is wonderful, and are also desperately keen on animal welfare, might perhaps decide that it would be a good idea to lobby the European Union to get rid of its rules, which allow this terrible, horrible trade to continue, right across Europe.

My Lords, I welcome the Minister to the Front Bench and to the Second Reading of his first Bill in your Lordships’ House. Obviously, on some of the issues in the Bill, I take a different view from the noble Baroness, Lady Hoey.

I want to talk from a Northern Ireland perspective, which may seem rather odd since Northern Ireland is not covered by this legislation, but there are very good reasons for that. The provisions in the Bill, as the Minister said, seek to prohibit the export of cattle, sheep, goats, pigs and equines for slaughter, including fattening for subsequent slaughter, beginning in or transiting through GB to EU member states and other third countries. This in itself does not apply to Northern Ireland.

For practical, agricultural, trading, political and animal health reasons, that is the right decision. That fact was recognised by the Secretary of State for Environment, Food and Rural Affairs in the other place, on 15 January, when he stated, in response to the debate, that the Bill must not jeopardise the access that Northern Ireland farmers have to the Republic of Ireland. I hope that all noble Lords recognise the economic and trading importance of agriculture to both parts of Ireland and the fact that farmers and those involved in trading try to adhere to animal health standards.

There is another feature. The island of Ireland, both north and south, is treated as a single animal health epidemiological unit. That has persisted for many years because of the nature of the trade on an ongoing daily basis, to and fro. That is essential for the agri-food industry and its success. Agri-food on the island of Ireland is interlinked. Northern Ireland’s farmers have invested much time and energy in maintaining very good, world-leading animal welfare practices, including in how animals are transported. The farming unions in Northern Ireland would refute any claims or suggestions that anti-animal welfare conditions exist. I am also mindful of what the noble Lord, Lord Trees, has said, which is absolutely correct: with all these movements there have to be proper monitoring procedures in place. Much of that is covered by the fact that it is a single animal health epidemiological unit.

The bottom line is that Northern Ireland farmers need access to the markets. They need access to the Republic of Ireland and to mainland EU for live animals, particularly the sheep sector. Reference has already been made to this. In 2022, the last year for which statistics are available, 337,000 sheep moved from Northern Ireland to the Republic for slaughter and fattening, and about 3,500 cattle and 17,000 pigs were moved for slaughter. The dairy sector needs this avenue maintained for dairy-bred bull calves, as a limited market exists for them in Northern Ireland.

In 2018, in evidence to a Northern Ireland Affairs Committee inquiry in the other place into live animals, the farmers’ union in Northern Ireland stated that the two agri-food industries on the island of Ireland

“are highly integrated and they move both ways … That two-way movement is a historic thing and it is essential”.

The Agriculture and Horticulture Development Board also highlighted to that committee’s inquiry the importance of processing capacity in the Republic to the red meat sectors. For example, in the pig industry, sows go across the border for slaughter and then back again.

Cross-border movement is important not only for Northern Ireland’s trade with the Republic but with other countries. Calves from Northern Ireland destined for France are regularly transported through ports in the Republic of Ireland. The noble Baroness, Lady Hoey, and the noble Lord, Lord Dodds, have referred to the influence of the Windsor Framework. I am glad that the Windsor Framework is in place, because it will ensure that the agri-food industry in Northern Ireland is protected, as there will be the free movement of livestock for export purposes and for fattening and slaughter on the island of Ireland.

The Bill recognises that trade in live animals from Northern Ireland to the Republic of Ireland should be allowed to continue—and I hope it will be. The Ulster Farmers’ Union and farming organisations asked for this to happen in 2018. Thankfully, this legislation recognises the need to leave Northern Ireland out of its provisions.

I have a question for the Minister about a more pertinent issue. We need to turn our attention to the EU proposals on animal transport that will apply in Northern Ireland. It is important that, in negotiations with the EU on behalf of Northern Ireland farmers, the UK Government ensure that the transport of live animals to the EU, with all the proper animal welfare conditions in place, is maintained. This is vital for the safeguarding and protection of our agri-food industry on the island, which is highly integrated. In that regard, can the Minister indicate what discussions have been held with the EU regarding the need to ensure that the transport of live animals to the mainland EU is retained? If he is not able to provide that information in his wind-up, can he write to me and place a copy of the letter in the Library of your Lordships’ House?

I support this legislation. Animal welfare regulations and standards are vital to the agri-food industry, but equally important is the need to ensure that we have that free movement of animals for slaughter and fattening purposes on the island of Ireland. So, although I welcome the legislation, I am glad it does not include Northern Ireland.

My Lords, I draw attention to my entry in the register of interests. It is a pleasure to speak in this debate, and I welcome the Government’s commitment to improving the standards of animal welfare in the UK. I add my thanks to the Minister, as he begins his new role, and to those who have campaigned for so long, particularly the noble Baroness, Lady Fookes, whose birthday it is today.

I have spoken to farmers and farm vets in Suffolk, and they are clear that the exporting of animals for slaughter is not an acceptable practice, and I fully support the Bill. They raised with me a couple of related points, both of which have been made already, but I will briefly refer to them. First, we must ensure that holding British farmers to high welfare standards does not result in the undercutting of our farmers by cheaply produced imported meat that does not meet the same standards required of UK farmers. I hope the Government are able to provide farmers with the assurances they need on this matter.

Equally, it is important that consumers in Britain can feel confident that the produce they are buying meets the appropriately high standards of animal welfare that we expect of British farmers, regardless of where the meat originated. Producing food in the UK remains a vital role in protecting the food security of the country, which of course is another issue. I support calls from the NFU and others to establish core production standards that apply to agri-food imports, and to establish best practice protocols for transporting animals.

Secondly, one of the key drivers of the desire to export live animals for slaughter—a desire that could easily be reignited—has been the reduction in the number of UK slaughterhouses. As we have heard, this results in longer journeys to slaughterhouses within the UK—not only is this an animal welfare concern but it drives up emissions associated with the transport of livestock. The transport of animals to small and medium-sized abattoirs often has the shortest overall journey lengths, and it is important that we have a sufficient network of abattoirs, particularly small and medium-sized ones, so that our food supply chain can be as humane as possible.

I also add my support for the possibility of an amendment to achieve a simple device for adding new animals to the list.

As a country, we strive to be a world leader in animal welfare standards, and I fully support this legislation and its speedy progress.

My Lords, I am delighted to follow the right reverend Prelate and to participate at Second Reading of this Bill. My interests are that I chaired the Environment, Food and Rural Affairs Committee in the other place and served as an MEP for 10 years.

I am extremely proud of the high animal welfare conditions met by livestock producers in this country. Yet, as we have heard, there are no EU border posts currently in place, so it is impossible for our livestock producers to export, even for legitimate breeding purposes. While we admit breeding stock from the EU, with health checks conducted at the farm of destination, there are no reciprocal arrangements in place for British breeding stock going to the EU other than through Ireland, as we have heard. The Bill therefore seems to address a problem that does not exist—the live export of animals for fattening and slaughter—but fails to solve one that does, that of failure to export breeding stock. Can my noble friend the Minister say when the Government will address this? In the view of the National Sheep Association, it is a matter of utmost urgency.

I am grateful to my noble friend the Minister for taking on this Bill as his first Bill and for his briefing with us on 30 January and subsequent letter, which I received today. I have some personal history with this issue. I was the Member of the European Parliament for the constituency which contained Brightlingsea, and exports came through that port when the Port of Dover stopped the movement of live animals in 1992. A vigorous campaign was mounted by a rather unknown organisation at that time, run by a mother and daughter, the embryo of Compassion in World Farming. The manager of the Port of Brightlingsea suffered attacks to his home and the town was overrun by visitors protesting about the transport of live animals on the ferries. I made a point of going to visit and board a ferry for myself, to see at first hand the comfortable conditions in which those sheep were transported— they were, frankly, superior to those enjoyed by foot passengers on many cross-channel ferries at that time.

It is important to note, however, that the live export of animals has always been a very limited and heavily regulated trade, as the maximum hours that animals can travel between resting periods, and feeding and watering intervals, are heavily regulated throughout the EU. Live exports of sheep and cattle—particularly sheep—were economically important to livestock producers in the north of England and Scotland for the same reasons as my noble friend and other cited regarding poultry exports, which will continue. They are of high value and meet the highest animal welfare standards, which is why our live exports of sheep were so welcome, particularly in France. The impact assessment gives the 2020 figures for exports of all livestock as 6,272 sheep for slaughter and 38,111 for fattening, with four goats for fattening—those four goats must have been very important.

The Bill raises a number of questions. Why is the ban not on a reciprocal basis? Why does it impact only producers in Great Britain? Why does it discriminate against our own producers in favour of EU exporters, in particular of breeding stock? I presume that some livestock comes from the EU to this country for fattening and slaughter purposes, no matter how small the trade —I ask my noble friend to confirm that. I would like to see an amendment from the Government to make this Bill work on the basis of reciprocity. Why is poultry excluded? The same welfare conditions should surely apply to poultry as to other livestock, such as sheep and cattle, particularly in view of the fact that they do not travel as well as other livestock such as sheep.

As we have heard from a number of speakers, the Bill contains a glaring loophole, referred to in particular by the noble Lords, Lord Trees and Lord Dodds. Livestock movement between Great Britain and Northern Ireland will be permitted, which means that, under the provisions of the ban in the Bill, any animal could be exported from Great Britain to Northern Ireland and through the Republic of Ireland for onward export to other parts of the EU, entailing a much longer journey that undermines the key animal welfare provisions of the Bill. I understand that that route is currently the only one available for breeding stock.

The noble Baroness, Lady Ritchie of Downpatrick, very eloquently described the importance of the agri-food industry to Northern Ireland. I would echo that: it is an extremely important industry to the whole of the United Kingdom. Given the fact that basic payments are reducing and the ELMS criteria are still extremely fuzzy, yet we face a rising need for food security, what is the government action plan for beleaguered livestock farmers, particularly in the upland areas of England, which were the source of much of the live trade in the past? Again, I understand that the figures quoted showed that, for every live animal exported, seven were in carcass form—so the vast majority of this trade will continue, but in carcass form.

A further problem that I ask the Government to address is the lack of a phytosanitary agreement with the European Union. There is a chapter in the EU-UK Trade and Cooperation Agreement on sanitary and phytosanitary standards that has never come into effect. Does my noble friend not agree that it is extremely important, as others have stated this afternoon, that any import, whether from the EU or a third country coming via the EU, must match the same high standards that are applied in this country? This gap in regulatory agreement, together with the new controls at UK border posts, is causing grave concerns to farmers and consumer groups alike.

I understand that the new BTOM regulations that are coming into effect are moving the checkpoint some 20 miles from those envisaged in the port of Dover to Sevington. I would argue that that is a hostage to fortune and not conducive to effective checks on entry to this country on plant and animal health. Let us pause and remember the recent cases of ash tree dieback and horsemeat fraud, which should serve as a wake-up call for greater vigilance on imported foods, whether they are live animals for breeding purposes or plants and food products coming in through the checkpoint at Sevington. There is also concern about the reliance at sale and production points on environmental health and trading standards officers at a time when local authority budgets are under severe constraint.

I conclude by saying that no farmer has willingly exported a live animal for fattening or slaughter in recent times. I pay tribute—and I hope that my noble friend and the House will join me—to the very high standards that our farmers meet, as expected by UK consumers. I hope that the beleaguered livestock industry in this country will soon have some good news from the Government, and certainty as to what their future will be.

I also welcome this Bill and am in awe of the passion shown by many Members of this House in getting the Bill to this stage. I note my interests in the register.

The simplicity of the Bill is a strength and I hope that it will contribute to a quick passage through the House. However, by keeping it simple, there is the potential to miss certain areas of animal welfare. The range of farm animals included are the principal main production animals, but this leaves out minority animals —it does not, for example, mention birds. I thank the Minister for his time doing the briefing on the export of young poultry, also mentioned in detail by my noble friend Lord Trees.

I also welcome and back the noble Baronesses, Lady Young and Lady Fookes, on their amendments for these species to be included, if required in the future by the Secretary of State. As humans have generally shown over the years, where there is an opportunity or a loophole, people will seek to use it in some way. This will only be to the detriment of a small number of animals and birds in the future.

Due to the focused nature of the Bill, there is a missed opportunity to improve the general legislation with regard to the transport of animals throughout the UK and for their export for breeding and competition purposes. Some of these journeys can be of significant time and length, and we need to protect animals during this transportation. I ask the Government to look again at this legislation to ensure that we continue to improve animal welfare standards during transportation, to include time and distance travelled, to monitor the health and welfare of these animals, and also to include driver skill levels, the design of transport vehicles and the stocking density.

As mentioned by the noble Baroness, Lady Hodgson, the support of local abattoirs is essential to keep the transport distance down to minimum for animals due for slaughter. This proposed legislation can only happen due to the UK leaving the EU. Animals are certainly benefiting from this legislation, but we need to ensure the farming industry as a whole benefits too. The export of farm animals was a minor but significant part of the fresh and frozen meat sector, and the only reason it has reduced is the lack of EU border control posts, as mentioned by the noble Lord, Lord Carrington.

When this legislation is passed, this potential profitable and alternative market will be closed to English, Scottish and Welsh farmers due to the welcome higher animal welfare standards. I therefore ask the Minister to encourage the Government to begin, as asked for by the NFU, a formal process of developing and establishing a core production standard that applies to all agricultural imports, as mentioned by the right reverend Prelate. These standards should apply to all future international trade deals, to prevent the undercutting of British farmers, whose costs are increased by high animal welfare standards —which we all welcome.

All these high standards need to apply not only to production but to biosecurity, and these issues were highlighted by my noble friend Lord Trees in a recent debate on biosecurity. It is important that, if we cannot export our livestock for slaughter, we export and promote the UK’s high animal welfare standards and maintain a level trading playing field for all UK livestock producers.

My Lords, the Minister has set out clearly the purposes and remit of the Bill, and we have heard very interesting contributions from across the House. I support the Bill and the contributions that have been made. These measures were in the Conservative manifesto, and the Government are keen to get the Bill in statute. Before they go to the electorate again, they want to be able to say, “We delivered on our manifesto”.

Sadly, this is not exactly the case. Before I go on to deal with what the Bill includes, I will mention those issues which it does not: banning puppy smuggling, amending the Zoo Licensing Act 1981, banning the keeping of primates as pets, and protecting sheep from dangerous dogs.

When the Government abandoned the kept animals Bill, they were relying on a number of Private Members’ Bills and smaller government Bills to fill the gaps. Some Private Members’ Bills were successful. The banning of glue traps was one example, thanks to the intrepid noble Baroness, Lady Fookes. Others, such as banning the import of hunting trophies, were not.

However, we are today debating the Animal Welfare (Livestock Export) Bill. We have heard from many who, quite rightly, are passionate about animal welfare—the noble Baronesses, Lady Fookes and Lady Hodgson of Abinger, and the noble Lord, Lord Trees, are such. I am grateful for the briefings I have received from the NFU, the RSPCA, Wildlife and Countryside Link, Compassion in World Farming, and the House of Lords Library.

As has been said, the Bill prohibits the export of cattle, sheep, goats, pigs and equines for slaughter or fattening for subsequent slaughter. No animals have been transported for those purposes since December 2020, which is due entirely to Brexit and there no longer being any suitable border control posts in French or Belgian ports to receive the live exports. However, there is nothing to stop suitable border control posts being set up specifically for that purpose in future. It is therefore essential that UK law is changed now to prevent the export of live animals for slaughter or fattening before slaughter.

The ban does not apply to live animal movements for breeding and competition purposes, provided that adequate safeguards are in place to protect the animal’s health and well-being during transportation. That provides much-needed reassurance to the owner of equines and other breeding stock. Day-old chicks are exempt from the provisions of the Bill, as we have already heard.

In September 2021, the Environment, Food and Rural Affairs Committee in the other place published a report that welcomed the proposed legislative ban included in the Bill. That was over two years ago—although nothing as long as the noble Baroness, Lady Fookes, has been waiting. This issue is taking far too long time to get into statute. Let us hope that we can speed up the process.

There is an issue around the number and distribution of abattoirs, as the noble Lord, Lord Trees, and others referred to. In the past, there were abattoirs in easy reach of farmers; however, that is no longer the case and farmers are taking their animals further and further to slaughter. That is good for neither the animals nor the farmers, who are spending so much time away from their farms. I recently met a colleague whom I had not seen for some considerable time, and asked how she was doing. She said that she had given up her farming, as she was having to transport her stock over 200 miles for slaughter. She felt that that was not good for her animals and the cost made it uneconomic to continue. The noble Lord, Lord Carrington, also referred to the journey times to abattoirs. I understand that the Government are making £4 million available in the form of grants to support smaller abattoirs to improve, but also needed are more accessible abattoirs, so that farmers do not have to travel so far. Are the Government planning to increase the number of abattoirs, particularly in rural areas? The noble Baroness, Lady Hodgson, also raised that issue.

The majority of the comments that I have received have been overwhelmingly in favour of the Bill. However, the NFU has expressed concern that no impact assessments were provided with the proposals. The impact assessment that was provided had been produced for the kept animals Bill, which was subsequently abandoned. That IA indicated that a loss of around £5.2 million over a 10-year period would be suffered, mainly by sheep exporters; the noble Lord, Lord Carrington, referred to sheep farmers. That is a significant sum for a section of the farming community that is generally not affluent.

The NFU is concerned that British farmers will be undercut by imports that do not meet the same high animal welfare standards that exist here. The NFU is calling for the establishment of core production standards that apply to agri-food imports. That would assist in providing a level playing field for British farmers. I fully support the NFU on that and agree with the right reverend Prelate the Bishop of St Edmundsbury and Ipswich. The British Veterinary Association and the Farmers’ Union of Wales also support the call for British livestock farmers not to be undercut by trade deals that do not meet equivalent animal welfare standards. Can the Minister give reassurance on that issue?

The Bill does not ban the import of live animals for slaughter, as the noble Baroness, Lady McIntosh, referred to. In July last year, the noble Lord, Lord Benyon, stated that,

“from 2019 to 2021, only 91 cattle and 14 sheep were imported for slaughter from the mainland EU”.—[Official Report, 10/7/23; col. 1512.]

Can the Minister give an update on that figure and say how many animals are currently imported for slaughter, if any?

The Bill does not apply to Northern Ireland, and we have heard from some of those directly affected by that this afternoon—the noble Lord, Lord Dodds, and the noble Baronesses, Lady Hoey and Lady Ritchie. However, the movement of live animals covered by the Bill is still allowed throughout the island of Ireland, as Northern Ireland is treated as part of the EU, which we have already heard eloquently explained. The movement of animals within the UK, the Channel Islands and the Isle of Man is still allowed. However, all live ruminants from Great Britain are currently banned from entering Northern Ireland due to a case of bluetongue virus in Kent. Is this ban likely to be lifted any time soon?

Compassion in World Farming says that in 2019-20, animals were transported to designations in Bulgaria and Hungary via Northern Ireland. Even when exports were destined for the Republic of Ireland, there was no way of knowing what the final destination would be, as Eire has a large live export trade to the EU and the Middle East. However, once the Bill becomes law, this trade will end and the risk to animal welfare will cease from GB.

The Northern Ireland livestock market is affected by live animal exports restrictions, as in 2020 this trade was worth £938 million—that is, 31% of Northern Ireland total exports to Ireland. The NFU believes that the live trade is essential to stimulate competition for livestock and to ensure that farmers have access to the best paying markets—the noble Baroness, Lady Ritchie, also referred to this. The RSPCA believes that the wording of the Bill is compatible with WTO rules and meets the conditions of the EU-UK Trade and Cooperation Agreement and the Northern Ireland protocol.

This is a fairly short, uncomplicated Bill. It aims to prevent animals being shipped overseas for fattening and slaughter, a process which causes distress as the animals are often kept in restricted conditions and have limited access to food and water. We have heard many examples this afternoon describing the suffering of the animals as a result. It seems that all contributors to this debate are in agreement. As a nation of animal lovers, the public are fully on board with the aim of the Bill and want it passed quickly. The Bill is not completely perfect but I urge all present to support it unamended to hasten its passage.

My Lords, I start by declaring my interest as set out in the register as president of the Rare Breeds Survival Trust, and I thank the Minister for his introduction to the Bill.

We welcome this legislation. Labour has previously called for a ban on live exports and I have personally campaigned on it as well—although not as long as the noble Baroness, Lady Fookes, who has worked so long and hard on this; I congratulate her on her efforts and her birthday present today. However, we regret that it has taken so long to bring the Bill forward. We have heard about the Animal Welfare (Kept Animals) Bill, which disappeared last May. If that had come forward, this could be on the statute book already. Therefore it is of regret that we did not do this sooner but we are pleased to see that we are debating it today. However, as the noble Baroness, Lady Bakewell of Hardington Mandeville, said, certain elements of that Bill are still to appear, so we hope to see that promised legislation also coming forward.

As we heard, the Bill applies to cattle, sheep, goats, pigs, wild boar, horses and certain other related animals, with the proposed ban applying only to slaughter and fattening exports, and clearly not prohibiting animals travelling for other purposes—for example, breeding or competition. Yet the export of breeding stocks represented a huge percentage of all exports pre Brexit in 2019. I heard that one intention following Brexit was to intensify this by making the UK

“the centre for breeding stock and genetic exports for the world”,

according to the director of the UK Export Certification Partnership. Can the Minister say whether the intention is still to support that?

Considering that the intention to ban livestock export is on welfare grounds and that breeding stocks are exported and then transported using the same standards as for fattening and slaughter stocks, it is also critical that these journeys are undertaken to the highest standards. A number of noble Lords have talked about this. Obviously, it is good that animals are not transported when conditions at sea are poor, but we need clearer regulations and information about what happens to the animals while they are waiting for better sea conditions in order to be transported. How are they kept? Are they still in the trucks? Are they unloaded? How are they fed and watered? What are those conditions? It is important that the Government provide reassurance on that.

As my noble friend Lady Young of Old Scone said, animal welfare can be compromised during long-distance live travel. Animals can experience a range of problems, such as physical injury, hot or cold stress, hunger, hydration and exhaustion, and during export overcrowding means that some cannot lie down at all, while those who do may be injured or trampled. Different animals suffer in different ways. For example, pigs can become very travel sick, even on very short journeys. Newly weaned piglets are more vulnerable than older animals, particularly to temperature changes, so I was very pleased that noble Lords—particularly the noble Lord, Lord Trees—talked about the closure of abattoirs and how that has increased travel distances for animals on our own shores.

The noble Baroness, Lady Bakewell, talked about the government funding for abattoirs but the problem with that is that it is to support only existing abattoirs. It will not solve the problem where abattoirs have already closed and left huge gaps with no abattoirs for many miles. I hope that the Minister takes that away because we need to look at how we replace the abattoirs that have gone.

I thank a number of organisations for their briefings. The RSPCA talked about animals being transported to Spain on journeys that lasted up to 96 hours and some animals being slaughtered in Middle Eastern countries such as Lebanon and Libya after being re-exported—and, of course, non-stun slaughter is the norm there. Once animals have left our shores, we have no control over how they are reared or slaughtered. The noble Baroness, Lady Fookes, gave some fairly graphic examples of the terrible conditions that animals have suffered.

We have also heard that live exports of calves halted after 2019 and live exports of sheep halted after 2020. The final export of live farm animals overseas occurred with five lorries laden with sheep leaving Dover on 31 December 2020. Since then, no live sheep have been exported across the channel because, as we have heard, no border control posts have been set up by France and Belgium to receive them and post Brexit animals must go through a BCP. Noble Lords have asked why we need the Bill. It is because without a legal ban the exports could start up again, leaving thousands of British animals vulnerable to cruel, stressful and often unnecessary journeys.

If a suitable BCP were to be installed at Calais and the UK Government had not secured this live-export ban in law, the trade could resume via the same vessels and routes that were being used before January 2021. Additionally, while commercial ferry companies currently do not accept the transportation of live animals for slaughter or fattening overseas on sailings across the English Channel, there is nothing in law to prevent them changing that position. Another scenario is that an individual or company could charter a vessel to operate between Scotland and Northern Ireland. This would allow the trade to resume via Ireland, where there is then a large onward trade to the rest of the EU and beyond.

The Bill is designed to prevent this from occurring, and we support that. The noble Lord, Lord Dodds, the noble Baroness, Lady Hoey, and my noble friend Lady Ritchie of Downpatrick have talked about the impact on Northern Ireland and how the Bill relates to Northern Ireland and the Republic. I am interested to hear the Minister’s response because these are legitimate questions and concerns for ensuring that this legislation operates as we hope.

The noble Baroness, Lady Hodgson, made the important point about keeping a close eye on imports, as did other noble Baronesses. The noble Lord, Lord Carrington, talked about farming concerns, and the NFU has raised concerns about trade negotiations with countries that export large numbers of animals for fattening and slaughter. It is very important that British livestock farmers are not undercut by imports that do not meet the same high standards that we adhere to in this country—the right reverend Prelate the Bishop of St Edmundsbury and Ipswich talked at length about this. I am sure I do not need to remind the Minister that we signed trade deals not very long ago with at least one country that does not have standards compatible with this proposed legislation. For example, Australia still permits the live export of animals over long distances, including overseas. Lower animal welfare standards should not be imported, and we should be using our influence to drive up standards in the countries with which we do trade deals.

Poultry has been mentioned by a number of noble Lords, but poultry and rabbits are excluded from the Bill. We know that they are highly sensitive to the effects of heat stress; rabbits and poultry were the most frequently exported animals pre Brexit, particularly the trade in day-old chicks, which we have heard about during the debate, and neither is any more resilient to transportation than any other animal. The noble Baroness, Lady McIntosh of Pickering, asked about the exclusion of poultry from the Bill; if poultry and rabbits are not included, it is important that we have very strong assurances that any cross-border trade from Britain in day-old chicks and rabbits will meet strict transport and animal welfare standards. The noble Lord, Lord de Clifford, talked about standards during transport, and it is important that we have those strong reassurances, and that proper checks are done, so we can feel that any people who break those standards are held to account.

Finally, I will briefly mention horses. World Horse Welfare recently drew the attention of the EFRA Select Committee to the huge numbers that are still illegally exported to Europe, under the guise of sport, competition or breeding, where they end up being slaughtered. I wonder whether the Minister is aware of this practice because if transport for breeding and competition is allowed, it is important that it does not open the door to such illegal practices. Are the Government intending to tackle this as part of implementing the Bill into law? It is really important that this is stopped. I also support my noble friend Lady Young regarding the opportunity to add further animals into the Bill as an amendment to cover any future issues. It is important that the Bill is as solid as it possibly can be, and there are always changes in the future that we need to manage as we go through legislation.

In conclusion, banning live export for fattening and slaughter has been both a Labour and Conservative manifesto commitment—and of other parties as well—so we strongly support the Bill. We want to see it get Royal Assent as soon as possible, so I hope that, in a general election year, the Government will treat this as a priority, because we cannot afford to risk it being lost.

My Lords, I thank all 14 noble Lords and noble Baronesses who have spoken for their thoughtful and constructive comments, and in particular those, beginning with the noble Baroness, Lady Young, who congratulated me on my appointment and my first Bill. It is a pleasure to have delivered such a happy birthday present to my noble friend Lady Fookes.

As we have heard, the Bill will end the unnecessary export of livestock and horses for slaughter and fattening, and prevent the associated stress, exhaustion and injury caused by these journeys. It signals to our international partners our firm commitment to improving welfare standards for all kept animals, reinforcing our position as global leaders on this important issue. Many animal welfare groups, as well as a number of parliamentarians, have called for this ban on live exports. We know that there is also huge public support for this measure. There is clear and broad recognition that we must end these unnecessary journeys.

Before I address a number of the specific questions, I will briefly touch on two things. The first, from the noble Baroness, Lady Bakewell, is the bluetongue virus, which is very current. I do not have a timeframe for when this restriction will be lifted, but I will get back to her as soon as I do. The second, from the noble Baroness, Lady Hayman, is the welfare of animals during a transport delay. I will write and confirm the exact details of how they are looked after and how we address this issue.

I turn now to the questions asked by noble Lords. The noble Baronesses, Lady Young and Lady Jones, my noble friend Lady Fookes and many others queried why other species were not within the scope of the ban. I assure them that the Bill’s definition of “relevant livestock” covers all species for which there has been a significant slaughter export trade, which the Government consulted on in 2020. In the 10 years prior to EU exit, the live export trade for slaughter and fattening mainly involved sheep and unweaned calves.

Compassion in World Farming and the RSPCA, both leading campaigners on banning live exports for the past 50 years, agree that the Bill covers the relevant species to end this unnecessary trade. Responding to proposed amendments in the other place, Compassion in World Farming said that it is not aware of any alpacas, llamas or deer being exported for slaughter, and the RSPCA said that only sheep, calves and horses have been exported from Britain for slaughter over the last 10 years.

The issue of small abattoirs was raised by the right reverend Prelate the Bishop of St Edmundsbury and Ipswich, the noble Lords, Lord Carrington, Lord Trees and Lord de Clifford, the noble Baronesses, Lady Hoey, Lady Bakewell and Lady Hayman, and my noble friend Lady Hodgson, so it was a popular subject today. Many asked what further financial assistance there is for small abattoirs and what work we are doing to promote and market sheep products, particularly in order to develop our meat export trade. The farming investment fund has offered access to financial support to establish new producer-led abattoirs. Now that the first round is closed, we will assess how the scheme has performed and will investigate the potential launching of a second round later this year. The Government are working with the Agriculture and Horticulture Development Board and industry to help secure market access for world-class British red meat and dairy, empowering our exporters to maximise opportunities on the global stage.

The noble Lord, Lord Trees, queried whether Northern Ireland could be used as a loophole for transporters wanting to export livestock for slaughter and fattening. I assure him that the requirements when moving animals to Northern Ireland would make such a slaughter trade uneconomic. Livestock transported for slaughter from Great Britain to Northern Ireland must go directly to the slaughterhouse. It would be an offence to take them anywhere else. When livestock are moved for other purposes, they must be moved directly to the holding destination and remain there for at least 30 days. Failure to do so is an offence and may result in prosecution. We will also continue to monitor volumes over the next few years as this policy takes effect.

The Minister rightly said that, in theory, anyway, the 30-day period stops in respect of transportation from Great Britain to Northern Ireland. But what about all the animals in Northern Ireland that will not be affected by that limit, and that will go to the Republic and down to Rosslare, and on a long journey to France and then Morocco?

The noble Baroness makes a very good point. Once animals have passed into the Republic of Ireland, that is outwith the jurisdiction of the Bill. That is the current position.

I would like to address the issues eloquently described by the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, concerning Northern Ireland and the Bill. I hope they will appreciate that I am somewhat constrained in this respect. Perhaps I might write to them separately on the issues they have raised.

The noble Lord, Lord Dodds, raised the question of negotiations with the EU on veterinary medicines going into Northern Ireland. The Government are committed to seeing a long-term, sustainable solution ahead of December 2025 that will properly support the flow of veterinary medicines into Northern Ireland from Great Britain on an enduring basis. It remains our priority to find a solution, through technical talks with the EU, that removes the barriers to supply of veterinary medicines into Northern Ireland. The Government are very clear that, in all scenarios, it is imperative to safeguard the supply of veterinary medicines into Northern Ireland. If necessary, we will deploy all available flexibilities in line with our legal obligations.

The noble Lord, Lord Carrington, and the noble Baroness, Lady Hayman, asked about the impact of this legislation on farmers and businesses. The current position is that we expect the ban to have minimal impact. We published an impact assessment in 2021, which can be accessed via the Bill’s Explanatory Notes. We estimated the direct cost to businesses of ending live exports to be around £5.2 million across the 10-year appraisal period, or around £500,000 per year. As there have been no exports for this purpose since 2020, the impact will have further decreased.

My noble friend Lady McIntosh, the noble Baroness, Lady Young, and the noble Lord, Lord Carrington, also asked about border control posts on the northern coast of France. EU border control posts can be operated only with the approval of the competent authority in the relevant EU member state. The majority of BCPs are privately operated, and the main barrier to date for the establishment of a BCP for livestock is the commercial viability of such a site. We have encouraged our counterparts in France to do more to support commercial efforts to construct and operate a BCP for livestock, and we continue to engage with them to try to resolve this issue.

My Lords, may I press my noble friend on that point? Across the European Union, most ports are owned by the state. Is there any wriggle room whereby my noble friend and the Government could ask the Government of France to look into providing some sort of help? It looks like a rather protectionist measure as it stands.

I understand my noble friend’s point. I assure her that our officials are working very hard on this issue, but it is not going at pace at the moment.

My noble friend Lady McIntosh also asked why the Bill had been brought forward, given that there are other issues facing our farming sector. It is important that we put a permanent end to this unnecessary trade. Although there have been no exports of livestock for slaughter recently, given that there is demand from the EU for sheep from Great Britain, we would expect that trade to restart in the future if we did not legislate to ban live exports now. She also asked whether there were any plans to introduce a corresponding ban on animals imported for slaughter and fattening. There has never been a particularly significant import trade for either: for example, in 2019, only 91 cattle and 178 sheep were imported for slaughter or fattening from mainland Europe.

The noble Baronesses, Lady Bakewell and Lady Hayman, reflected on the Government’s broader animal welfare commitments. I take this opportunity to reassure them that we remain committed to our other animal welfare manifesto commitments, which are to crack down on illegal puppy smuggling, ban the keeping of primates as pets, and prevent livestock worrying.

On the question that the noble Baroness, Lady Hayman, raised on poultry, when we consulted on banning live exports for slaughter or fattening, we were clear that we were not proposing to extend the ban to poultry. There have been no exports of adult poultry for slaughter in recent years. I appreciate that the poultry industry and breeding companies export around 25 million day-old chicks every year, but no welfare concerns have been identified with this practice.

I once again thank all those who have spoken for their thoughtful and valuable comments. It has been hugely encouraging to hear the broad consensus throughout the debate on the importance of protecting and enhancing the welfare of the animals in our care. It is also clear that we can agree on the core aims of the Bill.

Bill read a second time and committed to a Grand Committee.

UK Economy

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 19 February.

“High inflation remains the biggest barrier to growth, which is why halving it is still our top priority. Thanks to decisive action supported by the Government, inflation has fallen from over 11% to 4%. The Bank of England is forecasting that it will fall to around 2% by early summer, in only a matter of months, which is much faster than previously thought.

It is important to put all this in context. Just over a year ago, the Bank of England was forecasting the longest recession in 100 years. That has not happened, and the British economy has proved resilient in the face of unprecedented shocks. Forecasters, including the Bank of England and the International Monetary Fund, agree that growth will strengthen over the next few years, with the IMF forecasting that we will grow faster than Japan, Germany, France, Italy and many others, on average, over the next five years. Wages have been higher than inflation for six months in a row, unemployment remains very low, and we are backing British business by delivering the biggest business tax cut in modern British history and rewarding work by cutting taxes for working people.

These are all reasons to be positive about the economy turning a corner. If we stick to our plan, we can be confident of seeing pressures reduce for families and of achieving healthy economic growth. At the Autumn Statement, we unveiled 110 growth measures, including unlocking £20 billion of business investment. This includes a substantial labour market package, delivering a tax cut to national insurance for 27 million people, as well as reforming pensions and extending investment zones. The real risk to economic growth and prosperity in this country is the fact that the Labour party has no plan for growth—no plan at all. While they may pretend that they have abandoned their £28 billion pledge, they are still committed to their damaging 2030 energy policy, which, as the leader of the Opposition has said, costs £28 billion. All of us across this House know what that means: higher taxes and lower growth with Labour”.

My Lords, the UK’s growth forecast was recently downgraded for every single year for the next three years. Debt is set to surpass £3 trillion for the first time ever. We are seeing the biggest ever fall in living standards and the tax burden is set to reach its highest ever level. Now, the ONS has confirmed that Britain has fallen into recession, with GDP per capita falling in every single quarter of the past year. Yet the Chancellor says, “Our plan is working”. Was it part of the Government’s plan, having spent 14 years in the economic slow lane, to now put our economy into reverse?

I absolutely believe that our plan is working. It is critical that we continue along the path that we have set out. One of the biggest challenges we have faced in this country over recent months is high inflation. That is the biggest barrier to growth and that is why halving it is still our top priority. Thanks to decisive action, supported by the Government, inflation has fallen. If one looks at what happens when inflation falls, one sees that interest rates can also fall, which will also mean that growth will begin to rise. The noble Lord mentioned growth. It is the case that the Government have very clear policies for growth. Noble Lords will discuss them with me shortly, as we debate the Finance Bill.

My Lords, the Resolution Foundation has reported that GDP per capita is now 4.2% below its path before the cost of living crisis. That is the equivalent of a loss of nearly £1,500 per household. The OBR has said that we are set to see the biggest fall in living standards since 1950. Do the Government understand that, for ordinary people, their plan is delivering real day-to-day pain and often deprivation? Nothing she has said or proposes to do changes that, as she will see if she looks at the forecasts.

What is absolutely clear is that the forecasts show that the UK is forecast to grow, and very strongly. The IMF has forecast that we are to grow faster than Japan, Germany, France and Italy over the next five years. I absolutely accept that the economy has seen some very significant challenges over recent years, with global instability in Ukraine and in the Middle East, and the legacy of Covid. I was a Minister throughout that period, and at no time did I ever hear any ideas from the party opposite or the Liberal Democrats that would have put the economy in a better situation than it is in now. They called always for more spending, for longer periods. We must fix the issues that appeared, mostly due to external factors, which is exactly what we are doing. The economy is turning a corner—indeed, it has turned a corner, thanks to our decisive action.

My Lords, the Minister referred to global headwinds. Would she accept that an economy such as the United States has experienced exactly the same headwinds? Instead of opening our newspapers and reading that the Chancellor intends to give enormous universal tax cuts on 6 March, would it not be more sensible for the Government to acknowledge that the people who are hurting the most from the cost of living crisis are the people at the bottom lower income deciles? Those are the people who should be targeted for assistance if there is any money going.

Obviously, I cannot comment on any potential tax cuts. I am sure the noble Baroness will agree that the US has a very different economic structure from the UK and tends to offer slightly less support to those at the bottom end of the ladder. She mentioned those who are the most vulnerable. Personal allowances have gone up by 30% in real terms than in 2010. That means that 30% of people now pay no tax. We are focusing our interventions on people at the lower end of the income scale, but we are also focusing them on growing business.

Would my noble friend agree that comparisons with the United States are not really appropriate, particularly given cheap energy costs in the States due to fracking, which we do not have? It might be better to compare us with European countries. Since 2010, the UK has had the fastest growth of any European G7 country—faster than Italy, Spain, Germany and France. Will she welcome today’s news that the budget surplus for net borrowing, excluding banks, shows a surplus for January of £16.76 billion, and today’s announcement that the UK purchasing managers index rose in January to 52.9? Rather than knocking the economy, let us celebrate the good news.

I agree with my noble friend—let us celebrate good news, and I believe there will be more good news to come. He mentioned debt. It is fair to reassure noble Lords that we are on track for debt to fall as a share of the economy. Public sector net debt as a percentage of GDP is expected to fall next year to the end of the forecast. If one were to exclude Bank of England debt, it will fall in the final year, and public sector net borrowing as a percentage of GDP is forecast to fall every single year. We also have the second-lowest debt as a share of GDP in the G7.

My Lords, the Minister talked about curbing inflation. The Government have a very strange policy. I characterise it as somebody who has an ailment and goes to see their doctor, who dusts off a 100 year-old book in which, regardless of the reasons for the ailment, the answer is the same remedy. Whether inflation is caused by wage rises, inequalities or profiteering, it is the same policy: we must increase interest rates and force ordinary people to hand over their wealth to the banks. That is no policy, because it causes other ailments. Will the Minister tell us what other ailments have been caused by this remedy adopted by the Government?

As the noble Lord will know, interest rates are just one of the levers that the Bank of England has to influence inflation. The Government can also play a key role in tackling inflation —for example, by ensuring that public sector pay awards are kept within reasonable bounds.

Can I have another bite here? The Minister said that public sector wages are within reasonable bounds, which suggests that the Government think wage rises are inflationary. But that does not apply to executive pay, profiteering, dividends or share buybacks—are they not inflationary as well? If they are, why are the Government not curbing them?

The noble Lord well knows that inflation is caused by a vast amount of different factors. When we announced our interventions at the Autumn Statement, the OBR said that they were not inflationary. That is another way in which the Government put downward pressure on inflation. As we have seen, the proof is in the pudding; we have gone from 11% in October 2022 to 4% in January 2024.

My Lords, I am glad that the Minister feels encouraged by the latest figures. Can she understand why some people who have inflated mortgages feel they have them because of the antics of Liz Truss and Kwasi Kwarteng—which is admittedly not the responsibility of the noble Baroness?

As the noble Lord will be aware, the reason interest rates are particularly high is to control inflation. The Bank of England now expects inflation to get back to the target of around 2% in the early summer. If that can happen, then of course interest rates would be able to come down.

Will my noble friend consider a longer-term anti-inflationary policy such as ensuring that the Monetary Policy Committee of the Bank of England, and the governor, build into their forecasting model a measure to take account of the growth in money supply each year?

Does my noble friend agree that it is highly complimentary to Liz Truss and Kwasi Kwarteng to suggest that their actions are responsible for interest rates in every country around the world, which are broadly comparable to ours?

As I think I said earlier on in answering this question, all sorts of countries have faced the challenges that the UK has. There have been a number of countries, over the second half of 2023—either in Q3 or Q4—that saw a small technical contraction in their economy. Andrew Bailey, the Governor of the Bank of England, believes that the technical recession may already be over. I expect us to return to growth very soon.

Finance Bill

Second Reading (and remaining stages)

Moved by

My Lords, it is a pleasure to open this debate on the Finance Bill. As I explained during a memorable debate in your Lordships’ House last year, the Autumn Statement was designed with three purposes in mind: “to drive growth” across the economy, to create jobs, and to ensure that hard-working people can keep more of what they earn.

As many noble Lords will know, since the beginning of 2023 we have been working on five priorities. Three of those priorities are economic: to halve inflation, grow the economy and reduce the national debt. I will outline our current economic picture in more detail shortly. A year on from when we set out these priorities, I am pleased to report that there has been some significant progress.

Inflation has fallen from 11.1% to 4%, and this has led to two positive outcomes: wages are rising faster than inflation, and mortgage rates are starting to come down. On growth, like some other similar economies, the UK faced challenges at the end of 2023, but overall the economy was larger at the end of the year than at the start. The Bank of England and the IMF forecast growth to increase over the next few years. Finally, our national debt is on track to fall as a share of the economy.

The Government proposed at the Autumn Statement to put money back in people’s pockets, cut taxes and “back British business”. That is why the National Insurance Contributions Act has reduced national insurance from 12% to 10%, delivered a tax cut for 29 million working people, and saved the average worker £450 a year. But I recognise that times are still far too tough for far too many. That is why we need to stick to our plan, so we can deliver the long-term change our country needs to deliver a brighter future for Britain, and improve economic security and opportunity for everyone.

As part of delivering our broader long-term plan, we need to deliver our Autumn Statement commitments. This Finance Bill does exactly that. First, it will support British businesses by allowing them to invest for less. Secondly, it will support employment, by ensuring that hard work pays, through reforms to our pensions system. Finally, its measures will improve and simplify our tax system, ensuring that it is fit for purpose. Indeed, the Finance Bill covers 36 different measures in total, some more technical than others.

Before I delve into the specifics of these measures, I will first outline some of the economic context behind this Finance Bill. As noble Lords will be aware, inflation—and the subsequent impact on the cost of living—has been the Government’s key challenge since Vladimir Putin’s illegal invasion of Ukraine in 2022. Therefore, it is significant that, as I noted previously, inflation has more than halved, from 11.1% in late 2022 to 4% in February. Our key priority remains getting inflation back to the 2% target, to drive sustainable growth. The recent GDP figures are a reminder that, while inflation has more than halved from 11% to 4%, wages are rising, mortgage rates are falling and taxes are being cut. But we are not out of the woods yet; there is more to do. The OBR has projected that the 2023 Autumn Statement policies will have “lasting supply-side effects”. Combined with policies from the Spring Budget in 2023, this approach will permanently boost output by 0.5% by 2028-29.

I will now outline the measures in the Bill which will back British business, reward work, and support a modern and simpler tax system. I turn to the suite of measures to back British business. First, we will make full expensing permanent, thus allowing businesses to invest for less. As a result, firms will save £10 billion a year—the most generous plant and machinery capital allowances of any major economy. This will drive 0.1% GDP growth over the next five years, and that number will increase to 0.2% every year over the longer term. It is forecast to unlock an additional £3 billion of investment per year.

The Government’s second measure recognises the importance of research and development. R&D is important because of its dual role: driving economic growth and bringing benefits to wider society through innovation. Therefore, we will merge two government programmes: the R&D expenditure credit scheme and the small to medium-size enterprises scheme. This will have two key impacts: it will simplify the system and provide greater support for UK firms to drive innovation. These changes will apply from 2024 onwards. I note that the Government have consulted widely on proposed changes to the R&D tax credit system over a considerable period. We have decided to proceed with an April 2024 implementation date to move the system to a more stable footing at the earliest opportunity.

In the Bill we have gone even further, by introducing greater support for loss-making R&D-intensive SMEs. In addition, we will also lower the R&D intensity threshold required to access this support to 30%. As a result, around 5,000 extra SMEs will now be covered by the support and will receive £27 per £100 of qualifying R&D invested.

I note that noble Lords on the Economic Affairs Finance Bill Sub-Committee want us to simplify this scheme further by bringing it within the merged scheme at a higher rate of relief. It is worth being aware that the intensive scheme will share many of the merged scheme’s rules, including on subcontracting, albeit with a different rate mechanism given that the merged scheme is above the line. While there is potentially an option to simplify in the future, further work is needed to establish how that would operate while still targeting the scheme effectively.

These measures will significantly increase support to firms’ R&D efforts by about £280 million per year by 2028-29. We will also extend the sunset clause for two more programmes: the enterprise investment scheme and the venture capital trust scheme. Both will be extended to 6 April 2035, providing support to young companies in their endeavours to raise capital.

The UK’s creative industries grew 1.5 times faster than the wider economy between 2010 and 2019. It is therefore right that the Government offer them their fullest support. That is why we will reform tax reliefs to refundable expenditure credits for the film, TV and video games industries. In addition, we have designed targeted measures to boost investment in three areas: animated film, animated TV and children’s TV programmes. These areas will now be eligible for a 5% uplift in tax relief to a 39% credit rate.

This Government believe that hard work must be appropriately rewarded. That is why we are using this Bill to legislate for the abolition of the lifetime allowance. The OBR estimates that this will retain 15,000 workers annually in the UK labour market. The British Medical Association described it as

“potentially transformative for the NHS”,

because many of the individuals will be highly skilled, including senior doctors. We will effect this transformation with the right incentives. The removal of pension tax limits will motivate individuals to work harder for longer so that they can reap the rewards in future years.

Finally, I turn to measures in support of the third objective of our Finance Bill, a simpler and modernised tax system. This Bill, as I previously mentioned, makes full expensing permanent, which is a huge simplification for larger firms, but we are also supporting more than 4 million smaller, growing traders by expanding the “cash basis”. This will simplify the process for them to calculate their profits and pay income tax. We have closely consulted industry and, as result, the Government will legislate to remove three of the main restrictions on using the cash basis, completely removing limits on the size of businesses able to use the basis, interest deductions and the loss relief available.

We must also make sure that HMRC delivers on its strategic objective to collect the right tax at the right time. The Bill will deliver this by enabling HMRC to reduce the off-payroll working PAYE liability of a deemed employer which is responsible for ensuring that PAYE is calculated and sent to HMRC correctly. This will apply where that engagement was incorrectly treated as self-employed for tax purposes.

Of course, we need to ensure that UK plc is following, adopting and influencing developments on taxation on the global stage. That is why in the spring we legislated to implement OECD pillar 2 in the UK. This built on a historic international agreement to a two-pillar solution to the tax challenges of a globalised digital economy. This Bill goes on to make technical amendments to the main pillar 2 rules, as identified from stakeholder consultation, and ensures that the UK remains consistent with the latest internationally agreed guidance.

We will also take forward other technical measures, such as improving the data HMRC collects from its customers. These will result in a trusted, modern tax administration system. However, a simple, modernised tax system must also be fundamentally fair. Therefore, this Bill will create a criminal offence for promoters of tax avoidance specifically where persons continue to promote a scheme after the receipt of a stop notice. The Bill will also ensure that HMRC is empowered to respond more quickly to tackle promoters of tax avoidance. It will do so by introducing a new power for HMRC to bring disqualification action against the directors of companies involved in promoting tax avoidance. The scope of that power will include being applicable against those who control or exercise influence over a company.

Further to that objective of fairness, our next measure under this objective will amend the construction industry scheme to reduce the scope for tax fraud in that industry. To do so, the amendment will add VAT to the gross payment status test. This means two things: VAT compliance will now be checked as part of this process and HMRC powers to remove gross payment status will be enhanced. We will also legislate to confirm that, in line with the retained EU law Act, where UK law is incompatible with EU law, UK VAT and excise law will prevail. This measure also ensures the stability of the VAT and excise regimes while providing legal certainty for business following the changes in the retained EU law Act taking effect. This protects billions of pounds for the Exchequer.

This Finance Bill delivers some of the Chancellor’s key announcements at Autumn Statement 2023. As I have set out, it backs British business, rewards hard work and supports a modern and simpler tax system. I beg to move.

My Lords, the Finance Bill gives us a chance to raise issues which others may regard as hobby horses but which I think are important topical, technical matters that are worth drawing to the Minister’s attention. I have two issues on my agenda. The first is the implications for recipients of the state pension of the Government’s policy of freezing income tax personal allowances and the second is the taxation of pension benefits following the abolition of the lifetime allowance.

Those with a very long memory will be aware that there is something called the Rooker-Wise amendment, “Rooker” being my noble friend Lord Rooker. Back in 1977, it was laid down for the first time in legislation that the personal allowance should be increased each year in line with inflation. I think that, technically, that is still in force, but successive Governments, including this Government, have opted out, through Finance Bills, of that requirement to index-link. My understanding —and I ask the Minister for confirmation—is that the freeze, which is now proposed to go up to 2027-28, was provided for in last year’s Finance Act and so there is no need for it to appear again in this Bill. Does that imply that the Government have given up on rolling forward the period for which the personal allowance will be frozen? It is shorter this year than last year. Is that a clear statement of policy or has it just been left out? We cannot forecast the Budget. Will we be told? Perhaps we will if it is not in the Budget and not in purdah. Does the freezing last only until the year that we were told it would be or is it going to be rolled forward another year?

That is very pertinent to the main point that I want to raise, which is the impact of freezing the personal allowance on pensioners, particularly those dependent mainly on the state pension. As we know, the state pension is being increased in line with the triple lock, to which all parties are currently committed, so it goes up by inflation, earnings or 2.5%, whereas the personal allowance is frozen. The new state pension is rapidly catching up with the personal allowance. My figures, based on estimates by the Office for Budget Responsibility, are that the new state pension will catch up with the personal allowance by 2027-28 and that in the following year, 2028-29, it will exceed the personal allowance.

The practical problem is that pensions are not part of the PAYE system. Where people receive a state pension—many pensioners receive a state pension that is greater than the new state pension because they have retained rights from the previous scheme—they will owe tax but are not part of the tax system. Instead, at the beginning of the following year they get a brown envelope in the post saying, “You owe us some money”. That is going to become more and more frequent as the state pension increases but the personal allowance is frozen.

I want the Government to say they are fully aware of this problem and are on the case. The obvious answer is that the state pension ought to be brought within the remit of the PAYE system so that people pay the taxes due over the year, as people do out of their earnings. However, I have not yet heard the Government say either that they understand the issue that is coming down the road or that they are going to do anything about it.

I emphasise that the hardest hit will be those earning income entirely from the state pension—maybe they do not have any other income or it is very small—that is slightly larger than the new state pension. We are talking £15,000 a year, which is not exactly riches. That is over £2,000 more than the personal allowance so they will be liable for 20% tax on that £2,000, which is £400. Someone on £15,000 a year is going to get a request for £400, to be paid as a lump sum. That is untenable. It will be a crisis when it arrives, and I just hope the Government can get ahead of the issue.

I turn to pensions taxation. Clause 14 and Schedule 9 deal with the abolition of the lifetime allowance charge. The Financial Secretary said in the Commons, when introducing the Bill, that this was intended as part of a policy to

“remove both barriers to work and incentives not to work”.—[Official Report, Commons, 13/12/23; col. 925.]

Those remarks were echoed by the Minister in this House. Indeed, the OBR estimated that the abolition of the lifetime allowance would mean there would be 15,000 more people in work, not least in the medical profession. That is an estimate based on behavioural change so we have to be a bit sceptical, but still it will have had an impact.

However, the Government have been too quick to congratulate themselves on solving the problem of pension taxation on highly skilled professionals, given the extent to which they will still be leaving their jobs because of the impact of the pension tax system. In my view, the annual allowance has always been the bigger problem. Particularly when someone is at work, the annual allowance means that early the following year they get another brown envelope relating to a significantly larger sum of money, saying, in some cases, “You owe a sum in excess of £100,000”. That is not unknown, so this is a serious issue. The Government may think they have addressed that because they have increased the annual allowance from £40,000 to £60,000, but still on £60,000 there will be highly paid, sorely needed professionals who will get a tax charge the following year.

That is not even the biggest problem. There are two further immediate problems. First, there is the taper. This is not the venue to start explaining the technical details of pension taxation, but the taper withdraws the relief available on the annual allowance as incomes increase. It is a classic case of something that those familiar with how taxation works will know: when you remove a taper, you get very high marginal rates. There is a taper on the tax payable after allowing for the annual allowance. The taper is still there, and some professionals argue that that is actually what is driving them out of employment.

There is a second issue that needs to be addressed. The rules have changed. You are taxed on the growth of your pension in a pension scheme. If you have two schemes, under the previous rules each pension scheme was taken separately. If you happened to be in an old pension scheme, which many doctors were, as well as in a new pension scheme because of all the changes that were made to pensions in 2015, you could have a declining value of a pension in one scheme but an increase in the value of the pension in the other. Overall, you would not really have gained much at all, but you were still taxed on the increase in the one scheme even though you were not getting any extra pension.

The Government addressed that, so you were allowed to combine your schemes from the same employer, but there is an issue they have not addressed: if your pension went down last year, you get no credit for that if your pension goes up the following year. So over a two-year period there might be no change in your pension, but you still have to pay tax on the value of the increase of that pension the following year.

Those are the two issues that I have taken the opportunity to draw to the attention of the Minister: the taper and the taxation of negative pensions growth.

My Lords, it is a pleasure to follow the noble Lord, although I cannot say anything technical like he has. The Bill is coming before us far too late to really matter. I know we cannot amend money Bills and so on, but it would have been better had it come after it originally appeared in the Commons.

I have two observations. First, there has been a lot of effort in the Finance Bill, and by the Government generally, to emphasise tax cuts, especially tax cuts on business corporations. As an economist, I know, and it is very easy to show, that tax cuts do not actually encourage investment in a country. Whatever the corporations do, they do not plough it back into investment. Investment depends not on that sort of consideration but on expectations about growth.

What has happened here for the last 15 years is that we have had a number of corporation tax cuts and so on, but the economy has not grown. We have had one of the lowest growth experiences in the last 15 years, roughly since 2008. The Government really ought to think seriously about that, because I know that more tax cuts are promised in the forthcoming Budget. Indeed, the Chancellor is always trying to reassure people that he will find money somewhere—I do not know where—to make tax cuts. Basically, the borrowing rates on government debt are high right now because again and again there have been promises of tax cuts that have alarmed the markets. When the Liz Truss tax cut in particular was announced, it spooked the markets very much and put a lot of pension funds in trouble.

My one piece of advice is: please be careful and do not get mixed up in the idea that tax cuts somehow bring growth. They have the opposite effect from what people think they do. The recession that we have recently experienced, while it was a mild one, shows that all the talk of tax cuts ought to stop. We ought to make quite sure that we reduce our borrowing and enhance other taxes that are not efficiently imposed.

Secondly, there is one major thing, which we have seen the proof of in the Prime Minister and the leader of the Opposition releasing news on their taxes. This showed one major defect in our tax system: that we tax capital gains at a much lower rate than we tax income. That is not healthy. All economists would tell us that we ought to treat income from earnings and from capital gains in a symmetrical way. If we did that, we would increase our tax revenue and reduce our deficit.

My Lords, it is always a great pleasure to follow the noble Lord, Lord Desai, even though I do not agree with much of his analysis. In particular, I cannot understand why he thinks that if one takes a risk and invests capital, the rewards should be taxed at the same rate as banking a salary and working at a desk. They are two different sources of income and wealth, and therefore deserve different tax treatments, but I admire the way that he speaks so eloquently and without any notes on every occasion. I can only aspire to that.

I refer to my register of interests and remind your Lordships that I am chairman of the House of Lords Economic Affairs Finance Bill Sub-Committee, to which my noble friend alluded earlier. This sub-committee looked at the Bill with great interest and our report was published a couple of weeks ago, on 1 February. As I think this is the only time that the report will be mentioned in the House, I use this opportunity to thank the committee members, the clerk, his assistants and colleagues and, in particular, the two spads for their hard work in turning it around and delivering it in record-breaking time; as the noble Lord, Lord Desai, indicated, there was a crunch, because it followed the Autumn Statement.

The report focused on a few main areas. The main one was research and development, where we followed up on last year’s report and were pleased to see that the R&D review is now complete. We recommended that His Majesty’s Government do not make any further changes to R&D tax relief, other than some simplifications that we recommend. As my noble friend said, research and development is incredibly important to the UK economy. It is pleasing to note that gross domestic expenditure on R&D has risen from some 1.5% in 2010—to take a date at random—to nearly 3% now.

The new R&D intensive scheme needs careful monitoring and the threshold, which is a cliff edge, should be kept under review. We called for draft guidance on applying that test, as it is difficult for companies to predict whether they are going to be intensive companies. As my noble friend indicated, it is possible that the new intensive scheme will be merged with the main scheme. We hope that HMRC will enter into consultations on this issue and possibly delay its implementation until those have taken place. We also had quite a lot to say on the thorny issue of subcontracting of research and development where, in summary, we think a transitional period might be required, although we accept that this has its own challenges.

Another area we were concerned about was the changes proposed on how HMRC will collect data on issues such as hours worked. This is something different: HMRC has never collected data on anything other than tax before. We are not even sure that the Taxes Management Act allows it to do this, so we are concerned to know why it needs that data and what will be the true cost to business in supplying it. This is largely data on hours worked: HMRC has recognised that this would be difficult, so has turned it into data collection on hours paid, but we are still not convinced about the need for it.

We welcomed further attempts to punish promoters of tax avoidance schemes but have asked for some safeguards, particularly in respect of what are called stooge directors. These are people who get persuaded to become a director of a company and do not realise that the company is being used for tax avoidance, but we are not convinced that increasing prison sentences is necessarily always the answer.

Finally, in respect of our report, we were concerned about the level of resources that HMRC deploys for customer service. One obviously accepts that this is an issue across government. We recognise that steps are being taken to improve this issue—which, in my personal opinion, is not helped by civil servants working from home, but that is a wider governmental issue.

As your Lordships will appreciate, my comments are just a taster of our full report of 150-odd pages. However, this shows that our House not only gets to debate the Bill for a day but offers proper scrutiny of legislation—even if, as the noble Lord, Lord Desai, said, we cannot change it. But we are able to produce these reports, which we hope are used by Members in the other place to amend legislation. It is a little disappointing that there are so few of us speaking on this important debate, despite the fact that it is an exceptionally august selection of Peers with great depth of knowledge on the Bill.

Aside from the sub-committee report, I would like to make some additional observations and I hope that my noble friend the Minister can answer some questions that I have. The first is on the EIS, SEIS and VCT areas which she mentioned earlier. I warmly welcome the extension of the sunset clause; I have been advocating for it for some time, as she knows. I know that I have been pushing against an open door with HM Treasury and that she is convinced that I am a minority sport player with too much detail. None the less, I have to say that Clause 11 is to be commenced only by regulation, as in its subsection (2). That is a little unusual and I suspect there is a reason for it. I wonder if it is to do with some wrinkle in the Windsor agreement that is not yet quite ironed out or if we do not have permission from the EU to implement it. If so, we need some clarity that we will get that permission, and to reflect on the fact that we are trying to do things here which we are prohibited from doing by the EU, and that does not sit comfortably, particularly as we should no longer be bound by EU state aid restrictions.

I hope that my noble friend can agree to a review of all the other restrictions on EIS, SEIS and VCT, because we need to create a low-tax, low-regulation country and shed as many burdensome EU restrictions which are no longer necessary as we can. Are we restricted from doing that because of Northern Ireland issues? EIS and SEIS are incredibly important. In the year to 2022, HMRC data shows that £3.4 billion was raised to invest in SME businesses—for thousands of companies, so let us see what more we can do to enhance that scheme.

I also welcome the great progress on pillar 2, which my noble friend mentioned. I know that pillar 2 is not popular with everyone but we are committed to do it, so let us push ahead. It is good to see the transitional undertaxed profits rule safe harbour regimes, in addition to the multinational and domestic top-up tax, which is all part of the OECD global anti base erosion tax rules. This is a very complex and difficult area, with pages and pages of legislation, but it has been going for some time. In fact, it was the subject of my maiden speech almost exactly 10 years ago. We are still not there, but let us hope that the Government keep going in the direction they have taken to date.

Finally, it is worth using this debate on our proposed fiscal changes to reflect on what has been the effect of this Government’s fiscal policies to date on the economy. It is worth noting, as I am sure my noble friend will agree, that it is not just that inflation is falling from 11% to 4% but about the rate of growth in our economy compared to our European competitors. We are the fastest-growing European G7 economy and, from 2025 to 2028, our debt will come down as a huge part of the share of GDP. It is initiatives such as reducing national insurance in the Bill, and of course specifically raising allowances, which have enabled average taxpayers to be some £1,000 a year better off than they would be if those allowances had not risen since 2010. To keep up our outstandingly successful record levels in FDI, while achieving the success we have had in becoming the third-largest tech sector in the world, we have to keep the drive up for lower taxation.

As I understand it, the only tax initiatives announced by Labour are to increase taxation, such as VAT on schools, income tax for non-doms and enhanced tax for carried interests. Perversely, all these plans to raise tax by seeking to penalise successful people will, in my opinion, only lower the tax take. The direction of travel we need to stick to is a lower tax take, and a smarter tax system which encourages investment and increases growth and productivity.

My Lords, it is always a great pleasure to follow the noble Lord, Lord Leigh of Hurley, even though I do not agree with much of what he said.

This Bill is a mishmash of policies that have already given us recession, poverty, stagnation, NHS queues, food banks, inequalities and crumbling public infrastructure. Building a just society does not seem to be on the Government’s agenda at all. The Bill continues with failed policies and somehow, different outcomes are expected, which will not happen.

Since 2010, the Government have showered tax reliefs on businesses, but we continue to suffer from chronic underinvestment. The Bill hands out tax reliefs in the form of 100% first-year capital allowances, in the hope that this can somehow increase business investment by possibly £14 billion within the forecast cycle, but that is in any case too little and is unlikely to be durable.

The major reason for low investment is that people do not have enough purchasing power to buy goods and services, and that dissuades businesses from investing. Just look at any town centre and you will see that it has become an economic desert, simply crumbling away. But the Government remain wedded to real wage and public spending cuts. The real average wage is now around the 2007 level; people have not got enough money to spend.

Following the Second World War, the state invested in new industries and took the long-term risks the private sector simply was not willing to take. It invested in new industries such as biotechnology, information technology and aerospace. However, the entrepreneurial state has now been replaced by a state that guarantees corporate profits through subsidies, cash handouts and the exploitation of people and the natural environment. The result is record corporate profits and low investment in productive assets. According to the OECD table, the UK occupies the 35th spot out of 38 countries in the league for investment in productive assets. That position will not change until the state resumes its entrepreneurial role, directly invests in new industries and infrastructure, and ensures that the masses have sufficient purchasing power.

The Government offer nearly 1,140 tax reliefs but have no idea of the total cost. Little is known about the macroeconomic benefits of handing out vast amounts of tax reliefs. The Bill hands out generous research and development tax incentives to creative industries, which will be welcomed by many. Accountants would happily reclassify some business expenditure as R&D and claim higher tax relief. The National Audit Office laments that the tax reliefs for R&D routinely exceed the UK’s actual R&D expenditure. I hope the Minister will be able to tell us why.

In handing out generous tax reliefs, the Government should also ensure that the resulting profits are taxed in the UK. Oil and gas companies get generous tax reliefs, but their profits are not necessarily taxed in the UK. I worked as an accountant in our oil companies, and I am quite familiar with how transfer pricing works. The Government ought to look at that to see where the profits end up.

James Bond movies are made and marketed through a labyrinth of opaque offshore entities. UK government money is given to make those movies. E.ON, the company behind the James Bond enterprise, received £30 million for “Spectre”, £47 million for “No Time to Die”, £24 million for “Skyfall” and £21 million for “Quantum of Solace”. However, E.ON declares tax losses in the UK and very little of its profit is taxed in the UK. Despite receiving £120 million of subsidy, E.ON has been paying less than £500,000 a year in UK corporation tax. Can the Minister explain why there is no comprehensive programme of tracking benefits of tax reliefs, or for ensuring that the resulting profits are taxed in the UK?

The Government make lots of claims about curbing tax dodges, but they are soft on the enablers. If the Minister disagrees, she is welcome to tell the House how many partners of big accounting firms have been investigated, fined or prosecuted for selling unlawful tax avoidance schemes. Hopefully she can name one or two; that would suffice.

An estimated £570 billion of UK wealth is stashed in tax havens. There is little effective check on profit shifting through intragroup transactions to low or no tax jurisdictions. Despite promises, the Government have failed to publish an estimate of what is called the offshore tax gap. Civil investigations opened by the offshore, corporate and wealthy unit, part of HMRC’s fraud investigation service, have declined from 1,417 in 2018-19 to only 627 in 2022-23. This reduces any faith in the measures contained in Part 3 of the Bill.

Tax policy for the last 14 years has become a circus under this Government. There is no sensible debate of what or who ought to be taxed, and at what rate, to shape what kind of society. Special low tax rates are enacted for the rich because they fund political parties, or simply because they demand it. Prime Minister Rishi Sunak paid tax of £508,308 on an income of just over £2.2 million, which is an effective tax rate of 23%. That is the tax rate faced by somebody on a wage of around £30,000 per year.

As I said earlier, no attention is paid to building a fair and just society. The reason why the Prime Minister’s tax bill is so low is that the capital gains accruing to him are taxed at 10% to 28%, while workers’ wages are taxed at 20% to 45%. Workers pay national insurance, but beneficiaries of capital gains pay zero national insurance. Indeed, under the Government’s rules, it is possible to pay a tax rate of only 10% on capital gains of up to £10 million. That does not seem fair to me at all.

The benefits of low capital gains tax are unevenly spread, unfair and create numerous inequalities. In 2020, just 0.5% of adults in the UK paid capital gains tax and benefited from this special regime. Capital gains tax payers are concentrated in London and the south-east of England. Notting Hill, with a population of around 6,400, has more than the combined populations of Liverpool, Manchester and Newcastle. You can see where these benefits are going.

The distortions also fuel a tax avoidance industry and rob the public purse. SME directors pay themselves with dividends rather than wages because that reduces their tax bill, as dividends are taxed at a lower rate than wages. The rich hire accountants to convert income to capital gains. Just think about the number of graduates finding jobs in the tax avoidance industry, which adds absolutely zero to the economy.

HMRC data shows that a quarter of people with an income of £2 million paid tax at an effective rate of less than 20%. One in 10 of those earning £2 million paid tax at an effective rate of only 10%, which is less than what someone pays on the minimum wage. This is an utterly unfair system and an unfair society, so can the Minister explain why someone making £2 million a year pays tax at a lower rate than somebody earning £15,000 a year? How is that consistent with claims of levelling up?

Finally, no child should go hungry, so I will suggest how the Government can fund free school meals for everybody: simply deal with one tax abuse, which arises from gift aid. If somebody gives £100 to a charity, that is obviously considered to be net, and the charity can claim £25, so it becomes £125 in the charity’s books. If the donor enters it on their tax return—many do not—they can also claim tax relief. A basic rate taxpayer will claim a tax relief of £20, but higher and additional rate taxpayers claim tax relief on that £100 at 40% and 45%. They are quids in—they are getting more because they are giving to charity. That does not seem fair. If tax relief on charitable donations was curbed at 20% for everybody, that would generate £740 million extra in tax revenues, which is quite enough to fund free school meals for everybody. Hopefully the Minister will say, “Yes, that will be in next month’s Budget”.

My Lords, as the first of the winding speakers, I will say I have some sympathy for the Minister, who has been hit with a wall of technical expertise that is probably not matched in almost any other sector of debate. I wish her great luck in answering the details.

I draw the Minister’s attention in particular to the comments of the noble Lord, Lord Davies of Brixton, on the pension allowance, because that issue is so mired in complexity, and the scheme needs complete reform. This does not really affect the private sector, which managed workarounds for this long ago; it is people in the public sector who are caught. The judges have been exempted, as the Minister will know—they have their own special scheme—but senior consultants, senior members of the military and some senior civil servants are caught up in this mess. A straightforward reform would be far more effective than this constant chipping away at the edges and getting it wrong, which is the pattern of the last few years.

This Government are, frankly, living in a parallel universe. The economy is in recession. Many people remain under crushing pressure from the cost of living. Real GDP per capita has fallen for seven successive quarters, and, as I mentioned during Questions earlier, according to the Resolution Foundation, that equates to a loss of nearly £1,500 per household. But, just as significantly, the fundamentals that power the economy and economic growth would, if they were put into a risk assessment analysis, be in the red zone for high risk. But the Government have not responded to this kind of risk and this element of real danger for the economy with a coherent strategy. They have failed to take the action that we need to achieve economic recovery and, frankly, to go out and talk more commonly with people on the doorstep, as I do. People have had enough.

The Autumn Statement of 2023, which sits behind this Finance Bill, is often described by the word “fiction”. The cut in the national insurance rate, which the Minister referred to, is in reality a small reduction in tax increases because of the effect of frozen thresholds. I am stunned that the Minister does not understand the impact of this threshold freeze and in fact suggested that thresholds had risen significantly. You would have to go back to 2010, but we are talking about our more recent period, which is what is impacting people. Frankly, if trading standards looked at the Government’s statements and flagged misleading claims from the Government the way it does with retailers, the Government would not be able to make those claims that the national insurance rate is actually a tax cut; it would be recognised as a reduction in a tax increase.

In evidence to the Economic Affairs Committee, the OBR’s chief executive, Richard Hughes, pointed to the fictional nature of the forecast headroom that the Government claimed in the Autumn Statement and I fear will claim again in the Budget. He explained that the OBR is required to use the Government’s assertions on future tax and public spending, even in the absence of either credibility or detail. I say to the noble Lord, Lord Leigh, who was talking about growth and debt reduction: go back and look at those comments from the OBR in detail.

No one believes that this is just one example, or that the fuel duty escalator—this is one of the tax examples—will be reactivated, but, without it, the tax revenue numbers in the forecast are nonsense. Look at the public spending forecast. Richard Hughes suggested that calling it “fiction” was “generous”. With fiction writers, he said,

“someone has bothered to write a work of fiction, whereas the Government have not even bothered to write down their departmental spending plans”.

Slashing future public spending continuously as a percentage of GDP, which is embedded into that forecast— it is required to be so by government—is either vicious or a con.

Every public service is in dire straits. I am not talking just about the NHS: schools face record deficits, local governments are slashing essentials, the police are short of capacity, prisons are bursting and, frankly, I could go on with every area of public sector activity. Investment in infrastructure, which is absolutely key to our economic future, has not been adjusted by a single penny for inflation, which surely is a recipe for economic self-harm.

We need to focus, with open eyes and real vigour, on economic growth. As we discussed in February, given our older population and its growing dependency, our shortage of working age population is becoming relentlessly more serious. Improving our skills base can help in some sectors, but it requires a revolution in the role of apprenticeships and a complete overhaul of the apprenticeship levy. The drag on our economy of our sick working age population—by percentage, the highest in Europe—requires us to revive the NHS, which is faltering on so many fronts, from GP appointments to long waiting lists. The Government are fiddling at the margins of these issues and not driving forward fundamental change.

A sustained and high growth in productivity is vital—a return to over 2% a year productivity growth instead of the current stagnation. This requires business investment, which continues to be painfully low and has been despite a decade of low corporate taxes—here I agree with the noble Lords, Lord Desai and Lord Sikka. Low taxes have not generated investment, and we have years of experience and evidence for that. I support the full expensing of measures in the Finance Bill, but the OBR figures show that its benefits are actually quite small, and the other measures on R&D and those for the creative industries are useful but, frankly, small fry.

The Government should learn from their own experiences. As I say, low taxes do not persuade businesses to invest, but a proper industrial strategy would attract investment. Policy certainty, instead of shifts in the wind, would attract investment. Reducing friction in our access to the EU market would attract investment. A focus on small businesses, including reforming business rates, would attract investment. In productivity terms, the Government have simply failed to take advantage of the digital revolution. Work practices have changed, but UK productivity has not benefited; it remains utterly stagnant. This Government will waste the potential of the AI revolution unless they change their mind and put in place a coherent strategy.

Trade growth is lacklustre. All the Government’s vaunted trade deals utterly fail to offset the 4% scarring of the economy from Brexit, and we now face the trade consequence of world tensions, anti-globalisation and security concerns, not least with China. I am always stunned when the Government talk about the great trade potential outside Europe—they are essentially referring to either China or countries that fall within the Chinese sphere of influence, where we have so many security and trade issues that looking for that as our rescue is, frankly, a very inadequate response.

Our national debt is running close to 100% of GDP. The OBR, if we take away the requirement that it must give this kind of fake forecast, does not see that number coming down—look at the evidence it gave to the Economic Affairs Committee. There are huge fiscal consequences to running debt at 100% of GDP. We have a very high exposure to variable interest rates, thanks to both quantitative easing and our exceptional volume of index-linked gilts—I think we have twice the amount of any other developed economy; it is extraordinary. Unlike in other major economies, our gilt markets depend on investment by foreigners. It is called the kindness of strangers, and, in volatile times, it is very risky. At times of risk, people exercise a home bias; no one needs to be investing in sterling. We have got ourselves a very risky exposure, as we try to sustain the coherence of the gilt market.

I have not yet referred to the greatest risk of all: climate change. The EU’s climate service announced that global heating exceeded 1.5 degrees across an entire year for the first time last year. That is years earlier than was anticipated. Dealing with climate change is not a “nice to do”; it is a survival issue. I say both to the Government and to Labour: if we do not progress rapidly now, the consequences will be crushing, not least for our economy.

We will soon have a Budget. It is very strange to be discussing a Finance Bill with a Budget less than two weeks away, but I hope that the Government will begin to redeem themselves. Ordinary people are still feeling pain, and that pain will get worse before it gets better. We are in recession, but the downturn in the standard of living has been far greater. The fundamentals of the economy and of economic growth are sounding the alarm. Climate change is coming relentlessly. I say to the Government that looking for the populist vote by floating tax cuts is not the answer. Leaving a scorched earth for the next Government—which I fear is what they have in mind—is not responsible. Let me repeat what I have heard on the doorstep: enough is enough.

My Lords, the Finance Bill that we are debating today was published following the Chancellor’s Statement in November last year, in which he claimed to be delivering an “Autumn Statement for growth”. It was the 11th such growth plan that we have seen from this Government over the past 14 years, and, over that time, the UK’s growth record has been poor.

The noble Lord, Lord Leigh of Hurley, mentioned comparative growth rates. We have languished in the bottom third of OECD countries, with 27 OECD economies growing faster than us since 2010. Looking ahead, over the next two years, no fewer than 177 countries are forecast by the IMF to grow faster than the UK. Against this backdrop, in the so-called Autumn Statement for growth, the Office for Budget Responsibility actually downgraded its forecast for growth in each of the next three years—it was revised down this year, next year and the year after that. Growth this year is forecast to be just 0.7%, which is more than halved from the 1.8% predicted in the Budget, with the economy forecast to be £40 billion smaller by 2027 than the Chancellor expected back then. Now, the Office for National Statistics has confirmed that Britain has fallen into recession. We know too, as the noble Baroness, Lady Kramer, observed, that GDP per capita fell in every single quarter of the past year.

Britain is trapped in a spiral of economic decline. Having spent 14 years in the economic slow lane, the Government have now put our economy into reverse—the latest chapter in a 14-year story of failure and economic stagnation. First, we had austerity, which choked off investment, and then years of political instability, which in turn fuelled economic instability; then Brexit without a plan; then the disastrous mini-Budget, which, as the noble Lord, Lord Desai, observed, crashed the economy, sending mortgages and interest rates soaring. We have had five Prime Ministers, seven Chancellors, and 11 plans for growth, each yielding less than the last.

If the UK economy had grown at the average rate of the OECD over the past decade, it would now be £140 billion larger, equivalent to £5,000 per household every year. This would mean an additional £50 billion in tax revenues to invest in our public services. Instead, with growth so weak, taxes have risen remorselessly, with less and less to show for it. While our public services crumble, we have seen 25 tax rises in this Parliament alone. The tax burden now rises every single year for the next five years, rising to its highest ever level and making this the biggest tax-raising Parliament ever, with an average tax rise of £1,200 per household.

However, there is one small group of people who will continue to be protected from this Government’s tax rises on much of their income. Missing from this Finance Bill, once again, is any action to tackle non-dom tax status: those people who live in Britain but do not pay UK taxes on their income from overseas. Closing this loophole and replacing this archaic status with a residence scheme like other countries have could raise crucial funding to bring NHS waiting lists down. Labour believes that those who make Britain their home should pay their taxes here. That patriotic point should be uncontroversial; yet, while families across the UK face higher taxes year on year, the Government continue to enable those who keep their money overseas to avoid paying their fair share of tax. So, while we have yet another Finance Bill that leaves this loophole open, families across the UK face a tax burden that is climbing to a post-war high.

The chair of the UK Statistics Authority rebuked Government Ministers this week for making misleading claims about their record on tax. Let us be clear: while the cut in national insurance announced in the Autumn Statement was welcome, it was more than eclipsed by increases in taxes that the Government had previously announced. For example, as my noble friend Lord Davies of Brixton mentioned, the freezing of national insurance and income tax thresholds for six years is now expected to cost taxpayers £45 billion. This fiscal drag means that nearly 4 million more people will pay income tax and 3 million more people will pay the higher rate. To quote Paul Johnson from the Institute of Fiscal Studies, the cut in national insurance rates

“pales into … insignificance alongside the … increase in personal taxes created by the six year freeze in allowances and thresholds”.

The IFS has calculated that, extraordinarily, almost every single person in the UK who is liable for income tax or national insurance will now be paying higher taxes overall. As a result, the tax burden will now reach 37.7% of GDP by the end of the forecast period, an increase equivalent to an astonishing £4,300 additional tax for every household in the country.

We have an economy in recession, the tax burden rising to its highest ever level and the biggest fall in living standards since records began. We must break this spiral of economic decline. Increasing growth is clearly the biggest economic challenge that our country faces. In government, Labour’s defining economic mission will be to restore growth to Britain, with good jobs and productivity growth in every part of our country. Our plan to deliver that mission, supported by British business and developed in partnership with British business, is built on three pillars: stability, investment and reform.

Stability will be brought about by strong, robust and respected economic institutions. Rather than criticising the Bank of England, as a number of prominent Conservative politicians have, we will protect its independence, and we will strengthen the Office for Budget Responsibility. We will introduce a new fiscal lock and tough new fiscal rules. Iron discipline will ensure that every policy we announce, and every line in our manifesto, is fully costed and fully funded. With a Labour Government, never again will a Prime Minister or Chancellor be allowed to repeat the mistakes of the Liz Truss Budget. Never again can we allow a repeat of the devastation that that Budget brought to family finances or allow a plan to be pushed through that is uncosted, unscrutinised and wholly detached from economic reality.

We prize stability and predictability for business, as we know how highly businesses that are considering investing in the UK prize stability, predictability and a long-term plan. This Finance Bill contains a number of measures that we have been calling for for some time. We welcome the Government finally making full expensing permanent after so many years of chopping and changing capital allowances; we have made it clear we will maintain this policy if we are in government. We have also made it clear that we will maintain the system of R&D tax credits introduced by this Finance Bill—again, after so many years of this Government chopping and changing the design of the scheme.

Of course, there is still a general election to face, so I use this opportunity to invite the Minister to put on the record whether the Government will follow our lead. Will she confirm that, should they win the general election, they will maintain permanent full expensing? I am sure that many businesses would welcome the certainty that comes from knowing that both main parties are going into the election fully committed to keeping this policy in place.

Let me be clear about another area where we will provide certainty, should we win the next general election. As the shadow Chancellor has set out, we believe that the current corporation tax rate strikes the right balance between what our public finances need and maintaining our competitiveness in the global economy. That is why we are pledging to cap the headline rate of corporation tax at its current rate for the whole of the next Parliament. We would take action if tax changes in other advanced economies threatened to undermine UK competitiveness. That choice provides predictability and has a clear rationale; that is the pro-business and pro-growth choice. So, again, to offer businesses as much certainty as possible, I ask the Minister whether the Government will follow our lead and also pledge, today, to cap corporation tax at its current rate for the next Parliament?

Our commitment to stability will be matched by a commitment to investment, through partnership with the private sector, to power the industries of the future with a modern industrial strategy; a new national wealth fund to invest alongside business, in our automotive sector, in our ports, and in the future of our steel industry; and a new national champion in homegrown power, leading the way on floating offshore wind, tidal and nuclear power, to ignite growth, boost our economic security, drive down energy bills, and create good, well-paid jobs across Britain. This will be combined with our commitment to reform, starting with our planning system, taking on vested interests to get Britain building again. Stability, investment, reform—the foundations of a plan to break free from the vicious cycle over 14 years of stagnant growth, rising taxes, and falling living standards.

Can the noble Lord clarify a point that he made in response to a point that I made about non-dom taxation? I understand that the Labour Party originally thought that taxing non-doms in the way that he described would raise £3 billion—it then reduced it to £2 billion and I think that it now thinks that it is £1 billion. It would be very helpful to have precision and clarity on the estimate that this will raise. Will he also confirm, now that Labour Party officials are talking to the Treasury, that they have asked the Treasury for its figures on the Labour Party’s proposals on non-doms, which, as I understand it, show a net loss to HMRC in respect of those proposals?

I do not think that I am at liberty to divulge the exact nature of those discussions, but I can certainly say that that is not correct.

Does the noble Lord have an answer to my question on the specific amount that the non-dom tax proposals will raise?

My Lords, I had better intervene quickly, before that continues. I am grateful to my noble friend, but I am sure he is well aware that that was not the usual procedure.

I am very grateful to all noble Lords who have taken part in the debate this evening. It has been a spirited debate, as ever, and I can definitely say at the outset that I am unable to agree with everything that has been said—by some noble Lords more than others, and by one or two almost entirely. But let us leave it at that.

There have been many excellent contributions and points raised. I am very grateful to the noble Lord, Lord Davies, who kicked off the debate with some wonderful tax questions about pensions. Clearly, the issue around pensions catching up with the personal allowance is not something that I can comment on now, but it is something that people are aware of and it will be addressed over a period of time. It is the case, too, that many political parties are committed to the triple lock. Pensioners whose sole income is the new state pension and who do not have deferred or received protected payments currently do not pay any income tax, as noble Lords will know. This year we provided the biggest ever cash increase to payments—a 10.1% rise.

The Government have doubled the personal allowance since 2010, ensuring that those with the lowest incomes do not pay income tax at all. Many noble Lords are concerned about the level of the personal allowance. I believe that over the longer period of time, looking back to 2010, there have been significant increases, such that 30% of people do not pay tax at all. I accept that, given external headwinds, certain decisions had to be made—and were made quite rightly—to freeze the personal allowance over a period of time. However, it is one of the goals of this Government that, as we return to the sort of growth that I think all noble Lords would like to see, it would be a possibility in future that we would be able to address how those personal allowances are going to change over time.

If a person has to pay tax that cannot be collected through PAYE, whether because they have no employment or they have an occupational private pension, and they are not already a self-assessment taxpayer, HMRC may issue them with a simple assessment to explain what tax they owe and how to pay it. That would be well in advance of any payment being needed. But, of course, that assumes that personal allowances and the state pension collide in future. I would not want to say that that is the case, but it is an issue that people are aware of.

The issue around the tax threshold freezes comes up quite a lot in your Lordships’ House. I absolutely accept that we have had to make some incredibly difficult choices but, having done so, a UK employee can earn more before paying income tax and social security contributions than an employee in any other G7 country. We do not tax our employees as highly as other people do, and that is to our credit. We have taken a fair approach to repairing the public finances, so we have asked everybody to contribute a little through keeping tax thresholds fixed. However, that ensures that those with the broadest shoulders pay the most. As I say, now that inflation is falling and the economy has turned a corner, we must continue with our plan, and we can responsibly return some money to taxpayers to slightly change the shift and the amount of tax that people will now pay, versus what they were going to pay in the past. But it is important that we do that in a way that supports the work and grows a sustainable economy for the future. Prioritising those in work is the best way in which to get the economy growing and reducing national insurance contributions is the best way in which to target those individuals.

I will check through the comments made by the noble Lord—

I am grateful to the Minister. Is she saying that we cut taxes for people? Earlier she mentioned 29 million people. Can she also confirm that 17.8 million UK adults with an income of less than £12,570 a year received a zero cut in national insurance or taxes in last year’s Budget?

Yes, but let us also remember that the national living wage has gone up by 25% in real terms since 2010. There are all sorts of different things that the Government have done to protect the most vulnerable; the noble Lord is picking on just one thing. We are always looking at the most vulnerable to ensure that, for them too, work pays. That includes lifting the national living wage.

I am happy to respond to the Minister—this could get interesting. The £12,570 threshold —and, as I said, 17.8 million adults have less than that —is after taking account of the increases in minimum wage. Many people have zero-hours contracts, work part-time or are maybe on a pension. That is after taking account of all the increases that the Minister said have been handed out.

Does the noble Lord want me to give them a tax cut for taxes that they do not pay? I am not following here at all, but I am not willing to get into a long debate about this right now. The noble Lord may write, and I will respond, if he would like to get into that in detail, but I am not willing to get into the debate right now.

Moving on to other issues raised by the noble Lord, Lord Davies, I will write in more detail around the specific things; I was doing very well for 80% of his speech but I lost him towards the end, around the taxation of negative pension growth, or gains. I will write on that point.

The noble Lord, Lord Desai, noted that the Bill is too late. Obviously, this is beyond a humble Minister like me. The House authorities will have guided it through. I know that it took a while to get through the Commons, and we addressed it in your Lordships’ House as quickly as we could once it had finished in the Commons. I would like to push the blame down to the other place and leave it there. However, it is always our ambition to get our Finance Bills into and through Parliament as quickly as possible, because it is a really important thing that we do.

I suspect that, particularly as we go into the Spring Budget, there will be many more debates around growth. I say again that, since 2010, we have had the fastest growth of any European G7 nation. I also suspect that there will be counterarguments to that, and that those will continue. In many of these circumstances, particularly some of the points raised by the noble Lord, Lord Desai, it is just a case of economists not agreeing. Not all economists agree—it is an art, not a science. For those of us who studied economics at university, it is clear that there are sometimes fundamental differences, as noble Lords have said today. My noble friend Lord Leigh is also a very experienced person in these matters. As he pointed out, he does not agree with much of the analysis. Sometimes, that is the case.

I am incredibly grateful to my noble friend Lord Leigh, his committee and the officials for the report of their sub-committee. I reassure him that we take those reports very seriously. Officials read them to ensure that we take into account the considerations and the recommendations made. On research and development, I think he agrees with us that we want to keep things as stable as possible. We do not intend to make any further changes. However, there are a few small areas where we will continue to engage, and any changes will be done cautiously. We hear what he and his committee say, and we will consider it carefully.

My noble friend noted the issue around HMRC data and tax administration. The Government’s economic response to the coronavirus pandemic was made possible through the powerful use of all sorts of data. However, it highlighted that there are gaps in the data that HMRC holds. New or improved data collected by HMRC, such as detailed information on employee hours and start and end dates on self-employment, will help government to address some of the gaps, building a tax system which is more resilient. I reassure him that the Government are taking a proportionate response and collecting improved data in areas where taxpayers already hold it, to minimise administrative burdens. The existing safeguards are robust, well-established and well-understood. I reassure him that we expect all taxpayers to have this information already and be able to provide it to HMRC. HMRC will take a reasonable and proportionate approach to the application of any fees or penalties in this regard. These changes will not take effect before April 2025, to give the system some time to adjust.

My noble friend Lord Leigh also mentioned HMRC customer service. Noble Lords will have heard me say this before, and indeed I have had the discussion directly with HMRC: it acknowledges that its customer service levels are simply not as good as they should be. Levels on the phone and in the post are below service standards from last year. HMRC has been working very hard to improve services for those people who need to call, but encourages people to use the digital services as much as possible, as they can be very efficient and get very good ratings from customers.

My noble friend Lord Leigh once again brought up his minority sport—a very important sport—of EIS and VCT, and why these are being extended by regulation. He hinted about it being something to do with the Windsor Framework, the EU, Northern Ireland, and the trade and co-operation agreement, and he is right. These are important schemes, and the vast majority of UK subsidies will need to comply only with the UK’s domestic subsidy regime, as noble Lords would expect. The Windsor Framework also means that the EU-UK Trade and Cooperation Agreement will now serve as the primary framework governing subsidy control between the UK and the EU. For the EIS and the VCT scheme, we are engaging with the EU on approval for extension, due to Northern Ireland’s unique access to the EU single market. We are working to meet all relevant obligations. We believe that the systems are consistent with subsidy control principles and address evidence of market failure, and therefore we think those conversations will go well.

My noble friend mentioned the complexity of Pillar 2. I agree that it is complex and difficult to administer—it is necessarily complex, because of the wide variety of different corporate structures which exist. However, we are reassured that we have simplified processes as much as we possibly can, such that compliance from business will be at the sorts of levels that we want to see.

On stooge directors, as noble Lords would expect, these measures are targeted at the promoters of tax avoidance schemes. Stooges enable these promoters to hide their activities, and, frankly, that is not what we are after at all. The Government understand the need for strengthened HMRC powers to be proportionate and balanced. Those are the two words that are absolutely key. Nobody wants to put anybody in jail because they did something under the duress of somebody else.

The noble Lord, Lord Sikka, raised a number of points and many rhetorical questions, and, I suspect, lots of really good ideas for the Labour Party manifesto. I, unfortunately, cannot agree with much of what he said, particularly his insistence that the state needs to substantially increase investment which is traditionally private sector activity. The state does invest, but it invests in those areas where we feel it is right for the public sector to be investing. We believe that the private sector is much better at picking up that sort of investment.

The noble Lord seemed to imply that the Government have done nothing against tax avoidance and that it is all terrible out there, etcetera. I am afraid that is just not right. The amount of money lost to the Exchequer from tax avoidance has fallen from £3.6 billion in 2010—to pick a year—to £1.4 billion in 2021-22. That is a significant reduction in the amount of tax avoidance. Again, I do not expect the noble Lord to agree with me. He went on to ask me for specific examples. HMRC already prosecutes promoters. Since 2016, more than 20 individuals have been convicted of offences relating to arrangements which have been promoted and marketed as tax avoidance. Our interventions are working, and there are interventions in the Bill to make our levers stronger. This Government do not tolerate tax avoidance and we will do whatever we can to stop it.

The noble Baroness, Lady Kramer, raised a number of issues. I have already mentioned thresholds; from the Government’s perspective, we understand what had to happen over that time. She raised the issue of public spending, which I note is going up in real terms by 0.75% over the forecast period. What slightly concerns me now is the question of where it would stop. If it is going up in real terms every single year, after how many years would we say that that is enough? However, I also put it to her that, as important as productivity is in the public sector, in the private sector you would not get away with the lack of focus on productivity. That is why the Chief Secretary to the Treasury is looking at a productivity review across all areas of government, to ensure that public spending is the right amount. At the end of the day, the best way to increase the amount of money that we have available for public spending is to grow the economy, and that is exactly what this Government are doing.

The noble Baroness mentioned productivity. It has been estimated that supply-side measures from the Autumn Statement 2023 could close up to half of our productivity gap with France, Germany and the US. We feel that we are making good progress, investing in the right areas to improve productivity.

The noble Baroness mentioned climate change, which is incredibly important. It is also interesting that she mentioned Labour in her appeal to keep climate change front of mind, because Labour still has its very unachievable climate plans, with now literally no funding. It used to have £28 billion of funding, which shadow Front-Bench Members managed to commit to over 300 times. Unfortunately, that £28 billion has now disappeared, but all the policy seems to remain in the same place. That goes back to the point that the noble Lord, Lord Livermore, made. Apparently, in the stability, investment and something else he said—their plan to deliver, which I am still looking for the detail on—all Labour policies will be fully costed, apart from those on climate change. Is that right? I am looking forward to it. I do not know; the £28 billion has disappeared but the policies have not.

The noble Lord asked me to commit to certain things for the Conservative Party manifesto, which I will not do, but the Government have just introduced permanent full expensing. It would be a great surprise to me if, all of a sudden, it were to disappear again, because we believe that it is a very valuable thing to do.

The noble Lord mentioned non-domiciled individuals. I, too, am very interested in that and will keep an eye out for how much money will be raised from the changes to non-domiciled individuals’ tax arrangements. I suspect that it will not be anywhere close to the amount of money that Labour platitudes and unfunded promises will need as we head into the election. But we believe that non-UK domiciled individuals play an important role in funding our public services through their tax contributions. The Government want the UK to be a destination that will attract talented people to work and do business, and that includes people from overseas. It is only right that those who choose to live here for a long time pay their fair share of taxes—namely, that they cease to become non-domiciled.

I believe that I owe various noble Lords a letter, which I will ensure gets to them as soon as possible. In the meantime, I commend the Bill to the House.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Post Office Governance and Horizon Compensation Schemes


The following Statement was made in the House of Commons on Monday 19 February.

“With permission, Mr Speaker, I shall make a Statement about Post Office governance and the Horizon compensation schemes.

Over the weekend, several serious allegations were made against the Government, my department and its officials by Henry Staunton, the former chair of the Post Office. The allegations are completely false, and I would like to make a Statement to the House so that honourable Members and the British public know the truth about exactly what has happened. I would like to address three specific claims that Mr Staunton made in his Sunday Times interview—claims that are patently untrue.

First, Mr Staunton alleges that I refused to apologise to him after he learned of his dismissal from Sky News. That was not the case. In the call he referenced, I made it abundantly clear that I disapproved of the media breaking any aspect of the story. Out of respect for Henry Staunton’s reputation, I went to great pains to make my concerns about his conduct private. In fact, in my interviews with the press, I repeatedly said that I refuse to carry out HR in public. That is why it is so disappointing that he has chosen to spread a series of falsehoods, provide made-up anecdotes to journalists and leak discussions held in confidence. All that merely confirms in my mind that I made the correct decision in dismissing him.

Secondly, Mr Staunton claims that I told him that ‘someone’s got to take the rap’ for the Horizon scandal, and that was the reason for his dismissal. That was not the reason at all. I dismissed him because there were serious concerns about his behaviour as chair, including those raised by other directors on the board. My department found significant governance issues. For example, a public appointment process was under way for a new senior independent director to the Post Office board, but Mr Staunton apparently wanted to bypass it and appoint someone from the board without due process. He failed to properly consult the Post Office board on the proposal; he failed to hold the required nominations committee; and, most importantly, he failed to consult the Government, as a shareholder, which the company was required to do. I know that honourable Members will agree with me that such a cavalier approach to governance was the last thing we needed in the Post Office, given its historical failings.

I should also inform the House that while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct, including serious matters such as bullying. Concerns were brought to my department’s attention about Mr Staunton’s willingness to co-operate with that investigation.

It is right that the British public should know the facts behind the case, and what was said in the phone call in which I dismissed Mr Staunton. Officials from my department were on the line; the call was minuted, and a read-out was sent after it took place. Today, I am depositing a copy of that read-out in both Libraries of the House, so that honourable Members and the public can see the truth. In those minutes, personal information relating to other Post Office employees has been redacted. For all those reasons, an interim chair will be appointed shortly, and I will, of course, update the House when we have further details.

Finally, Mr Staunton claims that when he was first appointed as chair of the Post Office, he was told by a senior civil servant to stall on paying compensation. There is no evidence whatever that that is true. In fact, on becoming Post Office chair, Mr Staunton received a letter from the Permanent Secretary of the Department for Business, Energy and Industrial Strategy, Sarah Munby, on 9 December 2022, welcoming him to his role and making it crystal clear that successfully reaching settlements with victims of the Post Office scandal should be one of his highest priorities. That letter is in the public domain. The words are there in black and white, and copies of the correspondence will be placed in the Libraries of both Houses.

The reality is that my department has done everything it can to speed up compensation payments for victims. We have already made payments totalling £160 million across all three compensation schemes. That includes our announcement last autumn of the optional £600,000 fixed-sum award for those who had been wrongfully convicted. It is the strongest refutation of those in this House who would claim that we acted only after the ITV drama, “Mr Bates vs The Post Office”, was shown. British people should know that a dedicated team of Ministers and civil servants have been working around the clock for many months to hasten the pursuit of justice, and bring swift, fair redress to all those affected.

To that end, I am pleased that all 2,417 postmasters who claimed through the original Horizon shortfall scheme have now had offers of compensation. The Post Office is dealing promptly with late applications and cases where the initial offer has not been accepted. My department has also established the Horizon compensation unit to ensure that money gets to the right people without a moment’s delay. Last autumn, we announced an additional £150 million to the Post Office, specifically to help it meet the costs of participating in the Post Office-Horizon inquiry and delivering compensation to postmasters. In all, we have committed around £1 billion to ensure that wronged postmasters can be fully and fairly compensated, and through forthcoming legislation, we are taking unprecedented steps to quash the convictions of postmasters affected by the Horizon scandal.

In short, we are putting our money where our mouth is, and our shoulders to the wheel to ensure that justice is done. It is not fair on the victims of this scandal, which has already ruined so many lives and livelihoods, to claim, as Mr Staunton has done, that things are being dragged out a second longer than they ought to be. For Henry Staunton to suggest otherwise, for whatever personal motives, is a disgrace, and it risks damaging confidence in the compensation schemes that Ministers and civil servants are working so hard to deliver. I would hope that most people reading the interview in yesterday’s Sunday Times would see it for what it was: a blatant attempt to seek revenge following dismissal.

I must say that I regret the way in which these events have unfolded. We did everything that we could to manage this dismissal in a dignified way for Mr Staunton and others. However, I will not hesitate to defend myself and, more importantly, my officials, who cannot respond directly to these baseless attacks. Right now, the Post Office’s No. 1 priority must be delivering compensation to postmasters who have not already been compensated. There were those who fell victim to a faulty IT system that the Post Office implemented, and that it turned a blind eye to when brave whistleblowers such as Alan Bates sounded the alarm. We said that the Government would leave no stone unturned in uncovering the truth behind the Horizon scandal, and in pursuing justice for the victims and their families. We are delivering on that promise, while looking for any further possible steps that we can take to ensure the full and final settlement of claims as quickly as possible.

It is right that we reflect, too, on the cultural practices at the Post Office that allowed the Horizon scandal to happen in the first place. It was a culture that let those in the highest ranks of the organisation arbitrarily dismiss the very real concerns of the sub-postmasters who are the lifeblood of their business and pillars of the local community. Although the Post Office may have failed to stand by its postmasters in the past, we are ensuring that it does everything that it can to champion them today, and to foster an environment that respects their employees and their customers. That is how we will rebuild trust and ensure that the British public can have confidence in our Post Office, now and in the future. I commend this Statement to the House”.

My Lords, the Horizon scandal is widely accepted as one of the worst miscarriages of justice in British history. Given the magnitude and duration of the scandal, it is quite astonishing that it seems that every day we get more and more revelations. We get further from the truth and further from true justice for all those who have been victims of it.

Sunday’s allegations could not have been more serious, and the same applies for everything that has emerged since then, not least the memo that was unearthed last night showing Henry Staunton’s recording of a meeting with the then Permanent Secretary at BEIS, Sarah Munby, on 5 January 2023. In that, he was allegedly told to “hobble” into the election; not to

“rip off the band aid”

in terms of the Post Office’s finances; that

“politicians do not necessarily like to confront reality”;

and, finally, that

“now was not the time for dealing with long-term issues”.

This new evidence appears to endorse Mr Staunton’s claim made at the weekend. It is of the utmost importance that both the public and Parliament know the truth. Do the Government continue to deny that any of those conversations took place, as was stated categorically on numerous occasions throughout this week? Given the new evidence, will the Department for Business and Trade now commit to a Cabinet Office investigation into the serious and continued allegations that Mr Staunton has made?

Earlier this week, it was welcome that the Government agreed to publish copies of the letter from Sarah Munby to Henry Staunton on his appointment as chair of the Post Office in December 2022, but that does not go far enough. Given the Secretary of State’s own willingness now to place part of the record in the House Library, I ask once again what I asked on Monday, when we debated this—unfortunately, before the Statement had been made. Given the new evidence that has come to light, will the Government publish all correspondence and minutes of meetings between the relevant departments, UKGI and the Post Office, and put them all in the parliamentary Library?

Earlier this week, it was also suggested by the BBC that the Government knew that there was a cover-up in the Post Office eight years ago—in 2016—with Ministers having been told that an investigation was happening into how often and why cash accounts on the Horizon system had been tampered with remotely. Will the Minister comment any further on those claims about when that was known by the Government? How will the Government investigate those claims? Following that, will this matter also be handed over to Wyn Williams for full investigation? I am sure that we all agree that the secrecy must end, and that the full sunlight of public scrutiny should be brought to bear.

On the compensation itself, has the £1 billion figure referred to in the Statement already been allocated, and is it therefore ready to be paid to those who will receive it? Subsequently, if that is not the case, will the payments be specifically itemised and timelined within the next Budget?

Although Monday’s Statement and today’s repeat are rightly about the Post Office, people’s faith in government has already been damaged by scandals such as Hillsborough, infected blood, Bloody Sunday and Windrush. Victims of other scandals—especially the contaminated blood scandal—feel that they need to ask whether they have been the victims of deliberate inaction as well. Will the Government provide assurances that no such obstacles have been put in the way of any payments of this kind; and if so, how exactly do they explain the delays in so many cases?

The Post Office miscarriages of justice alone have shown the devastation that can occur when institutions are allowed to operate without oversight or are shrouded in secrecy, and I know the Minister shares everyone’s view on this. Throughout all this, we must not lose sight of the sub-postmasters and sub-postmistresses themselves, so I make no apology for returning to the issue of convictions and the overturning of them. Can the Minister update your Lordships’ House on the progress in this area? Have His Majesty’s Government set a timescale for delivering the legislation needed to quash the convictions?

Finally, the Minister often talks about compensation packages and money being paid in thousands, tens of thousands and hundreds of thousands of pounds to wrongly convicted—I would describe them as not just wrongly but malignly convicted—sub-postmasters and postmistresses. However, is he aware that the vast majority of Post Office payments for the specific issue of “damage to reputation and stress” are still generally only around the £5,000 mark?

Finally, again—I feel a bit like Columbo—there is a discrepancy between the Secretary of State’s speech in Hansard and the Statement. Would the Minister like to comment on it, and if not, will he write to me and place a letter in the Library? There is no mention in the Department of Business and Trade Statement of bullying by Mr Staunton, yet the Secretary of State says:

“I should also inform the House that while Mr Staunton was in post, a formal investigation was launched into allegations made regarding his conduct”—

we know that, but she goes further—

“including serious matters such as bullying”.—[Official Report, Commons, 19/2/24; col. 474.]

I am just a bit confused as to why it was in the Statement delivered in Parliament but not in the departmental Written Statement.

My Lords, as we have heard, with every day that passes, more questions seem to come up.

In Parliament, the Secretary of State’s Statement was strident—I would say unusually strident—but no matter how loudly and aggressively she asserts her side of the issue, it will not go away without answers and evidence. I support fully the questions that the noble Lord, Lord McNicol, just asked—I will try to interrogate some other areas—but we need answers in order to support or otherwise the Secretary of State’s position. These are answers that the Government can give, not ones they can push into the Wyn Williams inquiry.

Minutes from a call on 27 January show that Kemi Badenoch said to Henry Staunton that she had received

“a briefing on the governance issues at the Post Office and that the complaints against”


“are so serious that the government need to intervene”.

The Secretary of State said in Parliament that this included issues raised by other directors on the board. From whom did she receive the briefing on the governance in POL, and where are the notes on its contents? When were the directors’ issues first raised with the Secretary of State, and what form did these complaints take? Were they, for example, letters, emails, calls or meetings? Were any directors’ complaints submitted formally, and how many directors were involved in those submissions?

The Secretary of State’s public statements and comments conflate two issues. One is the possible disquiet as to Staunton’s progress on tackling governance within POL, and the other is an entirely separate accusation of bullying. Does the Minister agree that these two need to be properly separated? The conflation is adding to the confusion. As far as I can see, as yet, there is no documentation to support the bullying part of the Secretary of State’s response. The Secretary of State said that a “formal investigation” was under way into the complaint against Staunton. Who is leading this investigation and when was it started? Staunton says that he was not informed of this bullying complaint, so can the Minister confirm if, when and how Staunton was informed of this bullying complaint and whether he has yet to be contacted by an investigator?

Government, departmental and Post Office capacity is only so large. This very public and bitter argument is a major distraction. Given the huge quantity of energy that is being expelled on this dispute, all other activities suffer. Today, the Prime Minister declined to repeat the Secretary of State’s accusations, and if the Secretary of State misled Parliament, she clearly breached the Ministerial Code. Therefore, does the Minister agree that if we do not get a Cabinet Office inquiry, the Government’s ethics adviser should be asked to investigate this issue now?

Without publishing all the personal correspondence with the various intermediaries that link the Post Office with the Government, it cannot be established beyond any doubt who is telling the truth in this very public dispute. The problem for the Secretary of State and for the Government is that Mr Staunton’s central accusation has credibility. What we see is glacial progress in settling the Horizon victims’ cases. That was his central point. In one answer on Monday, the Minister outlined the bureaucratic appeal process open to those offered unacceptable settlements, and of course, these appeals slow things down considerably. Can the Minister at least acknowledge that this time-consuming and energy-sapping appeal process could largely be avoided if the original offers were at an acceptable level in the first place?

I have one final question. All pretence of an arm’s-length organisation has gone; the Government have the power to intervene and control. Will the Government step in and speed things up by making the process simpler, probably by collapsing the three schemes into one? Overall, will they ensure that the offers of compensation are realistic in the first place, so that all the sub-postmasters who have offers can accept them and move on?

There is a lot to unpack there. I will take it in three pieces, if your Lordships do not mind. I will start with the Henry Staunton spat; then we will talk a little bit about the compensation; and then we can talk about the convictions, overturning them, and general progress on that matter.

On the dismissal of Henry Staunton and the following row that has ensued, as I said before, it is a shame that we are doing this in public because obviously, there are HR matters here. A senior director has been removed from his post, and due process needs to be delivered and his confidentiality respected.

However, I can shed light on this. This has been helped by further documents today being put in the public domain. In addition to the file note of the Secretary of State’s conversation with Henry Staunton at the weekend, we now have Mr Staunton’s file note to himself after his meeting in January 2023 with Sarah Munby and very helpful clarification from Sarah Munby of her recollection of what happened, with back-up notes. Accordingly, all the minutes are now at the disposal of the public and in the Library.

In summary, the row here is on two allegations that have been made by Mr Staunton—that he was sacked because someone had to “take the rap” and that he was instructed by a senior civil servant, the Permanent Secretary, to slow down the process of compensation and justice for postmasters. It is now absolutely clear from the correspondence and the notes published, and even from reading Mr Staunton’s own note, that the reason for his dismissal was not that he had to take the rap, but quite the opposite. He was in post for just 14 months—from December 2022—and was given three specific priorities by Sarah Munby. The first was to accelerate and expedite the compensation to the postmasters. Therefore, he was not there to take the rap. His dismissal, which was designed to be done in private but has now come out in public, was simply because there were governance issues around his chairmanship.

Interestingly, taking account of the various discussions that we have had in this House on this matter, noble Lords, especially on the other Benches, have been quite clear that they feel that there has obviously been a breakdown in governance and that the Government were not exercising their governance powers appropriately. That is what Sir Wyn Williams will look at in detail. We have a new board. Three new non-execs of a higher calibre were appointed in 2023. There are now two postmaster directors on the board. A senior independent director is required to be appointed and, most importantly, the government shareholder, UKGI, is represented on that board.

In addition, you can imagine the amount of public and departmental scrutiny that is happening. There are monthly meetings with post office executives. A lot of conversations are going on with Post Office management. Within those conversations, quite rightly, without naming names, non-exec directors and UKGI have raised concerns on the governance and chairmanship of the Post Office.

Under previous regimes, it would appear that, when concerns were raised on other matters, they were ignored. In this case, concerns have been raised and not ignored but taken into serious consideration. That demonstrates that we have a different sort of governance now in the Post Office. If I was coming at this from a private sector basis, as a shareholder, I would want to know what is going on inside the company. If non-exec directors came and told me there was a problem on the board, I would take that very seriously. That was then discussed between the Secretary of State and Henry Staunton and specific governance issues and concerns were raised by the board. As I said, the board is run by the chair. If the board is at odds and therefore not functioning properly, we must change the chair. It is as simple as that.

So, on the first point, that he was there to take the rap, the memos and meeting notes clearly show that he was dismissed because we had a governance issue.

That is fascinating and helpful. Given that there is not a SID and that it was the chairman, what was the conduit of the director’s disquiet from the board to the Secretary of State? How did the Secretary of State learn these things?

As I said, we are in a situation now where dialogue quite rightly is happening—and minuted, as always—between officials and representatives of Post Office Ltd. The appointment of the senior independent director was one of the issues that the board were at odds over. The chairman wished to promote an internal candidate and the Department for Business and Trade wanted to bring in an external candidate—which was also the advice of the UK Government, the shareholder executive.

In this situation, when an investigation of why this was happening was brought to bear, that too was blocked by the chair. So there was a situation where the board was not working properly and we had to change the chair. It was as simple as that. The chair had to be changed to make sure the board worked properly. There was no concept of him being there to take the rap for the Horizon scandal.

He has made a second claim, and I advise noble Lords to read the notes carefully to understand this. The conflation going on here concerns the discussion with Sarah Munby in January. The chairman was appointed in December 2022. There was a discussion with the Permanent Secretary in January 2023. That was the first discussion after she wrote the letter saying “Here’s your three priorities”. It was the first meeting between the Permanent Secretary and the newly appointed chair, to say, “Right, you’ve been in post for a month, you’ve looked under the bonnet, what have you found?”

This is a brief point regarding the Minister’s description of the situation between the Secretary of State and the chair of the board, and the appointment of the SID. I seek clarification and want to check that I heard the Minister correctly. The Statement refers only to the chair, Staunton, looking to bring in his own person. It does not deal with the appointment. The Minister said the Secretary of State was looking to appoint the SID, a different person, and Henry Staunton did not want that person coming in as a SID, so that was the tension that was there, not the fact that he had carried out some nefarious process in trying to bring someone in.

That is a reasonable clarification. The clue is in the name “senior independent director”. The Department for Business and Trade was of the view that we should not be appointing an internal candidate to the role but that an external candidate should come in. That was the reason for the dispute.

On the matter of trying to delay, save money and not budget for compensation, this is on the record to be refuted. The conversation was between the Permanent Secretary and the chair one month into his appointment. A businessman comes in to review the company that he is now chairing. “Please can I have a meeting with you for you to tell me what you have seen? What are the pressure points, what’s good and what’s bad?” The conversation was entirely about the business operating model, not the postmaster compensation. That is a completely separate matter and the finance for it is ring-fenced. It is not within his budgetary concerns. They were talking about how this business model was fundamentally compromised and would not exist in the private sector.

But it is a public corporation and it needs to exist in the public sector. This is why we have this hybrid model. We have 11,500 post offices, of which 5,000 are in rural areas and 3,000 are the last shop in the village. That is not financially viable and would not survive any daylight in the private sector, but we all agree that it is legitimate that this is a vital public service for these rural communities, which is why the Treasury funds that to the tune of £50 million, specifically allocated to run a network which, frankly, is not profitable. That is an immediate discussion between the two and when you add in the pressures of last year, with the minimum wage increasing and energy prices increasing, you can see that there are budgetary pressures inside the operating model.

There is also a discussion about the Horizon computer. The Government have allocated £103 million to building a system to replace Horizon—which is now working fine but is clunky and clearly has not been the right system. So now a new system has been put in place. Any noble Lord in this Chamber who has done an IT project will understand how these budgets go—so there is a second pressure.

There are a number of business pressures being talked about. In the very first meeting between the chairman and his reporting senior civil servant, it is quite appropriate that they should talk about those pressures, and it may well be that the Permanent Secretary was explaining to a businessman, who had not worked with government before, about how government works and how communication works. Undoubtedly, a conversation was had between them, but the record now shows—and the letter written by Sarah Munby makes it very clear—that those discussions did not ever stray into the territory of “By the way, please can you solve your budget pressures by stopping or delaying compensation to postmasters”—that is simply not the case, and we can put it to bed now. It has been conflated and confused, but it is now on the record to show that it is simply not the case.

I turn to the compensation, and the question of whether the Government have been dragging their feet and why. There is absolutely no evidence that the Government have been dragging their feet and I will provide some evidence for that. There are three schemes in place: a scheme for the 900 wrongful convictions; a second scheme for the GLO 555, which, if you take out the convictions, is 477; and there is the Horizon shortfall scheme—the 2,500. That comes to just under 3,000 postmasters, and, today, 78% of all claims are paid and settled. Interestingly, of the 3,000 postmasters, 2,700 have received some sort of payment. Either they are settled, or they are interim, which means more than 90% of the cohort have received either a full and final settlement or an interim settlement on their way to final settlement. That was pushed through largely during 2023, and if we take the £160 million that has been paid out now to the 2,700, £138 million of that was paid out by December last year—before the series and the Bates documentary and under the tenure of Henry Staunton as chairman. Therefore, it is interesting that, under his chairmanship, there is no evidence—the opposite, in fact—that there has been any dragging of feet when it comes to compensation being made to the postmasters, of whom now 78% are fully settled and more than 90% have received compensation.

The noble Lord, Lord Fox, mentioned that this compensation process is clunky and bureaucratic. My noble friend Lord Arbuthnot, who is in the Chamber, will substantiate that the process has been put together by the subgroup; that is, the advisory group that Mr Bates has been involved with on how to make the process work and be fair. To be clear, the appeal process is more for the benefit of the postmasters and postmistresses to appeal, not for the Government to push back. The Government will not push back on the claims given; we need to give a process that, where an offer is made to a postmaster or postmistress and that individual does not feel it is high enough, they can appeal that process. That process has been designed by the advisory council, so, again, there is no evidence that we are dragging our feet.

In fact, when you look at the cohort of 477, who are part of the brave 555 group who have arguably been through the most trauma, having had to go to court and having been some of the most egregious examples, we want to process those claims as quickly as possible. We can go only as quickly as we receive the claims. What is interesting to me is that, of the 477 who have received the interim payment so far, only 58 full claims have been submitted, of which we have settled 41—we have settled 41 out of 58, we are settling as quickly as we can. Why is it only 58 full claims? It is because those postmasters and postmistresses are now in a position, with legal help, to access all the information to put their claim in, and they are taking their time to do that, and quite rightly so.

I think I can make the point that on convictions and compensation, the money is fully ring-fenced; it is not in the conversation about the operational matter of the Post Office—that is a completely separate issue—and we have committed to go as quickly as we can to make the payments and that is also why we are putting through legislation on the overturning of convictions.

My Lords, I declare my interest as a member of the Horizon compensation advisory board. Of course, if you are a sub-postmaster, you do not really care who said what to who. There are two questions that a sub-postmaster would be interested in: when will the compensation be paid and when will the convictions be overturned? As for when the compensation will be paid, I would like to pick up a question raised by the noble Lord, Lord McNicol; namely, the accounts. In which department’s accounts is the £1 billion that it is expected will be paid out in compensation to the sub-postmasters? I hope it can be found in some department’s accounts. As to the convictions, this is an interesting Statement, but when can we expect a Statement on precisely how those convictions are going to be overturned and when can we expect a Statement on the legislation to come before both Houses?

I thank my noble friend Lord Arbuthnot. I will take the second one first: there are live conversations going on right now, at great speed, to finalise the legal process with the Ministry of Justice, which will result in the overturning of all the convictions in England and Wales by an Act of Parliament, excepting that there may be some small number of people who, in fact, have had legal or safe convictions, but they will be overturned—as we discussed before—because the greater good is to wipe the slate clean as quickly as possible. That will be coming to this House in short order, and I imagine there will be unanimous support for that.

As for the timing and the finance, the finance for this will come ultimately from the Treasury. The Treasury has been funding DBT, in order for it to fund the Post Office, and, in the course of last year, under the chairmanship of Henry Staunton, £253 million was paid by the Treasury, via DBT, to Post Office Ltd, of which £150 million was for the compensation schemes—and £160 million has now been paid—and the £103 million was for the replacement of the Horizon system. There are regular funding lines going to the Post Office via DBT.

This money has been ring-fenced and identified by the Government—it sits within the Treasury—but we have also had conversations in this House about the fact that there may be some other sources of compensation to be had from other places, and why it should not necessarily be just the taxpayer who picks up the bill for this when there are perhaps other stakeholders involved in this sorry saga who should pay their part. It may well be that that the taxpayer can be relieved of some of the £1 billion ring-fencing because it may be that we can get other sources, not least Fujitsu, to pay for that.

The commitment given by my department—we are working flat out on this—is to get 90% of the claims processed and settled within 40 working days. There is no going back from that; as we have said before, 78% of postmasters and postmistresses—a figure of 2,270—have been fully paid and settled. We are now at the sharp end of this process for those who were treated the most egregiously. Therefore, those cases are more complex, and perhaps need more time—not demanded by the Government—for the process of how they put their claim together. We have a situation where it is openly known that Mr Bates has submitted his claim and is not happy with the response: that is part of the process that we are in, and it will go on. We will move as quickly as we can to make sure that everyone is restored to the position that they should be in.

My Lords, I have a question about the undated letter from Sarah Munby to Mr Staunton that has been released. It asks him to focus on

“effective management of legal costs”.

Can the Minister explain what those legal costs are? What does that mean? Such a letter could not have been written without consultation with lots of colleagues as to what kind of terminology to use. Will the Minister ensure that all the back-up notes to this letter are put in the public domain?

This is very straight- forward. If I am appointed as the new chairman of a company in this situation and, of my three priorities, the No. 1 is to manage a legal process to get compensation quickly to postmasters, I would expect to be told that formally by the Permanent Secretary and to be held accountable to manage those costs effectively. That does not mean to minimise or delay; it means to manage the process effectively to get compensation to the postmasters. What has been put into the public domain makes it very clear that there has been no dragging of feet and no instruction to the contrary on this matter.

As we have discussed many times in this Chamber, we now have a full statutory inquiry. The judge, Wyn Williams, will pick through this in fine detail. We are all very impatient and frustrated because we want the answer now, but we got into this mess because we jumped the gun before, and we are not going to do so again.

My Lords, I return to the question from the noble Lord, Lord Arbuthnot, about where the £1 billion sits. If it comes from the Treasury, would it be in the Green Book following the Autumn Statement? It was all agreed by then. If it is not visible in the Green Book, can the Minister please write to the people speaking on this Statement to say where we might find it? It should be visible from the moment it was agreed, which was well before the Autumn Statement last year.

My second question, going back to the point raised by my noble friend Lord Fox, is about the bullying claims. I find it slightly extraordinary that in one part of the Statement the Secretary of State says it is important that she does not go into details, yet suddenly she alleges bullying—which, as the noble Lord, Lord McNicol, has pointed out, is not in the Written Statement. It is really important to understand when the allegations of bullying came about and the process that must now be under way to investigate them. You do not sack somebody without an investigation having got under way. If you do, that is the most appalling error of judgment. Can the Minister please confirm when and how Staunton was informed of the bullying complaint and whether he has been contacted by an investigator?

On the first point, I do not have the exact intricacies of which bank account the money sits in. I am happy to write about that, but it seems to me that if the Treasury and the Government have said we have a potential liability of £1 billion, we are good for the £1 billion. I will find out where it is sitting, if that is the question, but to me that is perhaps a lesser matter.

On the Staunton case, I am not prepared to do HR in the Chamber. That would not be fair or right. We should not talk about detailed conduct allegations in a Chamber such as this. The chairman was dismissed by the shareholder, the Secretary of State. In any company I have ever operated in, the shareholder is entitled to remove a chairman. The chairman’s job is to represent the shareholder, so if the shareholder is not happy with the chairman, it is absolutely valid that the shareholder can dismiss the chair. That is what happened in this case, and there is now a process that is better done in private. Let us not do HR in the Chamber.

My Lords, I recognise that the outcome of this competition of accounts between Henry Staunton and the Secretary of State could have significant consequences for them both, certainly for the Secretary of State if she is proved, at the end of the day, not to have been truthful to Parliament. She has another problem to do with what Canadian High Commissioner Ralph Goodale has said to the Business and Trade Select Committee, so she is in some difficulty.

I am in the space that I think the noble Lord, Lord Arbuthnot, is in. I do not think that this unedifying spectacle—this sideshow of mud-slinging—is the Minister’s priority. The priorities need to be full and proper compensation to the people who have lost out; the restoration of their good name in all the ways that will be necessary, which will involve exoneration; and, in the longer term when the inquiry is over, proper accountability for the people responsible for this. In the immediate term there is a simple way of resolving this competition of accounts: to put into the public domain all the information that it is proper to and to let the people out there see it and make up their own minds. They will in any event.

My real concern is that there is almost certainly an ongoing miscarriage of justice occurring in our justice system, as has been exposed, properly, by this Horizon scandal. It is the ludicrous presumption that if information comes from a computer, it is deemed to be reliable evidence. If that is to be challenged, it is up to the person who is claiming that it is not right—not the person who owns the computer—to show that the computer is not producing the right evidence. When on earth will we get this presumption changed around the right way? There must be daily cases in our courts that are not up to the level of the Horizon scandal, in spades and at every single level, creating other miscarriages of justice whose mess we may have to clean up in future at enormous expense to the public.

I absolutely agree that the Staunton issue is a distraction that none of us needs; it is certainly not in the interests of the postmasters and postmistresses, who want to see compensation paid and convictions overturned. As I said, the Ministry of Justice is working expeditiously to sort the overturning of convictions. As I have also said before in this Chamber, there will be serious ramifications regarding a number of matters that will come from the inquiry when it is finally published. I imagine that the matter about which the noble Lord has deep knowledge, the presumption that the computer is always right, will be one such. I imagine that will be taken forward following the inquiry.

My Lords, there is an additional group of sub-postmasters affected by this scandal: those who paid the money back because of the potential or actual reality of dishonour in the communities in which they lived and worked. A significant number did nothing about it and simply paid the money back. Under the coal miners’ compensation scheme in previous years, government ensured that every former coal miner was invited to claim back money they were owed. Will government ensure that every single postmaster and postmistress, or their family if they are no longer with us, has the opportunity to make the claim that they wrongly had to pay back money and felt obliged to do so to avoid what they saw as the shame and dishonour of being seen to be dishonest in their local community?

I can assure the noble Lord that that is exactly the objective. The words that have been used are about restoring all postmasters and postmistresses to the position they were in before this sorry saga happened. The Government will make full compensation when all claims are received. We rely on the postmasters and postmistresses to come forward with their claims and cases. As we stand right now, the cases of 78% of the cohort of victims—more than 2,000—have been settled in full. There is a process to allow further claims to come through and an appeal process designed by the advisory committee to do that. The objective is to leave no stone unturned and to make sure that all compensation is paid as quickly and timeously as possible.

Immigration Rules and Border Security

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Tuesday 20 February.

“The security of the UK border is a top priority for me, the Home Secretary and the Home Office. Everything we do in this area is designed to reduce risks to this country and its citizens. Border Force performs checks on 100% of scheduled passengers arriving in the UK and risk-based intelligence-led checks on general aviation. It is deeply disturbing that information that has no basis in fact was leaked by the independent chief inspector to a national newspaper before the Home Office had the chance to respond. We are urgently investigating this breach of confidential information in full in the normal way.

Moving to yesterday’s changes to the Immigration Rules, since the launch of our Ukraine schemes the UK has offered or extended sanctuary to more than 280,000 Ukrainians, thanks to the immense generosity of the British public. I know that colleagues across the House are grateful for all the work that has been going on in communities to facilitate that support. Almost two years on from the start of the conflict, the UK Government’s commitment to the Ukrainian cause remains undimmed. It is right that we continue to adapt and develop our visa routes to ensure that they keep pace with the rapidly shifting situation in Ukraine. We must ensure that they remain as efficient and sustainable as possible, while providing stability for those we have welcomed to the UK and those who still need our sanctuary. Ukrainian nationals who may have previously been eligible to apply to come to the UK under the Ukraine family scheme will remain eligible to apply for the Homes for Ukraine sponsorship scheme.

Separately, the Government remain wholeheartedly committed to reducing levels of legal migration. Measures to curb immigration abuse and further reduce net migration are being implemented, ranging from salary increases for work and family visas to reforming the shortage occupation list, removing the right for overseas care workers to bring dependants, and requiring care providers to be registered with the Care Quality Commission before hiring overseas carers. The rule changes outlined yesterday, which relate to the care sector, pave the way for those measures to take effect.”

My Lords, there is yet more chaos at the borders as we learned yesterday of a failure to check hundreds of high-risk flights for the obvious threats of trafficking, serious crime and terrorism. The Government dispute the figures, so let me give them an opportunity to say whether all the high-risk flights were checked. What are the figures that the Government believe, not only for London City Airport but across the UK, and are they all properly checked?

Instead of getting a grip, the Government sacked the inspector immediately when he was being forced to leave next month anyway. Some 15 of his reports remain unpublished, including revelations of visa failures in the care sector, with 275 such visas issued to a non-existent care home. When will these 15 reports, being sat on by the Home Office, be published, and when will there be a new independent inspector to oversee our borders and immigration arrangements? Border security is too important for confusion, delay and incompetence but, too often, that is what we get from this Government.

I thank the noble Lord for his questions, and I will do my best to answer them all. I can reassure anyone from the public who happens to be watching: Border Force performs checks on 100% of scheduled passengers arriving in the UK and risk-based intelligence-led checks on general aviation. It is disturbing that information with no basis in fact was leaked by the independent chief inspector to a national newspaper before the Home Office had the chance to respond. As a consequence, Mr Neal lost the confidence of the Home Secretary, as he pointed out in his WMS yesterday. I cannot really improve on his words:

“I have terminated the appointment of David Neal, the Independent Chief Inspector of Borders and Immigration, after he breached the terms of appointment and lost my confidence”.

In terms of the checks at London City Airport, Mr Neal was very aware of a specific issue with the recording of data there that meant that a large proportion of flights recorded as high risk should have been reclassified as low risk. As I have already mentioned, all notified general aviation flights are categorised as high risk or low risk based on a number of factors. These are primarily related to persons on board, but additional factors can relate to intelligence about the aircraft and other matters. A flight may be remotely cleared when it has been assessed using the risk assessment as low risk, and for high-risk flights in certain circumstances only. A remote clearance requires, as a minimum, a digital record check on Home Office systems for all passengers. Where we are notified of a general aviation flight, we clear 100% of high-risk and low-risk flights remotely or in person, in accordance with the general aviation guidance.

I am not sure when the new replacement will be recruited. It is a very important position, and an appointment will be made following robust competition in accordance with the Governance Code on Public Appointments. As regards the publishing of the other reports, it is undeniably unfortunate that circumstances have delayed the publication of certain inspection reports. I will say that the one that was leaked was well within the time limit, and the Government had not been given an opportunity to respond and were still fact-checking, for the reasons I mentioned earlier. These will be published as soon as possible.